Are there any other applications foreseen as part of the procedure? When assessing when to file a request for certainty, defendants should also consider other claims and steps in the application that may affect the timing of the claim. A court recently rejected a request for cost certainty, in part because it would have been difficult to find a date to process the request before an anticipated urgent request.11 Is it worth waiting for discovery? There may be benefits to waiting until after discovery before submitting this application. First, the merits of the action may become clearer after discovery, which may increase the defendant`s chances of success in seeking certainty of costs. In fact, some courts have stated that this is the appropriate time to file the application.9 Second, upon disclosure, the defendant can learn more about the plaintiff`s business status and available assets if these issues are relevant to the underlying litigation. Third, it may be more efficient to wait until after discovery: “If oral discovery has not yet taken place, the merits should be considered in a separate cross-examination of the application. This cross-examination would unnecessarily duplicate elements of the final investigative review. 10 Despite a court`s broad powers to order certainty of costs, such an injunction has rarely been issued in an investment contract dispute.11 That is, as of January 2020, out of 33 investor–state disputes in which a cost guarantee was sought, only 5 publicly available requests were granted.12 The reason suggested was that certainty should only be issued in exceptional circumstances. extremes, if a “substantial interest of a party is threatened with irreparable harm”.13 A safety order should specify the date on which security is to be provided and the proceedings are often stayed until the security is provided. It should also indicate what should happen in the event of a default, which usually means that the claim will be cancelled. If such a provision is not provided, the defendant may request the cancellation of the claim if no security is provided. Defending a lawsuit can be an expensive process, even if a defendant ultimately succeeds in dismissing claims against them. Normally, court fees are “in the case”, so a winning defendant is awarded a portion of his court costs.

However, depending on the applicant`s situation, there may be serious difficulties in recovering legal fees – for example, the applicant may have no assets. Prior to the recent publication of the ICSID Arbitration Rules, which will apply from 1. July 2022 (“ICSID Rules 2022”), which now specifically addresses certainty of costs,5 the Arbitration Rules did not expressly provide for the parties` right to seek an order to secure costs. Consequently, the parties have already invoked their right to apply to the court for interim measures of protection necessary to safeguard their rights.6 In the case of such an application, the applicant must normally prove that such an injunction is necessary to protect its procedural right to reimbursement of costs if the court makes a decision on costs in favour of that applicant.7 A claimant company may, in its entirety: or essentially controlled by a person who is also a plaintiff in the proceeding – in this scenario, an order requiring the applicant company to post security is likely to affect the individual plaintiff as well. The question arises whether, in such a situation, the court should be less inclined to compel a claimant company to provide security. The amount of the security ordered must be proportionate and not overwhelming. Determining quantity is not an exact science. The court takes into account the costs already incurred and to be incurred and the defendant must prove it. It will also assess whether proceedings are imminent, as it may be considered disproportionate to order substantial guarantees at such a late stage.

Guarantee is usually not given on the basis of compensation, so not all of a defendant`s costs are guaranteed. When exactly “just cause” appears, the criteria of rule 56.01 come into play. The first three criteria are usually obvious from the beginning. For example, an applicant will often invoke his or her place of residence. Even if the plaintiff is not requesting this information, a defendant may require the plaintiff to declare whether the plaintiff is ordinarily resident in Ontario under rule 56.02. Thus, if a defendant seeks certainty based on the location of the plaintiff or because it knows that the plaintiff has a pending decision on costs in another proceeding, the defendant should file its application as soon as possible. Taking this approach into account from the outset and, where appropriate, initiating it makes it possible to avoid the risks associated with the obligation to declare a time-limit to the Court later in the dispute. To use the example above, if the plaintiff does not have enough assets in Ontario because of the million dollars the defendant stole, but can prove a high probability of success in court, a court would likely allow the plaintiff to proceed without providing security for costs. In such circumstances, it is fairer for a plaintiff to have a chance to obtain justice than to protect a defendant`s ability to repay. On the other hand, if the plaintiff has little chance of success in court (meaning that the evidence the plaintiff wants to rely on at trial does not appear to show that the defendant stole the million dollars), a court would likely require the plaintiff to post security for costs. since it would be unfair for the defendant to compel him to defend himself, knowing that he is likely to succeed in court and not at his expense.

When ordered, cost security is generally provided in the form of a bank guarantee3 or a deposit in an escrow account.4 For ICSID arbitration proceedings conducted on or after 1. As of July 2022, the ICSID Arbitration Rules 2022 stipulate that the tribunal must specifically consider the existence of third-party funding when deciding on a claim for a guarantee of costs.25 In general, a defendant should file its claim for costs security as soon as it has “reasonable grounds to believe” that the claimant meets one of the above criteria.2 This threshold is not onerous.3 To achieve it: The defendant does not have to prove “with certainty” that one of the criteria is met. Rather, the defendant`s motives must be based on “proven facts” and evidence and not on “mere conjecture, intuition or speculation”.4 Once any of the criteria set out in rule 56.01 have been established, the burden of proof is on the claimant to prove that he or she has assets in the jurisdiction or that he or she meets another exception to the security deposit. It should be noted that if the application is made on the grounds that the applicant does not reside in the jurisdiction or in one of the countries referred to in paragraph 25.13 of the CPP, this does not lead to a rigid presumption that security must be provided. The court will consider how easy it would be for a defendant to enforce a decision on costs and may order security by referring to: As stated in Volume 1, Number 4, a losing party must normally pay 60% of the prevailing party`s attorney`s fees at trial. Thus, if the prevailing party has incurred costs of $100,000, the successful party is required to pay the winning party $60,000 in addition to its own legal fees.