Confidentiality and Conflicts of Interest in Third-Party Funded Arbitration

Abstract

Third-party funding (hereinafter referred to as TPF) is on a central stage in the international commercial and investment arbitration market. It is an increasing phenomenon due to the high costs of the arbitration proceedings. TPF is a method of financing, which can reduce or eliminate the risk associated with a potentially unfavorable outcome of the proceedings. It also promotes access to justice by giving the parties an opportunity to be part of the game and win a good case. But, along with its attractive essence, TPF has troublesome aspects which need to be specified and discussed. This paper provides an overview of the problematic aspects of the TPF such as conflicts of interests and the relations between the confidentiality and disclosure requirement during the arbitration proceedings. By discussion of many interrelated aspects, it will be examined how disclosure of the TPF can prevent future complications and conflicts of interest between the participants of the proceedings. The paper is divided into three chapters. The first chapter gives a general overview of the TPF and its contractual basis. The chapter gives a short explanation of the Funding Agreement and also, emphasizes the importance of the TPF in relation to the access to justice. Herewith, it is briefly discussed the case where TPF is excluded according to the arbitration agreement and its possible consecutive outcome.