This article examines
the issues that arise when a respondent defaults on the advance on costs in
international arbitration. It provides an overview of the advance on costs
provisions contained within various arbitral institutional rules, with a
particular focus on mechanisms addressing a respondent’s failure to pay their
share. This article also discusses the legal basis of the obligation to pay the
advance on costs. In this regard, it explores the different remedies available
to nondefaulting parties when seeking reimbursement of their substitute
payment. The remainder of the article discusses the scope of the arbitral
tribunals’ discretion in deciding whether to issue an order or award for
reimbursement. The authors consider which circumstances may justify a
respondent’s default on the advance on costs, drawing upon existing arbitral jurisprudence
and related caselaw. The analysis highlights the lack of explicit guidance in
most institutional rules and the implications of this uncertainty for tribunals
and parties.