‘Mercantile Adventurers’? The Disclosure of Third-Party Funding in Investment Treaty Arbitration
Forthcoming in Willem van Boom (ed.), Litigation, costs, funding and behaviour – implications for the law (Abingdon: Routledge, 2017)
Grotius Centre Working Paper 2016/059-IEL
22 Pages Posted: 8 Oct 2016
Date Written: October 3, 2016
I will first briefly explain the specificity of investment treaty arbitration, as compared to international commercial arbitration. I will next briefly discuss the concept of third-party funding and its use in investment treaty arbitration. The third section will then analyze the question as to whether or not third-party funding agreements should be disclosed. This analysis will address disclosure, first in relation to the specific features of investment treaty arbitration, notably the rules on transparency of the procedure, secondly the need to maintain the independence and impartiality of arbitrators, which is generally considered to be a fundamental principle of arbitration, and thirdly, in relation to the question whether third-party funding poses any problems in relation to the identification of the ‘real party’ to the dispute. Disclosure will then be discussed in relation to cost allocation and security for costs, in which the following questions will be analyzed: 1) whether disclosure is required, 2) whether the resort to third party funding says anything about the financial situation of one of the parties, and 3) whether or not, in function of that, the mere existence of a third party funding agreement should result in a tribunal ordering security for costs against the funded party, as was proposed by Gavan Griffith in his dissenting opinion in the case RSM Production Corporation v. Saint Lucia.
Keywords: investment law, investment arbitration, third party funding, security for costs
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