Third-Party Funding In Investor-State Arbitrations: "A Common Practice" That Is "Relatively Widespread"

Authored by Jeffery Commission Senior Counsel, Vannin Capital

Third-party funding has become "a common practice" in investor-state arbitration. That is how the ICSID tribunal in EuroGas Inc. and Belmont Resources Inc. v. Slovak Republic – comprised of Pierre Mayer, Emmanuel Gaillard and Brigitte Stern – described the frequency of third-party financing in ICSID arbitrations in June 2015. Users of investor-state arbitration confirm as much. The use of third-party funding was reported as "relatively widespread" by 39% of respondents in the 2015 Queen Mary University in London and White & Case survey saying they encountered third-party funding in practice. An even higher percentage of respondents (49%) reported having used a particular form of third-party funding – conditional fee agreements in the form of discounted hourly rates with either a success fee calculated as a percentage of damages or by reference to counsel's hourly fees – in the 2013 Queen Mary and