Overview of Third-party Funding Practices in International Arbitration


In the ages of globalization with increasing cross-border transactions, international commercial arbitration has also boomed. Though it is efficient and time-saving compared to the traditional dispute resolution mechanisms the large costs attached to it cannot be ignored. Its solution comes in the form of “Third Party Funding”, “Third-party funding (hereinafter TPF) arises when a third party (the Funder) provides financial support to another party (the Funded Party) to pursue or defend an arbitration or related court or mediation proceedings. Such financial support is provided in exchange for an economic interest in any favorable award or outcome that may ensue.”It is achieved by means of third party contracts (hereinafter) “it is an agreement by a Party to dispute Resolution Proceedings with a TPF entity for the funding of all or portion of the costs of the proceedings in exchange for a share or other interest in the proceeds of the proceedings to which the party may become entitled”.

Authored by Ayush Garg & Mridul Pateriya, Gujarat National Law University.