Research On The Legal Issues Of Third-party Funding In International Commercial Arbitration

In international commercial arbitration,because of the huge number of bids,arbitration fees are high and there are other expenses,which means high costs and high risks for the arbitration parties.In recent years,the Third-Party Funding(hereinafter referred to as "TPF")began to participate in arbitration in international commercia]arbitration and gradually developed into an industry.Third-party funding means that,in a particular dispute,a third party other than the arbitration party pays a part or all of the arbitration fees for one party to the arbitration(usually the applicant).These costs include,but are not limited to,attorneys' fees,arbitrator's remuneration,arbitration institutions management fees,expert witness fees and expenses that may occur in arbitral proceedings.It is a financing type for applicants while a new type of investment for investors.Third-party funders have no interest in the arbitration case itself,but instead use it as an investment activity to invest in arbitral proceedings and arbitration results,hoping to obtain considerable profits in the settlement of disputes.There are two main reasons for the vigorous development of third-party funding in international commercial arbitration:First,the global financial crisis has led investment institutions to seek new investment instruments.The amount of the subject matter in many cases in international arbitration is huge.It is highly possible for investors to gain greater profits via financing international arbitration cases.Second,international arbitration is usually costly.As a result,one party to the arbitration may wish to have sufficient cash flow during the arbitration process to maintain the normal business of the company.TPF can help these parties to share the arbitration risk with a third party.Therefore,TPF plays a unique role in international commercial arbitration.With the development of third-party funding,problems such as conflicts of interest,disclosure of agreements,and the availability of legal support for funding fees began to appear.The regulation of third-party funding is an urgent issue to be solved in international commercial arbitration.Many scholars believe that the existence of third?party funding relationships may affect the conduct of arbitral proceedings.Some people think that third-party funders will influence the procedures and results of arbitration.Some people have suggested that the existence of a third-party funding agreement will enable funders to control the appeal of the arbitration party.Others have suggested that the participation of third party funders will bring many potential conflicts of interest to arbitration.Many scholars believe that the existence of third-party funding relationships may affect the conduct of arbitral proceedings.Some people think that third-party funders will influence the procedures and results of arbitration.Some people have suggested that the existence of a third-party funding agreement will enable funders to control the appeal of the arbitration party.Others have suggested that the participation of third party funders will bring many potential conflicts of interest to arbitration.Since the influence of the particpation of the third-party sponsors on the arbitral proceedings may increase significantly,it is necessary for the arbitral tribunal to participate in discussing the influence and power of the third-party funders,such as:deciding whether to disclose the third-party funding relationship,the content and form of the disclosure,how to allocate the arbitration fees,etc.In addition,in order to maintain the transparency of international commercial dispute arbitration procedures and the independence and impartiality of arbitrators,some people think that potential conflicts of interest between arbitrators and third-party funders are of great concern.At present,several well-known arbitration institutions in the world are beginning to pay attention to the participation of third parties' contributions,and respond by amendmenting arbitration rules,It is hoped that through the revision of arbitration rules,the third-party fundingwill be more standardized and cancontributebetter serve for international commercial arbitration.The paper is mainly divided into four parts.The first part mainly introduces the basic concept and characteristics of TPF.The second part introduces the historical evolution and development of TPF especially the impact on arbitration procedures.The third part focuses on the analysis of the challenges posed by the participation of third parties in participating in international commercial arbitration and analyzes the possible impact of TPF on the arbitral procedures,the lawyers of the funded parties,and the independence and impartiality of the arbitrators.Combining with the legal issues arising from TPF,the paper proposes corresponding regulations.The author believes that the third party's contribution may create a conflict of interest,which in turn affects the arbitral procedure and the final decision.The author believes that the disclosure of the existence and some key elements of the TPF agreement is necessary to maintain the fairness and transparency of the arbitration process,therefore,compares the advantages and disadvantages of TPF.The fifth part proposes regulation suggestions on how China should deal with TPF for participation in international commercial arbitration and advises TFP should be actively introduced to our country and strengthen management of TPF.