In this article, the author introduces us to the institution of third party funding and its future application in arbitration litigation. Third party funding allows the litigant’s costs can be funded. Moreover, he points out the problems that the third party financing has, and the implementation of rules to deal with this situation. Finally, there is a tendency to expand the duty of disclosure of the parties whether a third party is funding them. / En este artículo, el autor nos introduce a la institución del third party funding y su futura aplicación en los litigios arbitrales. El third party funding permite que los costos del litigante puedan ser financiados. Asimismo, señala los problemas que presenta el tercero financista, y la implementación de normas para afrontar esa situación. Finalmente, hay una tendencia de ampliar el deber de revelación de las partes sobre si se está siendo financiado por un tercero.

This diploma thesis deals with the latest trends in international commercial arbitration. Specifically, it focuses on transparency in international investment arbitration and third-party funding in international commercial arbitration. The objective of this thesis is to provide a comprehensive interpretation of a gradual development of these trends and to also give potential Czech readers an idea about present hot topics in international arbitration coming mostly from foreign sources of bibliography. The thesis is divided into three chapters. The first chapter dedicates itself to defining arbitration in the context of various dispute resolution methods and provides its basic comparison to international arbitration. At the same time, it offers an insight into the advantages and disadvantages of this type of dispute resolution and it discusses the principles of confidentiality and privacy of arbitration proceedings. The second chapter is divided into two main parts. The first one is focused on defining key terms of the specific area of international investment arbitration, including different regimes of treatment of international investments in order to protect them. It also includes a detailed description of the most important sources of international investment law and further discusses ways to...

Magister Legum - LLM (Mercantile and Labour Law) / The decision by countries to relax the common law doctrines of maintenance and champerty to accommodate Third Party Funding (TPF) in dispute resolution has sparked a worldwide debate. The controversial practice of funding disputes in exchange for a share of a successful outcome or settlement has left courts and administering institutions in a compromising position. South Africa joined the debate in 2004 after the Supreme Court of Appeal (SCA) relaxed the application of the doctrines in favour of TPF. The SCA found that domestic courts have the necessary mechanisms to protect themselves against any repercussions of TPF without the assistance of the doctrines. The SCA limited their search to the abilities of the courts and did not consider the effect TPF could have on other dispute resolution processes such as arbitration. This study seeks to discover whether arbitration can protect itself against the repercussions of TPF. It further questions the possibility of adopting regulations to aid in the protection of arbitration should the current mechanisms be insufficient.

