Independence and Impartiality: Third-Party Funding in International Investment Arbitration

Abstract

The increasing phenomenon of private funders in international investment arbitration raises legal and ethical concerns which are largely unregulated by the provisions of major arbitral institutions. Given the prohibitively high cost of international investment arbitration, third-party funding permits a certain ‘levelling of the playing field’ between parties to a dispute. Nevertheless, by introducing an additional player to the dispute, third-party funding may adversely affect the arbitral process. This paper explores issues raised by third-party funding in international investment arbitration and highlights the need for a disclosure regime to preserve arbitrators’ impartiality and independence. First, it provides a brief overview of the major concerns associated with third-party funding in international investment arbitration (section 2), with a focus on the implications of third-party funding in preserving the independence and impartiality of investment arbitral tribunals (section 3). Specific implications of third-party funding for investment arbitration, envisaged as a sub-field of public international law, are considered. Finally, a brief overview of recent initiatives aiming to regulate third party funding in investment arbitration is provided (section 4). It is argued that a shift towards a disclosure regime of third-party funding arrangements in international investment arbitration, prompted by concerns of transparency and independence, is discernable.