English Commercial Court: Article 30 of ICC Rules creates binding obligation to pay allotted share of advance on costs

by DLA Piper

The English Commercial Court has clarified the nature of an allotted share of an advance of costs pursuant to Article 30 of the ICC Rules 1998 (in broad terms the same as Article 36 of the ICC Rules 2012). 

The case is now the key decision of the English courts on this issue, confirming that Article 30 of the Rules (and therefore Article 36 of the 2012 Rules) creates a binding contractual obligation under English law to pay the allotted share and providing clarification to claimants on the options available where a defendant refuses to pay an advance on costs.

The facts

The underlying dispute in BDMS Limited v Rafael Advanced Systems concerned sums allegedly due to the claimant from the defendant by way of 'success fees' under a consultancy agreement.  Pursuant to clause 7 of the agreement, the parties had agreed to submit any disputes arising out of or in connection with the agreement to arbitration under the rules of the International Chamber of Commerce.

Following the filing of a request for arbitration with the ICC and the appointment of a sole arbitrator, the ICC wrote to the parties fixing the advance of costs at US$27,000 pursuant to Article 30(2) of the Rules, which provides that: "As soon as practicable, the Court shall fix the advance on costs in an amount likely to cover the fees and expenses of the arbitrators and the ICC administrative costs for the claims and counterclaims which have been referred to it by the parties […] ".

Article 30(3) of the Rules provides:

"The advance on costs fixed by the Court shall be payable in equal shares by the Claimant and the Respondent. Any provisional advance paid on the basis of Article 30(1) will be considered as a partial payment thereof. However, any party shall be free to pay the whole of the advance on costs in respect of the principal claim or the counterclaim should the other party fail to pay its share […] ".

Article 30(4) of the Rules provides:

"When a request for an advance on costs has not been complied with, and after consultation with the Arbitral Tribunal, the Secretary General may direct the Arbitral Tribunal to suspend its work and set a time limit, which must be not less than 15 days, on the expiry of which the relevant claims, or counterclaims, shall be considered as withdrawn […] ".


The parties were invited to pay an equal share of this advance pursuant to Article 30(3) of the Rules. The claimant paid its share of the advance; however, the defendant made it clear that it did not intend to pay its share of the advance of costs until security for its costs was provided by the claimant.

The claimant subsequently purported to accept the defendant's refusal to pay its share of the advance on costs as a repudiatory breach of the ICC Rules and clause 7 of the Agreement and commenced proceedings in the English Commercial Court.  The claimant also wrote to the ICC stating that as the defendant continued to refuse to pay the advance on costs, the ICC claim should be withdrawn pursuant to Article 30(4) of the Rules.  The ICC then notified the parties of the claimant's voluntary cessation and withdrawal of the ICC claim.

The English Commercial Court had to consider, among other things, whether the defendant's failure to pay its share of the advance of costs in accordance with Article 30(3) of the Rules amounted to a breach of a legally binding reciprocal obligation between the parties to pay their share of an advance on costs.

The decision

The court acknowledged that ICC arbitration decisions and commentaries in this area differed on the issue of whether a requirement to pay an advance on costs under Article 30(3) gave rise to a contractual obligation to the other party (known as the "contractual approach") or merely to a procedural obligation owed to the ICC Court (the "interim measure approach").  The Court considered that on the former view a substantive claim arises and an interim award may be sought on that basis.  However, on the latter view, the issue was one of procedure rather than substance and the only recourse would be by way of interim measures.

After consideration of the two approaches and the relevant commentary Mr Justice Hamblen held that the contractual approach was consistent with English law:

"It would therefore appear that the majority of arbitral and court decisions favour the contractual approach, as do the majority of commentators. In my judgment, as a matter of English law that approach is consistent  with the contractual agreement to arbitrate under the Rules and the mandatory terms in which Article 30(3) is expressed - "shall be payable".

 Mr Justice Hamblen went on to hold:

"In the present case it was expressly agreed that the arbitration "shall take place under the rules of the International Chamber of Commerce" and thereby that the parties would, as a matter of contract, comply with mandatory requirements imposed on the parties under the Rules…I accordingly conclude that a failure to pay the advance required under Article 30(3) does involve a breach of the arbitration agreement".

Mr Justice Hamblen also noted that it was accepted that an arbitral tribunal can order the defaulting party to pay the advance, either by means of an interim award or interim measure.

Ultimately, however, the court held that such breach did not go to the root of the contract such that it would constitute a repudiatory breach or deprive the claimant of its right to arbitrate.  The court therefore held for the defendant and granted a mandatory stay of the English court proceedings pursuant to section 9 of the Arbitration Act 1996, on the basis that the arbitration agreement remained operative.


The decision in BDMS is clear authority for the proposition that, under English law, failure to pay an allotted share of an advance on costs in ICC proceedings is a breach of the arbitration agreement, although it will be a question of fact in each case as to whether such a breach is repudiatory.  It is therefore open to an arbitral tribunal to order the defaulting party to pay the advance either by way of an interim award or an interim measure. 

While our experience suggests that, despite the contractual analysis, there is still uncertainty as to the availability of interim relief in these circumstances, the decision is to be welcomed as bringing much needed clarification to the issue, at least under English law.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© DLA Piper | Attorney Advertising

Written by:

DLA Piper

DLA Piper on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.