Third party funding (TPF) is a method of financing legal proceedings, in which a party not directly connected to the proceedings funds one of the disputing parties, usually in return for a percentage of the final monetary settlement. The interests behind TPF are that the funded party will have the resources to pursue their claim, while the funder will be able to profit from a percentage of the final settlement. Traditionally, within common law-systems, TPF was excluded through application of the common law torts of “Champerty and Maintenance”.[1] However, in the second half of the 20th century, many common law systems[2] abolished the torts of “Champerty and Maintence”.[3]This effectively opened up TPF as a valid litigation option for many resource poor litigants and birthed a niche industry of litigation financiers[4]. There is debate on TPF in general, with some believing that it allows legal recourse to include those that do not have the means to reasonably finance and confront legal wrongs imposed on them.[5]Others state that there is a danger of letting the funder interests supersede the claimant’s, as exemplified by some retaliatory cases[6] proceeding the Chevron v Ecuador arbitration, in which the funders had veto power over such aspects as the choice of attorneys and priority in the disbursement of a monetary award.[7] However, issues with the general system of TPF is not the focus of this thesis. Instead, focus will be on the issues it brings to the system of investment arbitration. While its operation is largely the same as within national jurisdictions, it does have the potential for damage of distinct principles and procedure of investment arbitration.  At first look, TPF seems to complement the system of arbitration as a whole. If one considers that, at its core, arbitration is a user determined dispute settlement system, then questions of funding should be determined by the parties themselves. This may suggest that due to its emphasis on “Party Autonomy”, TPF is more aligned with arbitration than it is with court-based litigation, where the principles of justice and fairness take a more preferential role. Nevertheless, “Party Autonomy” is not the sole principle of arbitration and does not mean that TPF is harmonious with either general arbitration or in particular investment arbitration. There is the general concern that a funder can actively change the process and end result of a dispute. This is seen through their influence over the funded party. As a funder will have a direct economic control over the funded party, they can dictate, as part of the funding agreement, outcomes such as early settlement, litigation strategies etc.[8] The choice of approach, and it is submission to a third party, however, is squarely within party autonomy and does not raise any fundamental concerns. What is concerning is affected parts of process that are out with party autonomy. One can see below that TPF can affect general trends and principles of arbitration, i.e. transparency and confidentiality , while also conflicting with core aspects of procedure such as jurisdiction and impartiality. This concern has given way to calls for regulation of TPF within the academic and global community. What was traditionally a “legal no mans land”[9] for investment arbitration, with little regard given to regulation, has now had extensive academic commentary and State reactions to regulating TPF. Yet, comprehensive regulation of TPF remains rare and piecemeal within the arbitral world. The majority of jurisdictions and arbitral institutions, while aware of the issues, have made no serious effort to remedy through regulation. That being said, there has been some work done in three distinct areas of regulation: (i) National laws (ii) Trade/Investment Treaties and (iii) Arbitral Rules. Each area’s success however can be described as mixed.   Therefore, the topic of this thesis is to first explore the potential issues of TPF and investment arbitration and then to examine and analysis the response to these issues through regulation. [1] Steyn LJ, in Giles v Thompson [1993] 3 All ER 321 at 328, explained the doctrines thusly: “In modern idiom maintenance is the support of litigation by a stranger without just cause. Champerty is an aggravated form of maintenance. The distinguishing feature of champerty is the support of litigation by a stranger in return for a share of the proceeds.” [2] In Civil law systems, unless TPF was not expressly excluded,  was mostly allowed. [3] For example see s.14(2), Criminal Law Act 1967 (England and Wales) or Maintenance, Champerty and Barratry Abolition Act 1993 (NSW, Australia) [4] There is now several prominent litigation financing companies such as: Burford Capital Ltd., Harbour Litigation Funding, IMF Bentham and Longford Capital. For a more in-depth review of the industry in general see Hancok, B, ‘Who Rules the World of Litigation Funding? ’March 30, 2017 , The American Lawyer. [5]Chen AD (2013), 'A Market For Justice: A First Empirical Look At Third Party Litigation Funding', at 1075 [6] Chevron Corp. v. Donziger, 800 F. Supp. 2d 484 (S.D.N.Y. 2011) [7] U.S. Chamber Institute for Legal Reform (2018), “Third Party Litigation Funding” [8] Shaw G (2017), ‘Third-party funding in investment arbitration: how non-disclosure can cause harm for the sake of profit’, at 12 [9]  Van Boom WH (2011), ‘Third-Party Financing in International Investment Arbitration’, at 5

Third-party funding (TPF) has grown to be a popular phenomenon in the past two decades with a large global market (billions of USD). This success came with new complications regarding conflicts of interest that threaten the impartiality and independence of arbitrators who may have common-interests with funders. Disclosure of funding has been proposed as a solution and ordered in many cases. However, it was not always approached in systematic ways. Similar TPF cases may have inconsistent decisions. The thesis tackles disclosure in arbitrations to arrive to conclusions on whether it is needed, if all funding-information should be disclosed, and if legal-bases grant tribunals the powers to order such disclosures.  Disclosure opponents raise several objections, which are discussed in the thesis. One objection touches upon the root of many problems namely, TPF definitions. Opponents argue that available-definitions do not circumscribe many funding-models i.e., they are biased against an array of investors that should not be considered as funders. Due to the muddy waters that tribunals have been walking to decide issues on TPF-disclosure, there are inclinations to regulate disclosure. Lately, two national-legislations that include disclosure-regulations have been enforced in Hong Kong and Singapore. Few arbitral-institutions have addressed TPF disclosure (inter alia 2021 ICC Arbitration Rules). In jurisdictions and institutions without such regulations and rules, the soft-law IBA-Guidelines on Conflicts of Interest in International Arbitration have been used but with different interpretations depending on arbitrators’ views and case-circumstances. The respective definitions do not address modern economic-realities in secondary-markets of claims. This causes dilemmas in deciding if investors in such markets are considered as funders per se. The thesis assesses TPF-disclosure in international commercial arbitration and analyses its applications in primary and secondary markets. The aim is to draw the attention to disclosure challenges in both markets, propound recommendations, and show that solving such challenges calls for: (i) revising existent-definitions to accommodate evolving funding-models, (ii) differentiating between disclosure-requirements in primary and secondary markets, and (iii) regulating TPF of arbitrations. One result is a proposed definition for ‘TPF of arbitration’ that encompasses unattended issues in existent-definitions. Other results show the need for mandatory-disclosure of funders’ identities (leaving funding-arrangements to tribunals on a case-by-case basis). Such results help to strike a balance between avoiding conflicts of interests and funders’ non-disclosure interests i.e., balancing between TPF transparency and confidentiality.

