LCIA Terms and Conditions for Holding Funds by Way of Security effective 1 December 2023 Download PDF Download Form The LCIA Security Terms and Conditions apply to arbitrations administered by the LCIA (including arbitrations administered pursuant to the LCIA Rules 2020, the LCIA Rules 2014, the LCIA Rules 1998 and arbitrations pursuant to the LCIA UNCITRAL Terms and Conditions) and in arbitrations subject to the Fundholding Terms and Conditions, where the LCIA agrees to hold Secured Funds, in accordance with the terms and conditions. Article 1 Holding Funds by Way of Security Article 2 The LCIA’s Approval to Hold the Secured Funds by Way of Security Article 3 Receipt and Holding of the Secured Funds Article 4 LCIA Fees Article 5 Transfer of the Secured Funds and Closure of the Account Article 6 Miscellaneous Terms Article 7 Compliance Article 8 Data Protection Article 9 Limitation Of Liability Article 10 Governing Law And Jurisdiction Article 1 Holding Funds by Way of Security 1.1 In its sole discretion, and without the need to state any reasons, and subject to these terms and conditions effective from 1 December 2023 (LCIA Security Terms and Conditions), the LCIA is prepared to hold funds, as defined below, by way of security, for a party or parties (Party or Parties) to arbitrations administered by the LCIA,1 or in arbitrations subject to the LCIA’s Fundholding Terms and Conditions2 (each, the Arbitration). 1.2 Subject to Articles 2.1 and 2.2, these LCIA Security Terms and Conditions shall apply where, following the directions (Directions) of the arbitral tribunal in the Arbitration (Tribunal), that a Party or Parties in the Arbitration provide security, that Party or those Parties have requested the LCIA to hold funds to be paid by a Party or Parties for the purpose of: (a) securing legal costs and expenses (Legal Costs) and/or the costs of the Arbitration other than the Legal Costs incurred by the Parties (Arbitration Costs) in relation to a claim, counterclaim and/or cross claim; (b) securing all or part of the amount in dispute; and/or (c) providing a cross indemnity; each the Secured Funds. 1.3 By proceeding in accordance with Article 2.1, all Parties to the Arbitration and the Tribunal are deemed to have consented to these LCIA Security Terms and Conditions. 1.4 For the avoidance of doubt, the LCIA will not hold the Secured Funds unless the LCIA is already administering the Arbitration or providing fundholding services pursuant to the Fundholding Terms and Conditions. 1.5 Subject to the LCIA’s approval of a request in accordance with Article 2.2, the LCIA is only prepared to hold funds in GBP, USD, CAD, EUR, CHF, or SGD up to a maximum of GBP one million, or equivalent, in aggregate in any single arbitration at any time. 1.6 In addition to terms that are expressly defined to include the plural, all other references in these LCIA Security Terms and Conditions to the singular shall also include the plural, where applicable, and vice versa. Article 2 The LCIA’s Approval to Hold the Secured Funds by Way of Security 2.1 A Party shall submit a request for the LCIA to hold the Secured Funds by completing and returning the “Holding Funds By Way of Security Form” (Annex A) (Security Form) by email or other electronic means, including via any electronic filing system operated by the LCIA, to [email protected], marked with the LCIA case reference number in the Arbitration (Request) together with: (a) a copy of the Directions of the Tribunal with respect to the Secured Funds; and (b) confirmation, from the Party that has been directed by the Tribunal in the Directions to provide the Secured Funds, that it has deposited a non-refundable fee of £1,950 (Fixed Fee) in the LCIA’s bank account. 2.2 Once the LCIA has received the Request, the Directions, and the Fixed Fee in accordance with Article 2.1, the LCIA will decide in its sole discretion, and without the need to state any reasons, whether it is willing to hold the Secured Funds and will inform the Parties and the Tribunal of its decision as soon as practicable. 2.3 No Party should deposit or seek to deposit the Secured Funds with the LCIA (other than the Fixed Fee) before the LCIA has confirmed its agreement to hold the Secured Funds in accordance with Article 2.2. Otherwise, and unless the LCIA obtains satisfactory additional information, it may, in its sole discretion, and without the need to state any reasons, return the Secured Funds to the account from which they were paid. 2.4 Where the Directions, or any subsequent or revised Directions in the Arbitration (which must be provided to the LCIA), provide for more than one Party to provide Secured Funds, or that a Party deposit further Secured Funds, a separate Security Form should be completed to accompany each Request and a separate Fixed Fee should be paid, unless the LCIA decides in its sole discretion, and without the need to state any reasons, to waive such further Fixed Fee. Article 3 Receipt and Holding of the Secured Funds 3.1 The LCIA will only accept the Secured Funds, and any other payments in connection with the Secured Funds, from a Party or any legal representatives authorised to act on legal matters for the Party, and who is on the record in the Arbitration (Legal Representatives), and the LCIA's acceptance of the Secured Funds/payments is subject to Article 7. 