The Application Of Third-Party Funding In Arbitration In China's Mainland

Third-party Funding(TPF),as a new form of legal investment,has been widely used in the field of international arbitration and played a significant role in helping the parties to lower the threshold of arbitration and promoting the development of arbitration institutions.Many Anglo-American legal system countries gradually break through the ban and start to accept and develop the application of TPF.Singapore and Hong Kong of China have made laws to recognize the legitimacy of TPF in the arbitration field and regulate the operation of it in combination with the mode of industry autonomy.At present,with the development of arbitration in mainland China,the increasing number of parties involved in commercial and investment activities need to settle disputes through arbitration,and the relatively open legal and policy environment in recent years,TPF has a very broad application prospect in our country.Although TPF is not prohibited in the arbitration in mainland of China,there are still challenges in the application process that cannot be ignored.In terms of legal ethics,TPF may infringe upon the impartiality and confidentiality of arbitration proceedings.In practical application,the power of the arbitral tribunal is limited and it is difficult to effectively restrain the sponsor.In terms of application mode,the new revision of China's arbitration law only lasts for three years,so it is inappropriate to revise the law on TPF in a short term.Moreover,mainland funders have not yet formed the industry scale and their self-governance ability is limited,which is insufficient to regulate the sound development of TPF industry.In addition,the mainland of China and countries with relatively perfect third-party financing development belong to different legal areas,and their political systems and economic development levels are also different.Therefore,the countermeasures of TPF outside the region cannot be completely copied.Given that the Chinese government supports institutional innovation in free trade area and that free trade area arbitration agencies have a better chance of accepting foreign-related arbitration cases,a pilot project of TPF can be launched in the free trade area.In the specific application,the government can issue normative documents to make principled provisions on the core issues of TPF in arbitration,so as to make up for the absence of relevant laws and regulations in the mainland of China.The supreme people's court may issue judicial safeguard opinions on the pilot operation of TPF in free trade area and improve the judicial correction mechanism of TPF in arbitration awards.Free trade area arbitration alliance shall formulate guidelines for TPF,which shall specify the conclusion of financial assistance agreement,the rights and obligations of the parties involved in the TPF arbitration and the power of the arbitration tribunal.Each arbitration institution may,according to its own development level and business needs,voluntarily revise the arbitration rules with reference to the guidelines to regulate the application of TPF in arbitration proceedings.Mainland lawyers' associations may also revise the code of conduct for lawyers' practice,and learn from the code of conduct for lawyers acting on behalf of TPF arbitration cases.In short,the introduction of TPF in arbitration in the mainland of China should be carried out step by step,and the hybrid application mode of soft law autonomy should be adopted when the pilot areas of free trade area are carried out.When the application of TPF in free trade area is mature,it will be replicated and promoted nationwide.