Third-Party Funding in International Arbitration: Ownership of the Claim, Consequences for Costs Orders, and Regulation

Abstract

Abstract The increasing use of third-party funding in international arbitration has given rise to a myriad of challenges. Many of these remain unaddressed. Even though some jurisdictions have sought to regulate the sphere of third-party funding in international arbitration, it remains largely unregulated. The result is that a third-party funder is not held accountable. This article examines the issue of ownership of a funded international arbitration claim, and the consequences of that finding on an arbitral tribunal’s ability to impose costs order on a funder. The objective is to ensure that a funder is playing a role in the arbitral process merely to facilitate access to justice, and nothing more. The examination in this article comprises a review of case law, primarily of English courts, in the context of litigation funding, and then determining whether it is possible to transpose the learnings therefrom to the arbitration context. A brief discussion on the applicability of the doctrine of res judicata, in the context of the issues raised in this article, is undertaken. Finally, the article also considers the best way to regulate the specific question of imposing costs on a third-party funder in international arbitration.