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Sanction for the Non-Payment of Advances on Costs
At this point, we should briefly explain the sanction for non-pay-
ment of advances. Pursuant to Article 36(6) of the Rules, when a
request for an advance on costs has not been complied with, after con-
sultation with the arbitral tribunal, the Secretary General may direct the
arbitral tribunal to suspend its work and set a time limit of not less than
15 days, upon the expiry of which the relevant claims shall be consid-
ered as withdrawn. Therefore, in case separate advances on costs have
been determined, the arbitration will proceed with the claims of the
party who paid the advances on costs.
However, in case there is a global advance on costs, the claimant
who is faced with the possibility of withdrawal of the claims pursuant
to Article 36(6) is forced to pay the whole amount of the advance on
costs.
Where separate advances on costs are determined, the parties have
to pay the amount of the advance, calculated based on the amount of
their claims or counterclaims. In case one of the parties fails to pay the
advance on costs concerning their own claims, then the claims or coun-
terclaims of the relevant party is subject to the sanction set forth under
Article 36(6) of the Rules.
This incentivizes the parties to make the advance payments.
The Court’s Discretion on Fixing Separate Advances on Costs
It should be emphasized that the fixing of separate advances on
costs is at the Court’s discretion. It is also stated that the Court does not
fix separate advances on costs, unless a party makes a request
4
.
The reluctance of the Court on this issue is two-fold: First, the
Court aims to avoid additional financial burden on the parties.
When the claims of the parties are considered separately, they are sub-
ject to higher margins pursuant to the scales under Article 4 of
Appendix III of the Rules
5
. Secondly, the Court may avoid fixing
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4
Secretariat’s Guide, p. 376.
5
As the scales provide lower margins for higher amounts, the claims and counterclaims would be
subject to lower margins, in case they are added to each other.