Third-Party Funding in International Commercial Arbitration and Arbitrator Conflict of Interest

Abstract

Third-party funding in international commercial arbitration is one of the most current and controversial issues in international arbitration. Third-party funding is the system whereby a third-party funder finances, partly or fully, one of the parties' arbitration costs. In case of a favourable award, the third-party funder is generally remunerated by a previously agreed percentage of the amount of the award. In case of an unfavourable award, the funder's investment is lost. One of the numerous issues raised by the involvement of third-party funders in international commercial arbitration proceedings is arbitrator conflict of interest due to nondisclosure of the involvement of the third-party funder in the process. In this article, we first explain the concept of 'third-party funding in international commercial arbitration.' Then we examine arbitrator conflict of interest implicating third-party funders. Finally, we discuss the need to create an obligation to disclose the involvement of third-party funders in arbitral proceedings as a predicate for arbitrator conflict of interest.