Disclosing Dollars, Third-Party Funding In Arbitration

As funding activity becomes more and more widespread in both arbitration and litigation, various jurisdictions and arbitral institutions are introducing regulations to address the risks posed by this evolving practice. The use of third-party funding (TPF) in private arbitration, where arbitrators are party-appointed, has given rise to a series of ethical and procedural dilemmas. These challenges include conflicts of interest, the undue influence of funders on arbitration strategies, and the transparency of funding arrangements.

Risks and challenges

While TPF plays a vital role as an alternative for financing costly arbitration proceedings, it also introduces risks and challenges that have sparked considerable global debate.¹ A primary concern centers on the involvement of a founder, which can create conflicts of interest for arbitrators and potentially undermine the efficiency and integrity of the arbitration process. Arbitrator's independence and