Research On Third-party Funding In International Investment Arbitration

Recently,there has been much debate about the use of third-party funding in international investment arbitration.The term “third-party funding” is broadly defined in the field of international investment arbitration and has various forms,including commercial funding in return for remuneration and non-profit funding.Among them,non-recourse financing with repayment being contingent on success is the most common form of commercial third-party funding.Besides,financing by lawyers and dispute resolution insurance are also frequently used in practice.Third-party funding was historically forbidden in common law countries and the doctrines of maintenance,champerty and barratry were developed therefrom.However,in recent years,their attitudes toward third-party funding have gradually changed and restrictions have been largely lifted.By contrast,civil law countries never developed analogous doctrines and the emergence of modern third-party funding didn't meet impediment from local courts.Third-party funding in international investment arbitrations can promote access to justice and will not provoke frivolous claims in practice.In investment arbitration cases,the existence of a third-party funder and the terms of the funding agreement will affect tribunals' decisions in three key aspects:(i)jurisdiction and admissibility;(ii)the allocation of costs and security for costs;and(iii)disclosure of third-party funding.Tribunals have consistently held that receipt of third-party funding is unlikely to affect a claimant's position from a jurisdictional perspective and will not affect a claimant's ability to recover legal costs according to the costs award when it prevails in the arbitration.The costs of third-party funding may be recoverable in certain circumstances.If tribunals continue to follow the principle established in RSM v.Saint Lucia,awards of security for costs in cases involving third-party funders will continue to be rare and limited to situations of historic abuse.There is a growing tendency among tribunals to require disclosure by funded claimants of the existence and identity of third-party funders.However,claimants are unlikely to be commonly required to disclose the terms of any funding agreement except in rare cases when security for costs or reimbursement of third-party funding costs is being considered.