The first and arguably still most important question that arose when Third-Party Funding (TPF) arrived in international arbitration is whether the presence of a funder should be disclosed so that arbitrators can make appropriate inquiries and disclosures to avoid any potential conflicts of interest. At that time, some commentators—most notably some of the most prominent funders—initially doubted the very possibility of potential conflicts of interest between funders and arbitrators. These arguments were made forcefully, though ultimately unsuccessfully. Today, rules and guidelines requiring disclosure have been promulgated by several arbitral institutions, international organizations, and a few States, either through domestic legislation or in investment treaties. Despite these efforts and a general consensus in favor of disclosure, ambiguity remains about whether such disclosure is mandatory. It is also uncertain whether prevailing rules and best practices are uniformly understood or followed. This chapter provides a basic overview and analysis of third-party funding and arbitrator conflicts of interest. It proceeds as follows: Part I examines the practical arguments for and against disclosure of the presence and identity of third-party funders for the purposes of assessing potential conflicts of interest. Part II surveys the various sources that regulate such disclosure and the ambiguities that remain. Finally, Part III concludes that disclosure of the existence and identity of third-party funding should be a routine practice, either as a result of proffer by the parties or inquiry by the arbitrators. It provides practical tips to manage issues regarding TPF disclosure.
Potential Conflicts of Interest Between Arbitrators and Funders
Catherine Rogers
Writing – Review & Editing
2024
Abstract
The first and arguably still most important question that arose when Third-Party Funding (TPF) arrived in international arbitration is whether the presence of a funder should be disclosed so that arbitrators can make appropriate inquiries and disclosures to avoid any potential conflicts of interest. At that time, some commentators—most notably some of the most prominent funders—initially doubted the very possibility of potential conflicts of interest between funders and arbitrators. These arguments were made forcefully, though ultimately unsuccessfully. Today, rules and guidelines requiring disclosure have been promulgated by several arbitral institutions, international organizations, and a few States, either through domestic legislation or in investment treaties. Despite these efforts and a general consensus in favor of disclosure, ambiguity remains about whether such disclosure is mandatory. It is also uncertain whether prevailing rules and best practices are uniformly understood or followed. This chapter provides a basic overview and analysis of third-party funding and arbitrator conflicts of interest. It proceeds as follows: Part I examines the practical arguments for and against disclosure of the presence and identity of third-party funders for the purposes of assessing potential conflicts of interest. Part II surveys the various sources that regulate such disclosure and the ambiguities that remain. Finally, Part III concludes that disclosure of the existence and identity of third-party funding should be a routine practice, either as a result of proffer by the parties or inquiry by the arbitrators. It provides practical tips to manage issues regarding TPF disclosure.
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