Study On Legal Issues Of Third Party Funding In International Arbitration

Third party funding(TPF)emerged in the 1990 s,and the application of this system actually helped reduce the funded parties' financial burden and promote the access to justice.Meanwhile,the involvement of TPF arrangements has also brought a lot of challenges to international arbitration procedures,and how to deal with these challenges has become an urgent issue for international arbitration.Therefore,this thesis will examine these issues by reviewing the discussions in the theoretical community on the impact of TPF on disclosure and security for costs in international arbitration,and together with relevant case studies.Finally,the current situation of Chinese arbitration development will be analyzed for the feasibility of applying TPF in China.This thesis consists of four parts:The first chapter will study the formation conditions of TPF,and analyze the production background of the TPF and make an institutional evaluation of TPF.Through studying of the history of the development of TPF,it can be seen that the relaxation and repeal of the prohibition about maintenance and champerty is an important prerequisite for the formation of TPF,and at the end of the 20 th century,the development of the judicial reforms— — "access to justice" of major western countries has promoted the application of TPF in various countries.In addition,as a funded party,the parties need to be funded which based on various reasons and as a third party funders,the investors need new areas for investment,this condition is alsoone of the necessary reasons of the application of this system.In a certain sense,the emergence of TPF can be said to be a combination of market economic behavior and legal risk aversion.The application of TPF can not only help the claimants to access to justice,but also can provide scientific case assessment,in the meantime it also raises the concern about TPF will cause abuse of arbitration.The second chapter will sort out the current situation of the regulation of TPF.The regulation of TPF mainly through legislation,arbitration rules,industry norms and other ways to achieve.According to their own practice,each jurisdiction regulates the TPF by amending or enacting laws and arbitration rules,which involves the issues of funders,disclosure,conflict of interest and security for costs and so on.The third chapter will combine the current practice of TPF,arbitration rules of well-known arbitration institutions,adjustment regulations of industry associations and relevant cases,and then analyze the issues of disclosure and security for costs in TPF.By studying the current practice of TPF,it can be seen that both the disclosure and the security for costs are important reflections of TPF has posed a challenge to the existing arbitration system.As practices become more and more abundant,the opinions of those who oppose the disclosure of TPF gradually decrease.The main issues to be discussed are the degree of disclosure: if the purpose is only to determine whether there is a conflict of interest,when there is a funder,disclosure of the identity of the funder may be sufficient.However,if it is for the purpose of judging whether the security for costs order should be made,it shall also disclose the terms of the TPF arrangement which concerning whether the funder should bear the adverse cost award and the termination conditions of the agreement.Regarding the issue of security for costs,the arbitral tribunal's decision on the security for costs application should be based on the lack of finance of the party which is required to provide security for costs,regardless of whether the party was funded by a third party.The existence of the TPF doesn't necessarily affect the making of security for costs order.When judging whether a security for costs ruling should be made,it is more important to pay attention to the economic condition of the party that is required to make the guarantee,such as whether there are actual assets and whether or not there is solvency.The thirdparty funders' funding should be considered in conjunction with the specific circumstances of the case.The fourth chapter will discuss the feasibility of applying TPF in China.TPF is a kind of self-remedy of rights,which makes the arbitration fees originally borne by the parties transferred to the outside funders,which can make Chinese rights remedy theory more perfect in the field of arbitration costs burden,and it is also conducive to the promotion of the establishment of diversified transfer mechanism of arbitration fees in China.The number of arbitration cases in China has continued to grow in recent years,the application of TPF will promote the development of China's arbitration industry and safeguard the interest of the parties.However,such promotion needs to be based on the reasonable regulation of TPF.Therefore,China can absorb relevant experience from other countries and regions,combine the local legal culture and the characteristics of the arbitration system,and carry out the legislation and arbitration rules reforms which are related to the regulation of TPF so that TPF can be smoothly operated after large-scale introduction of this system.