Third-Party Funding in Arbitration: A Case for Mandatory Disclosure?

AbstractThis article provides an analysis of the Directive on representative actions for the protection of the collective interests of consumers of 25 November 2020. The Directive enables qualified entities to bring representative actions on behalf of the consumer. The article uses a Law and Economics approach to stress the advantages of collective actions as a tool to remedy rational apathy and free-rider behaviour. The article therefore in principle welcomes the fact that this Directive will lead to all Member States having some form of collective redress. However, it is rather difficult to fit this Directive into the economic criteria for centralization as there is no obvious danger of cross-border externalities or a race-to-the-bottom. The article is critical of the fact that the Directive only provides for a representative action and does not mention the alternative of a group action (sometimes referred to as a class action). This is especially problematic if there are very few qualified entities that could bring the representative action. Furthermore, the fact that Member States may choose an opt-in procedure instead of an opt-out procedure is critically evaluated. The most problematic aspect of the Directive is the funding of the representative action. Punitive damages and contingency fees are rejected, and the possibility of third-party funding is restricted. It is therefore to be feared that this Directive, notwithstanding the good intentions, may not lead to much application in practice, since the question of how the representative action is to be financed is not resolved in any satisfactory manner.

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Third Party Funding for Dispute Resolution

10.1007/978-981-16-1095-0 ◽

2021 ◽

Author(s):

Beibei Zhang

Keyword(s):

Dispute Resolution ◽

Third Party ◽

Party Funding

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Third-party funding na arbitragem contra Estados: a relativização da imunidade executória na execução da sentença arbitral contra Estados

REVISTA BRASILEIRA DE ALTERNATIVE DISPUTE RESOLUTION ◽

10.52028/rbadr.v1i1.10 ◽

2019 ◽

Vol 1 (1) ◽

pp. 203-234

Author(s):

Ana Monteiro ◽

Daniel Ferreira

Keyword(s):

United States ◽

Risk Assessment ◽

Asset Pricing ◽

The United States ◽

Third Party ◽

State Immunity ◽

The United Kingdom ◽

Domestic Legislation ◽

Current Context ◽

Party Funding

The purpose of this article is to assess the risk for preventing the execution of arbitral awards made against Sovereign States due to the State’s immunity shield. Given the importance of an accurate asset pricing in the business of third-party funding (TPF), the topic entails a particular relevance to the current context of globalized litigation in light of its contribution to the promotion of TPF at the international arbitration community. After reviewing the literature on TPF, on the peculiarities of investment and commercial arbitrations against States and on the evolution of State immunity (also in terms of domestic legislation, considering the local laws passed by the United States, the United Kingdom and Australia), the article aims explore how the funder should incorporate into its risk assessment the risk of not executing awards rendered against Sovereign States.

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