Third-Party Funding in Arbitration: Innovations and Limits in Self-Regulation (Part 2 of 2)
Yesterday’s post set the stage by describing the main provisions of a new voluntary Code of Conduct for “funding of resolution of disputes within England and Wales,” released in November 2011. Today’s post examines criticisms of that initiative from several corners, and notes important questions that persist in the arbitration arena, including issues surrounding the obligations of disclosure.
Despite the novelty and best intentions of the U.K. initiative, the Code has been strongly criticized both for its non-binding character and its lack of detail. Both the U.S. Chamber of Commerce’s Institute for Legal Reform (“ILR”) and the European Justice Forum (“EJF”) have expressed [...]
Third-Party Funding in Arbitration: Innovation and Limits in Self-Regulation (Part 1 of 2)
The use of third-party funding for international arbitration has been growing for several years, and its potential benefits and risks have received increasing attention from the arbitration community. The November 2011 release in the United Kingdom of a Code of Conduct for funders has galvanized the debate. The Code is the first-ever attempt at voluntary self-regulation by litigation funders, and could apply not just to third-party funders based in England and Wales, but arguably also to other funders of arbitrations seated in those jurisdictions. The Code has been welcomed as an innovative attempt to impose restraints on funding practices that otherwise raise significant ethical concerns [...]
Controlling Time and Costs in Arbitration: A Progress Report (Part 2 of 2)
In my last blog, I offered praise for the ICDR, ICC and ICSID, for taking a number of important steps over the last few years to control excessive time and costs in international arbitration. Those initiatives already have resulted in measurable reductions in the average duration of cases. But there is more that the leading institutions can do, particularly in the key areas of arbitrator availability at the outset and arbitrator diligence in rendering awards at the end. There is also much more that the users of international arbitration can do, and pressing the institutions for further reforms should never be a substitute for meaningful self-reflection and self-discipline by the parties, [...]
Controlling Time and Costs in Arbitration: A Progress Report (Part 1 of 2)
I’m honored to join today the fine ranks of contributors to this blog. For my first two posts, I thought I would offer a progress report of sorts on the critical task of controlling time and costs in international arbitration. This Part 1 focuses on the good news about various institutional reforms by the ICDR, ICC and ICSID that already are helping to reduce the average duration of cases. The next Part 2 offers suggestions for further action by these institutions, as well as a more sober “reality check”: that institutional reforms (no matter how vigorous) always will be a mere drop in the bucket, unless the users of the system also reform their expectations and practices.
My refle [...]
Third Party Funding – Maintenance and Champerty – Where is it Thriving?
Third party funding probably has its longest history in Australia, followed by the United Kingdom. The irony is that both of these are common law jurisdictions in which the legal principles of maintenance and champerty exist. Indeed, they originated in the United Kingdom. What are maintenance and champerty exactly and do they exist today? More importantly, should they?
Maintenance refers to the funding or providing of financial assistance to a holder of a claim, which allows the claim to be legally pursued, when the funder or provider of financial assistance holds no connection or valid interest in the claim itself. Champerty takes it one step further by adding that this funder or financial [...]
Third Party Funding – Investment of the Future?
Third party funding is currently receiving a lot of attention in the international arbitration community. An ethical topic for sure, third party funding can provide the financing necessary for an international arbitration to move forward. This logically opens doors to those who may otherwise not be able to pursue the claim or assist those clients with many ongoing claims in mitigating their risk exposure.
How does it work? A fund is created which operates to finance a dispute proceeding. This includes covering the attorneys’ fees and the tribunal’s fees. In exchange, the fund shares a portion of the awarded damages, but also takes on the risk that no damages are awarded. It is possible [...]
