Third-Party Funding in International Arbitration
With London continuing to wrestle with uncertainty over
third-party litigation funding following the UK Supreme
Court's decision in PACCAR, and New York
seeking to relax restrictions over litigation funding deals,
funding arbitrations in London and New York—the world's
biggest litigation funding centers and two of the most commonly
used arbitration seats—is at an inflection point.
In July 2023, the UK Supreme Court delivered its decision
in PACCAR, holding that litigation funding
agreements, which entitle funders to payment based on a percentage
of the amount of damages recovered, are subject to contingency-fee
agreement regulations (known in the UK as “damages-based
agreements” or “DBAs”), causing wide-ranging
uncertainty over the enforceability of existing funding agreements.
The UK Supreme Court acknowledged that “the implications of
the issue [were] significant” because “the likely
consequence in practice would
