Third-Party Funding in Commercial Arbitration in ASEAN: Dealing with Conflicts of Interest

Abstract

Third-party funding as an arrangement where an entity, who is not already a party to the dispute, provides funds or other material support to a disputing party to further their claim or defense. Besides the benefits third-party funding brings, such as increasing access to justice, many experts are concerned about the serious risks that this mechanism can cause, one of which is conflicts of interest. In ordinary cases, conflicts of interest are mostly anticipated to happen between arbitrators and disputing parties. The more types of funders get introduced and the more relationships are made, the more grounds for conflicts to arise. If a conflict is discovered late, the arbitration procedure may get extended to appoint a new arbitrator, or the validity of an existing award may be challenged, wasting time and resources in the process.

Third-party funding has become increasingly popular worldwide and attracts the attention of the legal community. Even though many literature works have focused on this topic, few mention the applicability of such regulations in ASEAN or its members. In order to enrich the existing discussion on third-party funding in commercial arbitration, the paper examines conflicts of interest in third-party funding and suggests how to mitigate the risks. The paper proceeds as follows. After giving an overview of ASEAN and third-party funding, the authors then analyze possible legal issues concerning conflicts of interest in third-party funding agreement and suggests how to minimize the risks using different measures. Hopefully, this paper will become a stepping stone to a more intensive regulation in ASEAN on third-party funding, making third-party funding more relevant and helping people gain access to justice in the future.

Keywords: third-party funding, ASEAN, commercial arbitration, conflicts of interest, control