Cards On The Table? Thoughts On Disclosure Of Third Party Funding

Author:Mr Dorothy Murray
Profession:King & Wood Mallesons
 
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As more jurisdictions permit third party funding of international arbitration, the question of whether details of the funding must be disclosed arises ever more frequently.

Concerns to date focus on conflicts (ensuring that the identity of the funder poses no challenge to the independence and impartiality of the tribunal) and the ability of a respondent to apply for security for costs. The Tribunal in the case of Muhammet Çap v. Turkmenistan1, was motivated by these concerns when requiring the Claimant to disclose whether it was being funded by a third party funder, and if so, the funder's identity and nature of the funding arrangements, including to what extent the funder would share in a favourable award to the Claimant.

Singapore removed long standing prohibitions against such funding in January 2017. Hong Kong looks to follow suit shortly with the Arbitration and Mediation Legislation (Third Party Funding) (Amendment) Bill 2016 (the "Bill"), which is currently gazetted before Hong Kong's Legislative Counsel.

The process of legislative reform in Singapore and Hong Kong have both contemplated standards of disclosure. In the case of Hong Kong, the Bill requires disclosure of the existence of a funding agreement and the name of the third party funder upon the commencement of the funded arbitration (if the agreement is made on or before the commencement of the arbitration) or within 15 days (if a funding agreement is entered into after the arbitration has commenced).

In the case of Singapore, whilst the Civil Law (Amendment) Bill abolished the common law torts of champerty and maintenance, it has been left to subsidiary legislation and regulations to deal with the standard of disclosure required. It is widely expected that, like Hong Kong, Singapore will adopt a "light touch" regulatory approach to disclosure.

For arbitrations seated in other jurisdictions, which do not have a law that clearly delineates what is to be included in the "costs" of an arbitration or rules that mandate disclosure of funding arrangements, the recent decision of the English High Court in Essar v Norscot2   adds another argument to the armory of the party seeking disclosure.

The award in question was made under the 2012 ICC Rules in England. It concerned a claim by Norscot (Claimant) that Essar (Respondent) was in repudiatory breach of an operations management agreement. The sole arbitrator found for the Claimant and awarded USD4 million together with indemnity...

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