Third-Party Funding in International Arbitration

The demand for third-party funding – a financing method in which an entity that is not a party to a particular dispute funds another party’s legal fees or pays an order, award, or judgment rendered against that party, or both – has grown exponentially in both the litigation and the international arbitration communities.

Although it has drawn significant attention in the litigation context, many prospective parties to arbitration do not fully understand what third-party funding entails or what legal parameters exist. This welcome book, expertly revealing the nuances of third-party funding in international arbitration, examines the phenomenon in key jurisdictions around the world and provides a reliable resource for users and potential users that may wish to tap into and make use of this distinctive funding tool.

The authors analyse and assess the legal regime in a variety of countries based upon legislation, judicial opinions, ethics opinions, and practitioner anecdotes describing the state of third-party funding in that jurisdiction. They describe how courts and legislative bodies around the world have thus far handled the major ethical issues and concerns that affect the practice of third-party funding. Among the issues raised and examined are the following:

• payment of adverse costs;
• “before-the-event” (BTE) and “after-the-event” (ATE) insurance;
• attorney financing, including contingency representation and conditional fee arrangements;
• loans;
• ethical doctrines influential to the continued existence and viability of the third-party funding industry;
• possible waivers of attorney work-product doctrine or attorney-client privilege;
• potential encouragement of non-meritorious claims;
• possible future bundling, securitization, and trading of legal claims;
• risk that the funder may put its own interests ahead of the client’s interests; and
• whether the existence of a funding agreement must or should be disclosed to the decision-maker

The book concludes with observations regarding third-party funding in international investment arbitration and predictions regarding the future of the third-party funding industry worldwide. Focusing on the key jurisdictions that have well-developed third-party funding markets – Australia, Germany, The United Kingdom, the United States, the Netherlands, Canada, and South Africa – and regional overviews for Europe, Asia, the Middle East, Africa, and South America, this book ably creates a reference source for parties aiming to take advantage of the high values, speed, reduced evidentiary costs, outcome predictability, industry expertise, and high award enforceability characteristic of the third-party funding arrangements available in international arbitration.