Third-Party Funding In International Arbitration

Introduction: Third-Party funding is the process wherein a third-party party, who is otherwise unconnected with the proceeding, funds the proceedings in a dispute for a party in return for certain financial gain, which can be in the form of the share of damages awarded in the case or settlement reached between the parties.¹ These third-parties can engage with such funding in various forms, such as through insurance companies, investment banks, hedge funds, specialist third-party funders and even law firms.² While International Arbitration has its merits as a mode of settling disputes in cross-border transactions, it can be extremely expensive for the parties. Therefore, if third-party funding can be effectively and properly used in the context of transactions, it can benefit by increasing the access to justice for parties and have the effect of putting parties on a level playing field in the dispute resolution process. However, several issues crop up when discussing