Third-Party Funding in International Commercial Arbitration

Abstract

ABSTRACT This thesis explores the complexities surrounding third-party funding (‘TPF’) in international commercial arbitration, comprehensively examining the relevant ethical and legal challenges. The research addresses how TPF has evolved from the shadowy confines of maintenance and champerty into a more accepted method to access justice. It investigates various funding mechanisms and identifies ethical issues and procedural flaws in TPF. Chapter One lays the groundwork for the thesis by outlining the research questions, key issues and scope. It critically reviews the existing literature on TPF, identifying significant gaps and highlighting the contributions of this research. The chapter concludes with a detailed description of the methodologies employed, including doctrinal, theoretical, comparative, and reform-oriented approaches, demonstrating how they collectively support a thorough investigation of the topic. Chapter Two explains the nature of TPF and examines its history and theoretical foundations, including tracing its roots within ancient societies, considering the impediments of the doctrines of maintenance and champerty and noting the modern appeal of TPF as vehicle for delivering economic access to justice. This chapter examines the conceptual basis of TPF and its mechanisms and structures. It outlines the complexities of defining TPF and advocates for a comprehensive definition focusing on funding activities rather than individual stakeholders. Chapters Three and Four adopt a doctrinal and comparative approach, examining the evolution and regulation of TPF in common law jurisdictions, namely, England and Wales and Australia, as well as civil law jurisdictions, namely, Germany and the Netherlands. The research highlights disparities between these systems, identifies regulatory gaps and proposes strategies to mitigate potential risks. Chapter Five explores where TPF overlaps with international commercial arbitration. It begins with an overview of the applicable laws and rules, explaining how they govern arbitration. The chapter then contrasts arbitration with litigation, highlighting the unique aspects of TPF in arbitration. It discusses how TPF fits within the arbitration context and examines its implications, emphasising the distinctions and specific considerations relevant to TPF in arbitration. iv Chapter Six delves into the practical implications of TPF in international commercial arbitration, examining the ethical and procedural issues. This chapter examines current international commercial practice concerning maintenance and champerty in arbitration, conflicts of interest, jurisdictional and admissibility considerations, confidentiality, disclosure and costs. It then provides proposals on how to address these issues. This thesis asserts that while TPF offers opportunities to enhance efficiency and accessibility in arbitration, proper regulation is crucial to prevent abuse and ensure fairness for all parties involved. The overarching theme of this thesis is the balancing act required in regulating TPF. While it provides a pathway for parties to gain economic access justice, its profit-driven nature necessitates careful oversight to prevent abuse. This preface introduces the research’s core structure and sets the stage for further discussion on how TPF can coexist with the traditional framework of international commercial arbitration without compromising its integrity. By proposing a balanced approach to TPF regulation, this thesis aims to guide stakeholders toward a more ethical and consistent arbitration environment.