Third-party funding and arbitration
Produced in partnership with Simmons & Simmons
Third-party funding and arbitration

The following Arbitration practice note produced in partnership with Simmons & Simmons provides comprehensive and up to date legal information covering:

  • Third-party funding and arbitration
  • What is third-party funding?
  • How does it work?
  • Evidence of funding in arbitrations
  • International reach/regulation
  • Confidentiality/privilege
  • Disclosure of funding and security for costs
  • Funding and conflicts
  • Champerty, maintenance and control
  • Costs and enforcement

Third-party funding has seen increasing impetus across the globe, in the sphere of both litigation and arbitration.

Third-party funding is nothing new in international arbitration, as it has a longer track record in certain jurisdictions, notably Australia. However, the growth in awareness of funding means it is now being considered more often. While many of the same issues that arise in court proceedings apply equally in an arbitration context, third-party funding in arbitration presents its own discrete challenges.

What is third-party funding?

Third-party funding involves a third-party, normally an investment company or fund, providing initial capital to cover a claimant’s legal costs and expenses in return for the repayment of that capital with a return. The return can be calculated as a percentage proportion of the damages successfully recovered by the claimant, or as a fixed return on either committed capital or the amount drawn down. Often the return is calculated as the greater of these. If the claim is lost, the client will not need to reimburse the funder. Funders will often require parties to take out After the Event (ATE) insurance against an adverse costs order, with the premium for this added to the amount of the funder's advance, though funders may be less concerned about this in arbitration than in litigation (see: Costs and enforcement).

For the third-party funder, its interest in the case is

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