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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).

Third-party funding:

beyond the traditional model

Noah Rubins

Partner

T +33 1 44 56 29 12

E noah.rubins@freshfields.com

Michael Kotrly

Senior Associate

T +44 20 7427 3443

E michael.kotrly@freshfields.com

7

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