DISPUTE RESOLUTION: ARBITRATION ASSIGNMENT = q4 - Essay Example

Section 38(3) goes on to limit an arbitrator’s power to award a claim for security for costs. An arbitrator is not permitted to exercise his or her discretion to award security for costs ‘on the ground that the claimant is - (a) an individual ordinarily resident outside the United Kingdom, or (b) a corporation or association incorporated or formed under the law of a country outside the United Kingdom, or whose central management and control is exercised outside the United Kingdom.’(The Arbitration Act 1996 Section 38(3)) An arbitrator’s power to award security for costs can only be fully understood by reference to Section 1 of the Arbitration Act 1996 and other statutory provisions for security for costs.

Section 1 of the 1996 sets out the principles upon which the Arbitration Act are founded and arbitrators are to be guided accordingly. ‘The object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense.’ (The Arbitration Act 1996 Section 1(a)) Order 23 of the Rules of the Supreme Court and Section 726(1) of the Companies Act 1985 make provision for security for costs in High Court proceedings. The powers of an arbitrator in similar circumstances must be construed by reference to the underlying principles of these two statutory provisions.

There are three grounds upon which a court can order that a plaintiff provide security for costs under Order 23 of the Rules of the Supreme Court. (Fender) The first of these grounds provide for security for costs in instances where the plaintiff is ordinarily resident outside of the United Kingdom. This option is specifically denied an arbitrator under Section 38(3) of the Arbitration Act 1996. The remaining two grounds are more helpful in understanding and assessing the powers of an arbitrator to award security for costs.

They are 1) ‘the plaintiff is a "nominal" plaintiff suing on behalf of another