Security for Costs in International Commercial Law: Concept, Nature and Governing Law

Nowadays, the arbitrator can issue various protective orders in the arbitral process in international commercial arbitration. Some of these orders are so important that if the arbitrator makes decision incorrectly about the order, the award on the merits will be ineffective for winning party. The order of security for costs in arbitration is one of the above-mentioned orders. The respondent in the claim or the respondent in counter-claim requests the arbitrator to grant an order against the plaintiff for paying the sum of money. If the arbitrator’s final decision on the merits is not favor of the plaintiff, the costs of respondent for defending the frivolous claim will compensate from money. There are both advantages and disadvantages for ordering security for costs, but the advantages of this order are so much that the possibility of granting this order whether expressly or implicitly is accepted in most arbitration laws. With considering non-mentioning of security for costs in Iran’s International Commercial Arbitrations Law, the essay first is trying to study the concept and nature of security for costs order and second survey the possibility of ordering of it under Iran’s International Commercial Arbitrations Law.