In recent years, international literature and debate has acknowledged the fact that increasingly third party funders, partially or fully, finance a party’s arbitration costs. This essay examines whether a party whom is financed by a third party funder could be seen as having incurred costs and if so, to what extent these costs should be reimbursed by the losing party. This essay also examines if a third party funder in Sweden may be responsible for arbitration costs and if so, on what possible grounds. The essay analyzes the new dilemma of so-called ”hit and run”- arbitration and the relevant principles and interests of its discussion as a way to find a satisfying solution to the complex situation. By examining these matters, the essay uses a traditional dogmatic legal method in order to clarify applicable law and practice. The prevailing consensus amongst practitioners as well as academics, is that how a party chooses to finance its’ arbitral costs should not affect the tribunal’s allocation of costs. The mere existence of a third party funder does not automatically give rise to an exception from chapter 18 of the Swedish Code of Judicial Procedure. Instead, costs should be allocated based on the parties’ conduct of the arbitral proceedings. Article 8 in chapter 18 of the Swedish Code of Judicial Proceedings provides minimal guidance as to whether a party should be considered to have had costs when a third party funder has paid the costs. Instead, from international case law and doctrine its possible to draw the conclusion that a funder whom has a right to be reimbursed for its investment by the financed party is sufficient for the party to be considered to have had costs. However, the reimbursement for the investment to the funder is not a reimbursable cost for the financed party. In the situation that a funded impecunious party loses the arbitral proceedings, the financed party may have no economic possibility to reimburse the counter party. Neither are there explicit provisions that allows for an arbitral tribunal to issue a costs order against a third party funder since the funder is not a party to the arbitration. However, based on case law (NJA 2014 p 877), a third party funder could be responsible for a non funded counter party’s arbitral costs in a subsequent court proceeding (a claim for compensation from the funder). One of the circumstances needed in order for that subsequent responsibility to kick in is that the main purpose of financing the party must have been to avoid the Swedish Code of Judicial Proceedings’ provisions on allocation of costs. The English equivalent is often referred to as alter ego or veil piercing.

Third-Party funding refers to a financing arrangement in which a non-party entityprovides financial resources to a disputing party in return for some benefits whichis usually dependent on the outcome of the dispute before the court or tribunal.These benefits could be for pecuniary profits or for the achievement of somepolicy objectives.Whilst this funding model has been commended for promoting access to justice, ithas also been criticized for the possibility of it leading to the filing ofunmeritorious claims, its inherent conflict with the common law tort of champertyand maintenance, the disclosure of privileged information and its impact on theimplied or express duty of confidentiality owed by the parties in arbitration.This research seeks to examine the effect of the disclosure of privilegedinformation by the party seeking funding to the potential funder before or duringArbitration with a view to determining whether the said disclosure constitutes awaiver of litigation privileges or can the third-party funder be deemed to share acommon interest with the funded party? This research will be viewed from thelens of the domestic law operational in England and Wales and Nigeria in acomparative analytical fashion with a view to determining what lessons could belearnt by the developing jurisdiction.This study also makes a brief review of extant legal regime on Third-Partyfunding in both jurisdictions on the adequacy of the provisions on disclosure witha view to providing some safeguards towards promoting the third-party fundingpractice, balance competing interests amongst the parties, promote investorconfidence as well as enhance the growth of foreign direct investment in spite ofthe various existing criticisms against the third-party litigation financing model.

