In our 2017 briefing, we discussed the continued move of third-party funding of
international arbitration into the mainstream. This trend continues and is expected
to accelerate in 2018.
Third-party funding in the arbitration space
continues to broaden its global footprint. It is now
permitted in the arbitration hubs Singapore and
Hong Kong. Similarly, while funders have been
aware of the potential of emerging economies as
funding markets for a number of years, we are
now seeing tie-ups emerge between international
funders and local counterparts in emerging
economies, such as the 2017 co-operation agreement
between London-based funder Woodsford Litigation
Funding and Brazil-based funder Leste. It is not
clear that the emergence of local market practices
for funding will necessarily follow, however.
Many of the principal funders maintain an
international portfolio of cases and are often
anchored in more 'traditional' jurisdictions
(ie the US and the UK).
The range of funding arrangements on offer is also
expanding. For example, as an alternative to or in
combination with third-party funding, clients have
access to a multitude of bespoke insurance options.
Furthermore, some funders are also beginning
to propose financial support on a portfolio basis,
where funding is provided for - and the funder's
investment is secured against - multiple disputes
involving the same company (or law firm), rather
than a single dispute. This would expand the scope
of cases that could receive third-party funding,
as a portfolio can include cases where a favourable
result will not involve payment of money, such as
those where the funded party is defending a claim.
Despite this continued movement in the
mainstream, third-party funding arrangements in
international arbitration are still highly bespoke
and heavily negotiated, even among the most
frequent users. We can also anticipate seeing
additional debates (and disputes) regarding the
obligation to disclose the identity of a third-party
funder to the arbitral tribunal, and the impact
of third-party funding on costs orders (including
security for costs).
beyond the traditional model
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