Ethical implications of third-party funding in international arbitration

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This article describes the phenomenon of third-party funding with a particular focus on its impact on the arbitral proceedings. After a general description of what third-party funding is and how it works, the article examines the possible implications that third-party funding may have on both the attorney–client relationship and the independence and impartiality of the arbitral tribunal. Since the involvement of a third-party funder may create different situations of conflict of interest for the arbitrators, which in turn may affect the entire arbitral proceedings and the final award, the article suggests that the disclosure of the existence of a third-party funder in arbitration is an essential step to safeguard the fairness and transparency of the arbitral process. A comparison of the advantages and disadvantages of such disclosure is offered, together with a proposal on how such duty to disclose should be articulated. The article concludes with an overview of the current status of the regulation of third-party funding in international arbitration, and with some thoughts about the desirability of a more accurate regulation of this important and constantly increasing phenomenon.