3.2 If the LCIA receives the Secured Funds, or any part of the Secured Funds from any party other than those set out in Article 3.1, or prior to the LCIA confirming its agreement to hold the Secured Funds in accordance with Article 2.2, the LCIA may, in its sole discretion, and without the need to state any reasons, return such funds to the account from which they were paid. 3.3 Payments made shall be the property of the LCIA to be disbursed or otherwise applied by the LCIA in accordance with these LCIA Security Terms and Conditions. The Parties agree that the LCIA shall not act as trustee, and its sole duty in respect of the Secured Funds received shall be to act in accordance with these LCIA Security Terms and Conditions. 3.4 The Parties are not entitled to interest on the Secured Funds, and any interest earned from the Secured Funds paid to the LCIA by the Parties shall accrue for the sole benefit of the LCIA. 3.5 Subject to an extension in accordance with Article 3.6, the LCIA is prepared to hold the Secured Funds for a maximum period of one year from the date of receipt of the Secured Funds (Initial Term). 3.6 The LCIA may, in its sole discretion, and without the need to state any reasons, grant an extension of the Initial Term for a further period, or periods, of one year (each the Extended Term) where it holds the Secured Funds, or part of the Secured Funds at the expiry of the Initial Term (or any Extended Term). 3.7 Where at the expiry of the Initial Term, or at the expiry of the Extended Term, the Tribunal has not sent the LCIA and the Parties written directions concerning the return of the Secured Funds, the LCIA has the right to return any Secured Funds it holds to the Party who lodged the Secured Funds in accordance with the procedures set out in Article 5. Article 4 LCIA Fees 4.1 In addition to the Fixed Fee that is payable by the Party that has been directed by the Tribunal to provide the Secured Funds, the LCIA will charge the Parties for holding the Secured Funds, an amount equal to 0.5% per annum of the Secured Funds, (plus UK value added tax (UK VAT) if applicable) (Additional Fees). The Additional Fees are calculated monthly. 4.2 The LCIA will charge the Parties expenses, if any, incurred by the LCIA in connection with the holding of the Secured Funds (such as postage, telephone, travel, communications technology etc) and additional support services, whether provided by the LCIA from its own resources or otherwise (Expenses). 4.3 The Parties shall be jointly and severally liable for the Additional Fees and Expenses. 4.4 Upon request by a Party, a Party’s Legal Representatives or the Tribunal, the LCIA will provide a written statement of the balance of the Secured Funds. 4.5 The LCIA will periodically render invoices for its Additional Fees and any Expenses. Once invoices are rendered, the LCIA will deduct the Additional Fees and any Expenses directly from any advance payment for costs or funds deposited by the Parties in the Arbitration in accordance with the payment terms of its invoice. 4.6 Any bank charges incurred on any transfer of funds by or to the Parties shall be borne exclusively by the Parties. 4.7 UK-based Parties shall be jointly and severally liable to the LCIA for any UK VAT chargeable on or in respect of the Registration Fee, the Additional Fees and the Expenses, and shall include their UK VAT registration numbers in the Security Form. Article 5 Transfer of the Secured Funds and Closure of the Account 5.1 Subject to Articles 5.5 and 7, the LCIA will only transfer the Secured Funds, or any part of the Secured Funds to a Party or a Party’s Legal Representatives: (a) in accordance with the prior written directions of the Tribunal which shall be sent to the LCIA and copied to the Parties; or (b) where the Tribunal has not provided the LCIA with written directions concerning the return of the Secured Funds, at the expiry of the Initial Term or any Extended Term in accordance with Article 3.7. 5.2 On receipt of written directions of the Tribunal to transfer the Secured Funds, and within two business days, the LCIA will provide written confirmation to the Tribunal and the Parties of its receipt of such directions, and its intention to transfer the Secured Funds in accordance with the Tribunal’s directions. 5.3 If the LCIA decides to return the Secured Funds at the expiry of the Initial Term or any Extended Term in accordance with Articles 3.7 and 5.1(b), the LCIA will provide written confirmation to the Tribunal and the Parties of its intention to do so and its intention to transfer the Secured Funds to the Party which lodged the Secured Funds. 5.4 Where the LCIA is to make a transfer of the Secured Funds in accordance with Article 5.1(a) or (b), the LCIA will transfer the Secured Funds in accordance with the details provided by the Parties in the Arbitration, within five business days of the LCIA’s written confirmation to the Tribunal and the Parties as set out in Articles 5.2 and 5.3 as applicable or, if the date is later, on the date specified in the Tribunal’s directions. 5.5 The LCIA will make reasonable attempts to contact the Parties in order to arrange for the transfer of the Secured Funds, using the contact details provided to the LCIA during the proceedings. If a response is not received from a Party so contacted within 30 days, the LCIA will provide that Party with written notice of its intention to retain the Secured Funds. If no response is received within a further 60 days, the Party will be deemed irrevocably to have waived any right to claim and/or receive the Secured Funds. Article 6 Miscellaneous Terms 6.1 Unless otherwise directed by the LCIA, all communications shall be delivered in electronic form to [email protected] and any communication so delivered shall be treated as having been received. 