Le financement par les tiers des procedures d’arbitrage international, une vue d’Europe Seconde partie: le debat juridique (Third Party Funding of International Arbitration Proceedings - A view from Europe Part II: The Legal Debate)

International Business Law Journal (2012) 649

Queen Mary School of Law Legal Studies Research Paper No. 160/2013

19 Pages Posted: 15 Nov 2013 Last revised: 17 Dec 2013

See all articles by Prof Maxi Scherer

Prof Maxi Scherer

Queen Mary, University of London, Centre for Commercial Law Studies

Aren Goldsmith

Cleary Gottlieb Steen & Hamilton LLP

Camille Fléchet

Allen & Overy LLP

Date Written: 2012

Abstract

Third party funding has become one of the ‘‘hot topics’’ in international arbitration. More and more parties, whether in financial distress or not, explore the possibility of using funders to provide the necessary cash to pay for their lawsuit, allowing the funder to realise in return a percentage of the proceeds of the case (or multiple of costs financed), if successful. Third party funding thus shows similarities to certain forms of insurance contracts (where the insurer pays for the costs of the lawsuit, including, in certain cases, for the opposing party’s costs) and contingency fee arrangements (where the lawyer carries the costs of litigation in exchange for an interest in the proceeds of the case). The exact definition of third party funding, however, remains elusive and its legal and ethical implications in international arbitration, mostly unexplored.

This paper is the second part of a study that was carried out in the form of two roundtable discussions on the topic of third party funding in international arbitration proceedings. The first paper was published earlier in 2012 and focused on existing funding practices. This second paper is based on a follow-up roundtable during which international arbitration experts -- including university professors, arbitrators and attorneys -- from various jurisdiction discussed the emergence of third party funding of international arbitration proceedings, with a particular focus on the legal and ethical issues raised by this practice.

Note: Downloadable document is in French and English.

Keywords: Third-party funding, international arbitration, Champerty, maintenance, disclosure of funding agreement, regulation of third party funding, self-regulation of third party funding, legal ethics, arbitration costs, security for costs, confidentiality, discovery

Suggested Citation

Scherer, Maxi and Goldsmith, Aren and Fléchet, Camille, Le financement par les tiers des procedures d’arbitrage international, une vue d’Europe Seconde partie: le debat juridique (Third Party Funding of International Arbitration Proceedings - A view from Europe Part II: The Legal Debate) (2012). International Business Law Journal (2012) 649 , Queen Mary School of Law Legal Studies Research Paper No. 160/2013, Available at SSRN: https://ssrn.com/abstract=2348744

Maxi Scherer (Contact Author)

Queen Mary, University of London, Centre for Commercial Law Studies ( email )

67-69 Lincoln's Inn Fields
London, WC2A 3JB
United Kingdom

Aren Goldsmith

Cleary Gottlieb Steen & Hamilton LLP ( email )

12, rue de Tilsitt
Paris, 75008
France

Camille Fléchet

Allen & Overy LLP ( email )

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