UAB Garsu Pasaulis v. Kyrgyzstan
PCA · Investment (ICSID and treaty) · Sweden · 29 Jun 2021
Why it matters
This procedural order clarifies that under the 1976 UNCITRAL Rules and Swedish law, a tribunal can order a defaulting party to reimburse the other party for an unpaid advance on costs, even without an express rule. It reinforces the principle that parties must comply with tribunal orders and that the paying party should not bear the financial burden of the other's non-compliance.
Summary
In this investment treaty arbitration under the 1976 UNCITRAL Rules, the Tribunal issued Procedural Order No. 2 on 29 June 2021, addressing the Claimant's request for a separate award on costs. The Respondent failed to pay its €225,000 share of the advance on costs, so the Claimant paid it and sought reimbursement. The Tribunal found it had authority under the Swedish Arbitration Act (the lex loci arbitri) to order reimbursement, even though the 1976 UNCITRAL Rules do not expressly provide for such an order. The Tribunal rejected the Respondent's argument that Article 41(4) of the Rules exhaustively lists consequences (other party pays or proceedings terminate). Instead, the Tribunal relied on its general procedural discretion under Article 15(1) of the Rules and Section 25(4) of the Swedish Arbitration Act, which allows interim measures to secure a claim. The Tribunal ordered the Respondent to pay €225,000 to the Claimant, but deferred the interest rate determination to a later stage, noting that interest should be governed by the law applicable to the merits (public international law/BIT) rather than Swedish law. The order is a procedural decision, not a final award on costs.
The detail
Parties: UAB Garsu Pasaulis v. Kyrgyzstan
Case number: PCA Case No. 2020-59
Outcome: The Tribunal ordered the Respondent to pay the Claimant €225,000 for the Respondent's share of the advance on costs, plus interest at a rate to be determined later.
Quantum: €225,000
Applicable law: 1976 UNCITRAL Arbitration Rules; Swedish Arbitration Act (lex loci arbitri); Agreement Between the Government of the Republic of Lithuania and the Government of the Kyrgyz Republic on the Promotion and Protection of Investments
Issues in play: The Tribunal's authority to issue a separate award on costs under the 1976 UNCITRAL Rules and the Swedish Arbitration Act. The Respondent argued the Rules exhaustively list consequences of non-payment, while the Claimant argued the Tribunal has inherent authority.
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