6.2 When a Party communicates with, or copies correspondence to, the LCIA concerning the Secured Funds, that Party shall prominently quote the LCIA case reference number. 6.3 If there is any change to the contact details of a Party or its Legal Representatives, that Party shall promptly inform the other Party, the LCIA and the Tribunal in writing of the new contact details, and such details should then be used. 6.4 Unless and until the Party informs the other Party, the LCIA and the Tribunal of any change, the other Party, the LCIA and the Tribunal are entitled to continue using that Party’s previous contact details (including the contact details for their previous Legal Representatives). Article 7 Compliance 7.1 Any dealings between a Party, a member of the Tribunal and the LCIA will be subject to any requirements applicable to that Party, the member of the Tribunal or the LCIA relating to bribery, corruption, terrorist financing, fraud, tax evasion, money laundering and/or economic or trade sanctions (Prohibited Activity), and the LCIA will deal with any Party and any member of the Tribunal on the understanding that it is complying with all such requirements. 7.2 The LCIA may refuse to act on any instruction and/or accept or make any payment if the LCIA determines (in its sole discretion and without the need to state any reasons) that doing so may involve Prohibited Activity, or breach any law, regulation, or other legal duty which applies to it, or that doing so might otherwise expose the LCIA to enforcement action or censure from any regulator or law enforcement agency. 7.3 The Parties and each member of the Tribunal agree to provide the LCIA with any information and/or documents reasonably requested by the LCIA for the purpose of compliance with laws relating to Prohibited Activity. The LCIA may take any action it considers appropriate to comply with any applicable obligations relating to Prohibited Activity, including disclosure of any information and documents to courts, law enforcement agencies or regulatory authorities. Article 8 Data Protection 8.1 Any processing of personal data by the LCIA is subject to applicable data protection legislation, and the LCIA’s data protection notice can be found on the LCIA’s website. 8.2 The LCIA and the Tribunal may issue directions addressing information security or data protection, which shall be binding on the Parties, and in the case of those issued by the LCIA, also on the members of the Tribunal, subject to the mandatory provisions of any applicable law or rules of law. Article 9 Limitation Of Liability 9.1 The LCIA is not liable, or otherwise responsible, for any loss incurred by the Parties, the Tribunal, or any third parties, as a consequence of the failure of, or any act or omission by, any bank or banks holding the Secured Funds. 9.2 None of the LCIA (including its officers, members, and employees), the LCIA Court (including its President, Vice-Presidents, Honorary Vice-Presidents, former Vice-Presidents, and members), the LCIA Board (including any board member) and the Registrar (including any Deputy Registrar) shall be liable to any Party or any member of the Tribunal howsoever for any act or omission in connection with the holding of the Secured Funds, save: (a) where the act or omission is shown by that Party, or that member of the Tribunal, to constitute conscious and deliberate wrongdoing committed by the body or person alleged to be liable to that Party, or to that member of the Tribunal; or (b) to the extent that any part of this provision is shown to be prohibited by any applicable law. Article 10 Governing Law And Jurisdiction 10.1 These LCIA Security Terms and Conditions, together with the Security Form, constitute the entire agreement between the LCIA, the Parties and the Tribunal concerning holding funds by way of security. 10.2 These LCIA Security Terms and Conditions (and any non-contractual obligations related to them) are governed by, and shall be interpreted in accordance with, the laws of England. 10.3 The courts of England and Wales shall have exclusive jurisdiction to hear and decide any action, suit or proceedings between a Party, any member of the Tribunal and the LCIA (including its officers, members and employees), the LCIA Court (including its President, Vice Presidents, Honorary Vice Presidents, former Vice Presidents and members), the LCIA Board (including any board member), the Registrar (including any Deputy Registrar) which may arise out of or in connection with these LCIA Security Terms and Conditions (including any non-contractual obligations related to them) and, for these purposes, each Party and each member of the Tribunal irrevocably submits to the jurisdiction of the courts of England and Wales. 1 This includes arbitrations administered pursuant to the LCIA Rules 2020, the LCIA Rules 2014, the LCIA Rules 1998 and arbitrations pursuant to the LCIA UNCITRAL Terms and Conditions found on our website: https://www.lcia.org/Dispute_Resolution_Services/lcia-terms-and-conditions-for-the-administration-of-andor-prov.aspx. 2 See the LCIA Terms and Conditions for Fundholding found on our website: https://www.lcia.org/Dispute_Resolution_Services/lcia-terms-and-conditions-for-fundholding.aspx (Fundholding Terms and Conditions).