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

The Third-Party funding mechanism has received extensive attention in the field of international arbitration in recent years.In 2017,Singapore and Hong Kong respectively recognized the legal status of the third-party funding mechanism by amending the law.In the fourth draft of the revised arbitration rules issued by the International Investment Dispute Settlement Center(ICSID)in February 2020,the third-party funding draft was also specifically made for third-party funding Corresponding regulations.The third-party funding mechanism has gradually expanded from its initial application in the field of litigation to a wide range of applications in the fields of international investment arbitration and international commercial arbitration.Third-party funding refers to all acts that provide funding or in-kind support for litigation or arbitration.In a narrow sense,it specifically refers to providing financial support to parties to a litigation or arbitration case by signing a funding agreement,and sharing according to the results of the judgment or award.The act of stipulating proportional returns.This article mainly discusses the behavior of third-party funding in a narrow sense.Whether a third-party funder can obtain a profit depends on whether the case is successful.If the lawsuit fails,the funder will not only be unable to obtain profits but also be unable to recover previous investment funds.This makes it possible for investors to review the success of the case before deciding to invest,and only invest in cases with a higher probability of success.In the more than ten years of rapid development of third-party funding,there have been many commercial institutions around the world with third-party funding as their main business.These institutions are guaranteed by their strong financial strength,professional legal investment team,and rich investment experience.,While removing the financial obstacles in litigation or arbitration cases for many parties,they have also made substantial profits themselves.This article is mainly divided into the following five parts:The first part introduces the background of this topic,the significance of the topic,the current research status of domestic and foreign scholars on third-party funding issues,theresearch methods used in this article,and the innovative content of this article's research results compared with other scholars.Since the implementation of the “Belt and Road”overseas investment strategy,the amount of foreign investment by domestic companies has continued to increase,and frictional conflicts with foreign companies have also increased.The rapid and efficient resolution of these disputes requires the support of strong dispute resolution mechanisms.International commercial arbitration,as the main way to resolve international commercial disputes,plays an irreplaceable role in the settlement of foreign-related disputes.In this context,research on third-party funding can not only enrich China's arbitration theory system at the theoretical level,but also provide institutional support for China's foreign-related enterprises at the practical level and escort the strategic layout of the “Belt and Road”.The second part introduces the development overview of the third contribution and the feasibility and necessity of introducing a third-party contribution mechanism in China.Third-party funding is not a completely new concept,but due to the existence of the principle of “prohibition of litigation and profit sharing” in early common law countries,third-party funding was deemed illegal,and the implementation of third-party funding may even constitute a crime.In the modern sense,the third-party funding mechanism originated in the field of bankruptcy litigation in Australia.With the relaxation of the principle of "prohibition of litigation and profit sharing",this mechanism has been widely used in Britain,the United States and other countries.Different from the United Kingdom and the United States and other countries,the third-party funding mechanism does not violate the mandatory provisions of Chinese law,In addition,the use of the third-party funding mechanism will not adversely affect China's social and public interests.It is feasible for China to introduce a third-party funding mechanism.And in order to enhance the international influence of China's arbitration institutions,and to protect the vital interests of China's foreign-related enterprises,it is necessary to introduce a third-party funding mechanism in our country.The third part and the fourth part introduce the problems that may be encountered during the operation of the third-party funding mechanism and the regulatory measures taken by third parties to deal with these issues.The legal problems caused by third-party fundingoutside the territory mainly include three aspects: the validity of the third-party funding agreement,conflicts of interest,and the impact of third-party funding on the confidentiality of the arbitration process.The disputes over the validity of the third-party funding agreement are mainly focused on the validity of the procedural control clauses in the funding agreement.The main concern of the conflict of interest issue is that the participation of third party funding may adversely affect the independence and impartiality of the arbitrator.The main concern of the issue of confidentiality is that the contribution of third parties may affect the confidentiality subjects and confidentiality of the arbitration process.Different countries and regions have implemented different regulatory strategies to address the above issues.The most representative are the "court-led" regulatory model in Australia,the "industry self-regulatory" regulatory model in the United Kingdom,and the "light-touch" regulatory model in Hong Kong.And Singapore's "limited and targeted" regulatory model.The fifth part introduces our country's scholars' suggestions on the supervision of third-party funding and the regulatory suggestions put forward in this article.Chinese scholars' regulatory suggestions on third-party funding can be summarized into four models:industry self-regulation,"licensing",dual supervision,and step-by-step supervision.Based on the problems exposed by third-party funding outside the region and the research suggestions of Chinese scholars,this paper proposes that the third-party funding can be implemented in a phased and phased regulatory mode.Develop different standards of conduct for third-party funders in both litigation and arbitration.Stricter requirements for third-party funders participating in litigation.The regulation of third-party funding should also be carried out in stages.This article proposes that the development of third-party funding in the Mainland can be divided into three stages: "observation period","development period",and "self-discipline period".Different characteristics should be formulated according to the characteristics of different stages.Regulatory rules.