Le financement de l’arbitrage international par les tiers constitue aujourd’hui une solution d’accès à cette justice privée, largement plébiscitée et privilégiée par les opérateurs économiques. Ce mécanisme offre à des acteurs variés la possibilité de transférer les coûts et les risques induits par la procédure dont ils sont partis vers un tiers. En contrepartie, ce tiers perçoit un pourcentage des sommes allouées à son client par la sentence. Cette relation, guidée par une communauté d’intérêts tournée vers le succès de l’arbitrage, se concrétise par le contrat de financement. Ce dernier, d’apparence sui generis, se caractérise par un objet spécifique, le financement d’un arbitrage international et par ses effets singuliers. Il est relatif à un procès mais se trouve, de par son objet, dépourvu d’effet relatif. Ainsi, le contrat emporte des conséquences, à la fois, sur les acteurs du procès arbitral, pour lequel le financeur n’est pas partie, et sur la procédure elle-même, son déroulement et son issue. Cette étude permet d'entrevoir une frontière poreuse séparant traditionnellement les notions de partie et de tiers à un contrat et à un arbitrage, invitant alors à réfléchir sur l’opportunité d’une réglementation de la pratique / Today third-party funding in international arbitration is definitely the number one solution for economic operators to access this private justice. This process allows various players to transfer the costs and the risks incurred by the proceedings to a third party. In return, the latter is granted a percentage of the sums allocated to their client by the arbitral award. This relationship resting on a community of interests and geared towards a successful arbitration takes on a concrete form with the litigation finance agreement. This seemingly sui generis agreement is characterized by a specific object that is the financing of international arbitration, and by its specific effects. It is relative to a lawsuit and yet deprived of privity by its very object. Therefore, the contract carries consequences on both the players of the arbitration proceedings for which the financer is not a party, and on the whole of the procedure and its outcome. The present study examines how the border that traditionally separates the concepts of party and third party becomes porous thus questioning the relevance of a regulation of the practice

Recourir à l’assistance financière d’un tiers pour faire valoir un droit est connu depuis belle lurette. Avant son approbation progressive, ce financement a d’abord été décrié, car il était assimilé à une aide intéressée. En arbitrage commercial international, le financement des procédures par un tiers est actuellement courant. Par son entremise, une partie en litige peut ester en justice en n’étant plus dans l’obligation d’acquitter directement les frais d’arbitrage. Cette dernière a l’option de faire appel à un tiers financeur. Toutefois, ni le droit domestique ni le droit international ne peuvent offrir une règlementation complète de la pratique. Son encadrement est souvent laissé sous la responsabilité contractuelle des parties. Chaque juridiction possède sa propre approche et perception du financement par un tiers. Un régime international de la lex mercatoria apparait à ce niveau et normalise progressivement le financement.   En effet, la lex mercatoria possède les caractéristiques d’un régime international selon la théorie des régimes. Autrement dit, la lex mercatoria forme un régime international dans lequel un ensemble de régularisation (principes, normes, règles et procédures de prise de décision, implicites ou explicites) est institutionnalisé par les acteurs impliqués dans l’arbitrage commercial international pour répondre à un besoin qui est l’encadrement du financement par un tiers. Ainsi, l’émergence de cette lex mercatoria dans le financement est incontournable. Elle s’explique parfaitement par l’influence de la mondialisation sur l’arbitrage commercial international qui vient compléter le droit national lacunaire par une coopération axée sur l’uniformisation du soutien financier du bailleur d’arbitrage. / Third party funding is not a new topic. At the beginning, it was felt as a vicious way to provide a funder an abusive interest. This is the reason why it was first condemned and rejected. Although this might be true, the perception has changed. It is now approved and frequently used in international trade. The Funder is, de facto, considered as the help that gives access to arbitration regardless the financial abilities of the opponents in international commercial litigation. Regulating third party funding is concretely under the responsibilities of the funder and the funded parts. Each State has its own intervention style even though common ground can be noticed. The real difficulty is that in arbitration, thirdparty funding cannot be regulated exclusively by national nor international conventional rules. At this point, lex mercatoria appears to be an alternative manner to establish a homogeneous model. As an international regime, lex mercatoria is the most relevant regulation that leads to this practical normalization. According to regime theory, lex mercatoria and international regime reveal exactly the same structure. As far as lex mercatoria is concerned, it shapes an international regime composed by a set of implicit or explicit regulations (principles, norms, rules and decisionmaking procedures). Around those regulations, all international actors involved in international commercial arbitration contribute to the development of a general and nonstate guideline that frames the practice of third-party funding. All things considered, the rise of lex mercatoria is obvious in the field of third-party funding. Globalization process is well able to explain this appearance of an international regime of lex mercatoria since multilateral cooperation emerges to standardize third-party funding in international commercial arbitration.

