Disclosure and Conflicts of Interest in Relation to Third-Party Funding

Abstract

Third-party funding does not raise issues of legality: it is generally admitted by tribunals without their disputing its inherent legitimacy. Rather, what causes concern is the lack of transparency vis-à-vis the non-funded parties and tribunals. The threshold issue is, thus, disclosure of third-party funding and the timing and extent of such disclosure. At the outset, the non-funded party has the right to know whether its opponent is in receipt of third-party funding, who the funder is, what the funder’s role and interest in the case are, and whether the funder has purchased the claim, reducing the nominal claimant to a mere front man. The arbitrators, in turn, need to know whether the involvement of the funder raises any conflicts of interest for them. This is not to say that third-party funding should be banned, but there needs to be some rebalancing through the implementation of a procedure allowing for appropriate disclosure.This article addresses the way in which parties, tribunals, arbitral institutions, investment treaties, and international soft law rules have been and still are refining rules of conduct so as to fairly protect the parties’ divergent interests, while safeguarding the transparency and integrity of the process.