Third Party Funding in International Arbitration: a Critical Appraisal & Pragmatic Proposal

Mohamed Sweify, Fordham University School of Law


In response to the development of international markets, business transactions, in general, have become transnational,1 and so have become the disputes arising therefrom. 2 International arbitration has become the principal forum for deciding these disputes. However, it can exact considerable monetary costs that may pose risks to the structural balance of arbitration. Alternative mechanisms have been developed to alleviate these risks. A look through the regular territory of financing legal claims would, unsurprisingly, reveal nomenclature of different practices that now include the term “Third Party Funding;” a term that has acquired its own acronym (“TPF”). International arbitration is multifaceted. This makes the intersection between arbitration and other practices challenging to dissect and resolve. International arbitration may meet the dispute funding practice to generate funded disputes that pose special problems. Despite the fundamental role the funding industry plays, in general, within the civil justice system, it has been brought to litigation with risks, which may not be eliminated through the traditional markets of investment. This dissertation addresses the situation where an arbitration user seeks a funding setup to pursue an arbitration claim in which his substantive and procedural rights may be inconsistently structured. It then determines that current funding practices do not mitigate these structural inconsistencies. The main body of the study argues that the arbitration funding regime is fragmentary and complex. It generates arcane areas of intersection between arbitral justice and funding practices with no unifying framework. In conclusion, it proposes an arbitration funding paradigm that unifies the fragmented regime