Fruit de la globalisation économique et financière, la rencontre entre l’arbitrage international et la finance était inéluctable. Plusieurs facteurs expliquent ce phénomène : l’accroissement des échanges commerciaux et des investissements transnationaux, le choix des opérateurs du commerce international pour l’arbitrage lorsqu’il s’agit de régler leurs différends malgré le coût élevé des procédures d’arbitrage, enfin les nouvelles approches adoptées par les entreprises transnationales en matière de gouvernance et de gestion du risque. Le financement de procès par un tiers dans l’arbitrage international est protéiforme. Il implique différents acteurs comme les avocats, les assureurs mais ce sont les tiers-financeurs avec le concept du « Third-Party Funding », qui cristallisent notre attention pour cette étude. Le Third-Party Funding offre plusieurs options avec un schéma classique : le financement d’un procès mais aujourd’hui, nous assistons à un schéma beaucoup plus élaboré avec le financement de portefeuilles d’arbitrages « Portfolio Funding » qui a la préférence des tiers-financeurs. Aussi, dans un premier temps, il semblait essentiel d’analyser le financement de procès par un tiers dont le Third-Party Funding pour en comprendre les fondements, les mécanismes. Si le financement Third-Party Funding présente des atouts indéniables pour comme l’accès à la justice, il soulève aussi des problématiques en raison de la spécificité de l’arbitrage. Le tiers-financeur n’étant pas partie à l’arbitrage, sa participation a un réel impact sur la procédure et soulève des questions dont les principales touchent à la constitution du tribunal arbitral et au déroulement de la procédure arbitrale. Dès lors, il s’agit de savoir comment maîtriser cet impact sur la procédure d’arbitrage, comment la sécuriser, la pratique du Third-Party Funding n’étant pas réglementée. Les règles étatiques apportant des réponses laconiques, les règles informelles plus flexibles, sont plus à même à offrir un encadrement adapté à une activité résolument transnationale et globale. Certes, il existe bien une autorégulation des tiers-financeurs avec des codes de conduite mais insuffisante pour répondre aux spécificités de l’arbitrage. Les acteurs de l’arbitrage ont donc un rôle à jouer dans la proposition d’une réglementation tout comme les arbitres qui ont ainsi favorisé le développement d’une jurisprudence arbitrale principalement CIRDI. Les institutions arbitrales devraient s’inspirer des principes de base comme l’éthique et la transparence pour mettre en place de nouvelles règles intégrant le financement Third-Party Funding dans leurs Règlements d’arbitrage (comme l’ont fait le SIAC à Singapour, le Centre d’arbitrage et de médiation de la Chambre de commerce Brésil-Canada (CAM-CCB). Enfin, les règles de compliance viendraient compléter cette réglementation appropriée avec les Autorités de régulation financière. La réglementation est de toute évidence l’enjeu majeur dans les années à venir pour voir un financement Third-Party Funding éthique, transparent, efficient et concourant pleinement à l’efficacité de l’arbitrage international. / Being the result of economic and financial globalization, the meeting between international arbitration and finance was inevitable. Several factors explain this phenomenon: the increase of transnational trade and investment, the choice of international trade operators in favor of arbitration, despite the high cost of arbitration procedures, when they must solve disputes and new approaches adopted by transnational corporations in governance and risk management. Third-party funding in international arbitration proceedings is multifaceted. It involves different stakeholders such as lawyers, insurers but it is the third-party funders, with the concept of “Third-Party Funding”, which will be the focus of our attention for this study. It offers several options with a classic scheme, which is the financing of a trial but nowadays we witness a much more elaborate scheme with the financing of portfolios of arbitration i.e. “Portfolio funding”, which is favored by funders. Therefore, it seemed essential to analyze the funding of trials including the Third-Party Funding to understand the foundations, the mechanisms. While Third-Party Funding has undeniable strengths such as access to justice, it also raises problems because of the specificity of arbitration. Since the third party is not a party to the arbitration, its participation has a real impact on the procedure and raises questions, the main ones being the constitution of the arbitral tribunal and the conduct of the arbitration proceedings.It is therefore a question of knowing how to control this impact on the arbitration proceedings, how to secure it, since the Third-Party Funding practice is not regulated. State rules providing laconic answers, so more flexible informal rules are better able to offer a framework adapted to a resolutely transnational and global activity. There is, of course, a self-regulation of third-party funders with codes of conduct but insufficient to meet the specificities of arbitration. The actors of the arbitral community therefore have a role to play in the proposal of a regulation just like the arbitrators, who have thus favored the development of an arbitration jurisprudence mainly ICSID. Arbitral institutions should use basic principles such as ethics and transparency to implement new rules integrating Third-Party Funding into their Arbitration Rules (as did the SIAC in Singapore, the Center for Arbitration and Mediation of the Chamber of Commerce Brazil-Canada, CAM/CCBC. Finally, the compliance rules would complement this appropriate regulation with the financial regulatory authorities. Regulation is clearly the major issue in the coming years to see ethical, transparent, efficient Third-Party Funding that fully contributes to the effectiveness of international arbitration.