Disclosure of Third-Party Funding in Commercial Arbitration

Abstract

Third-party funding used to be an unknown phenomenon to the
majority of arbitration scholars and practitioners but, over the past decade,
the phenomenon has entered the arbitration scene and become subject to
significant attention. Today, arbitral proceedings may involve
sophisticated funding arrangements. Such arrangements may promote
access to arbitration and entail other advantages, but when they remain
unknown to the arbitrators and the funded party’s opponents, they may
give rise to a series of practical issues concerning, inter alia, costs and
conflicts of interest. When a party has raised funding from a third-party
funder, the arbitrators and opponents need to know about it. A series of
practitioners and academics have contributed to the general field of thirdparty
funding in arbitration. They have examined the prevalence of the
phenomenon and identified the issues associated with it. However, only a
few have provided practical and operational solutions to these issues. The
article explains how to solve the issues by way of disclosure. It examines
the consequences of compelling a funded party to disclose its funding
arrangements, and it examines how to adopt and construct a duty of
disclosure in the most feasible manner. The article thereby contributes to
the development of legal and institutional tools to tackle the issues
associated with third-party funding in arbitration.