Author: Aren GOLDSMITH and Lorenzo MELCHIONDA
N0: 1 de 2012
In this article, the authors address the phenomenon of third party funding (TPF) in the context of international arbitration proceedings. In Part I, published in this edition of the Journal, the authors introduce TPF and comment both on its origins and evolution, as well as on key aspects of the negotiation and structuring of TPF products for use in international arbitration. In addition, the authors propose a taxonomy of TPF, which includes a number of different financing techniques that have been observed in connection with arbitration proceedings. For the reasons explained below, those techniques include forms of financing such as "strategic" TPF, insurance products as TPF and legal fee arrangements, which are not always recognized as "TPF" in discussions regarding the phenomenon. Finally, the authors consider one of the most delicate issues that may arise in connection with efforts to obtain TPF or communications between litigant and funder, the risk that sensitive information regarding a claim or its defense could be targeted by opposing parties seeking the "discovery" of such information. The risk of disclosure is considered in the specific context of a United States statutory tool that has been used to obtain discovery in connection with international arbitration proceedings, wherever the seat of arbitration. For the reasons addressed in greater detail below, the unsettled law of legal privilege in the United States in relation to TPF and the existence of powerful tools in the United States authorizing discovery in "aid" of international arbitration proceedings, may counsel for attempts to structure funding outside of the United States and, in particular, in civil law jurisdictions that may offer a more protective environment for the relationship between litigant and funder.
Part II of this article, to be published in a subsequent edition of this journal, will then turn to a series of substantive and procedural problems that may be implicated by the involvement of TPF in connection with arbitration proceedings. Issues considered in relation to TPF in Part II include: liability and security for costs, conflicts of interest, confidentiality, jurisdiction and admissibility and the possibility of public policy-based obstacles to recognition and enforcement of awards rendered in proceedings financed by third parties. The difficult subject of disclosure will be evoked against the backdrop of the foregoing issues. Finally, the authors will consider a series of questions that may be implicated in relation to TPF in the specific context of investment treaty arbitration.