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6. Before the court refuses to order security on the ground that it would
unfairly stifle a valid claim, the court must be satisfied that, in all the
circumstances, it is probable that the claim would be stifled; and
7. The lateness of the application for security is a circumstance which
can properly be taken into account.5
In domestic arbitration proceeding under the Act, per s. 22, the Domestic
Commercial Arbitration Rules of Procedure (the “Rules”) of the British
Columbia International Commercial Arbitration Centre (the “BCICAC”) will
apply unless otherwise agreed by the parties. The Act and the Rules collectively
address both security for tribunal fees and security for legal costs.
Security for tribunal fees may be requested pursuant to Rule 31. In Ben
102 Enterprises Ltd. v. Ben 105 Enterprises Ltd.,6 the B.C. Supreme Court
affirmed a tribunal’s right to refuse delivery of a decision while fees are outstanding.
Authority to grant security for costs in domestic arbitration is
found in BCICAC Rule 29(1)(h). This rule grants a tribunal the power, unless
otherwise agreed by the parties, to “order any party to provide security for
the legal or other costs of any other party by way of a deposit or bank guarantee
or in any other manner the arbitration tribunal thinks fit”.
Arguably, authority to grant security for costs in domestic arbitration
may also be derived directly from the Act.7 Section 41 of the Act states that
“an order under this Act may be made on terms, as to costs or otherwise,
that the authority making the order thinks just”. This could be interpreted
broadly to include security for costs orders. Section 9 of the Act grants arbitrators
the power to “make an interim award respecting any matter on
which the arbitrator may make a final award”; costs fall within the discretion
of the arbitrator as part of the final award.
In Inforica Inc. v. CGI Information Systems and Management Consultants
Inc.,8 an appeal of an arbitration under the Ontario Arbitration Act, 1991,9 the
Ontario Court of Appeal confirmed a tribunal’s authority to order security
for costs in arbitration using the ADR Chambers Rules. At the time, Rule
8(1)(h) of the ADR Chambers Rules had wording identical to Rule 29(1)(h) of
the BCICAC Rules. This is persuasive evidence that security for costs
awards granted by tribunals under the (BCICAC) Rules would be upheld if
challenged. The Court of Appeal did not make a final determination on
whether a tribunal has the inherent authority to award security for costs
under the Ontario Arbitration Act.
As in court, requiring security in arbitration can have the effect of stifling
a party’s claim. Accordingly, care must be taken by tribunals to avoid the
injustice of preventing a genuine claim by an impecunious party. Although
a strict adherence to the test in Kropp may not be required in arbitration, in