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.
| Identifer | oai:union.ndltd.org:UPSALLA1/oai:DiVA.org:su-182348 |
| Date | January 2020 |
| Creators | Bark, Karoline |
| Publisher | Stockholms universitet, Juridiska institutionen |
| Source Sets | DiVA Archive at Upsalla University |
| Language | Swedish |
| Detected Language | English |
| Type | Student thesis, info:eu-repo/semantics/bachelorThesis, text |
| Format | application/pdf |
| Rights | info:eu-repo/semantics/openAccess |
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