Making the case for security for costs or claim: considerations for the applicant i. Proving the opposing party's inability or unwillingness to pay It is fundamental for the applicant party to show that the other party does not have the finances to satisfy an adverse costs order or award. The applicant party will invariably need to demonstrate that there is a high risk that the opposing party will not satisfy any final award, on costs or on the claim, as the case may be. The applicant may be faced with the practical problem of producing evidence to this effect. Evidence required may involve the claimant's financial records, evidence of lateness or missed payments and may require evidence from fact witnesses familiar with the opposing party's financial position. Tactically, a good way of addressing this issue is to write to the party that would be subject to the order (or their lawyers) asking for information regarding their financial status, which, if provided, can then be used to evidence the application. This can often be a win-win tactic. You may obtain the information you need to make the application or, in the event that evidence of financial solvency is provided, save yourself the cost and time of making an application that will likely fail. Equally, if the party refuses to provide such information, that refusal can also be evidenced in the application, and may be a critical factor in the tribunal's decision. In a recent successful application for security for costs, the tribunal listed as a key consideration in its decision to award our client security for costs the fact that the party responding to the application had led insufficient evidence of its financial status, such that the tribunal could not be satisfied that it would be able to meet an award of costs. Where security for claim is sought, it is very unlikely to be enough to simply show that the opposing party is resident or has assets outside of the jurisdiction of the arbitral seat or is resident or has assets in a jurisdiction where the enforcement record is uneven. As discussed below, these may well be seen as part of the risk the applicant took in choosing to transact with the opposing party in the first place. More commonly, the applicant needs to show that the opposing party is actively seeking to move or dissipate its assets to avoid paying a future award against it. This information may not be easy to come by. It may require detailed analysis into a company's legal structure and ownership, and the services of local legal advisors or investigators to carry out in-depth analysis into transactions which may evidence such an intention. In a recent successful security for claim application, the applicant was able to persuade the tribunal by providing evidence that: - the opposing party was a state-owned enterprise with no significant assets outside of its home state, coupled with evidence that the courts in that state have a poor record of enforcement of arbitral awards, especially arbitral awards against the state and state owned entities; - the opposing party was actively trying to move assets back into its own jurisdiction and out of reach of the applicant; - the opposing party's key asset, over which the applicant had security, was in the process of being wound up on suspicious grounds and was subject to a foreign injunction preventing enforcement of that security. ii. The opposing party's financial circumstances: material change and the role of the applicant party Once the applicant has demonstrated the respondent's likely inability to pay, further hurdles need to be overcome. For example, it will assist an application if the applicant can demonstrate that the respondent's inability to pay has not been caused by the applicant's actions. In looking at this question, the tribunal will usually focus on whether that "causation" has been in some way intentional or "unfair"; not simply as a result of the commercial terms of the parties' agreement. Equally, tribunals will be unlikely to exercise their discretion in favour of an application for security for costs, however impecunious the opposing party, if they believe it is being used to stifle a genuine claim.