Artigo - Independence - Third-Party Funding

INDEPENDENCE AND IMPARTIALITY: THIRD-PARTY FUNDING IN INTERNATIONAL INVESTMENT ARBITRATION

by Sara Pedroso*

Leiden University Law School Advanced LL.M. in Public International Law

28 February 2017

.

*

Lawyer; LLM candidate 2017, Leiden University, BSocSc, JD, LLL, University of Ottawa, Contact : [email protected].

1. Introduction

The increasing phenomenon of private funders in international investment arbitration raises legal and ethical concerns which are largely unregulated by the provisions of major arbitral institutions. Given the prohibitively high cost of international investment arbitration, third-party funding permits a certain ‘levelling of the playing field’ between parties to a dispute. In some instances, external funding may enable investors with insufficient financial resources to launch claims against host states and have their claims assessed on the merits.

Nevertheless, by introducing an additional player to the dispute, third-party funding may adversely affect, and even disrupt, the arbitral process. The aim of this paper is to explore issues raised by third-party funding in international investment arbitration and to highlight the need for a disclosure regime to preserve arbitrators’ impartiality and independence. First, it provides a brief overview of the major concerns associated with third-party funding in international investment arbitration (section 2), with a focus on the implications of third-party funding in preserving the independence and impartiality of investment arbitral tribunals (section 3). Specific implications of third-party funding for investment arbitration, envisaged as a sub-field of public international law, are considered. Finally, a brief overview of recent initiatives aiming to regulate third party funding in investment arbitration is provided (section 4). It is argued that a shift towards a disclosure regime of third-party funding arrangements in international investment arbitration, prompted by concerns of transparency and independence, is discernable.

2. New dynamics: third-party funding in international investment arbitration

2.1. Defining third-party funding in international investment arbitration

Broadly-speaking, third-party funding is the private financing of a party’s costs arising from the settlement of a dispute; in return for bearing a party’s arbitration or litigation costs, third-party funders generally receive a portion of the final award. The 2014 International Bar Association

"

Guidelines on Conflicts of Interest in International Arbitration [2014 IBA Guidelines ]1  define third-party funders broadly, as:

[…] any person or entity that is contributing funds, or other material support to the prosecution or defence of the case and that has a direct economic interest in, or a duty to indemnify a party for, the award to be rendered in the arbitration. 2

Third-party funding of litigation is a well-established practice in many domestic jurisdictions worldwide; however, it is a relatively new phenomenon in international investment arbitration.

3

A number of factors contribute to the steady rise of third-party funding in this area 4 such as the high costs associated with international arbitration, which contribute to parties’ willingness to transfer the risk associated with a claim to a third-party’; 5  the overall increase in investment arbitral proceedings, 6  and the relative transparency of investment arbitration and awards

7

(compared to private commercial arbitration where confidentiality is the norm), 8 which increases the level of predictability of the outcome of a case. 9 It is common practice for third-party funders, prior to entering into a funding agreement with an investor, to conduct thorough due diligence investigations to evaluate the likelihood of a favourable outcome. 10

1

 The 2014 IBA Guidelines apply to both commercial and investment arbitration, 2014 IBA Guidelines, ii).  2014 IBA Guidelines, Explanation to General Standard 6, b). 3  V. Frignati, 506; E. De Brabandere and J. Lepeltak, 6. 4  E. De Brabandere and J. Lepeltak, 6-7; G. Shaw, 4-6. 5  S. Khouri, K. Hurford and C. Bowman, 4. 6  As witnessed, in part, by the proliferation of arbitral institutions, J. Trusz, 1651, 1671. 7  Although International investment arbitrations have traditionally been closed-door processes, investment arbitral awards are often publicly available, J. Trusz, 1664; van Boom, 13; G. Shaw, 6. 8  Whereas confidentiality is one of the main distinct features of international commercial arbitration and has been characterized as part of the ‘very nature of arbitration’, it may argued that concerns for a party’s confidentiality of third-party funding arrangements is diminished in the context of international investment arbitration, E. Shirlow, 623, citing UNCITRAL, ‘Report of Working Group II (Arbitration and Conciliation) on the Work of its Fifty-Third Session, 57 and UNCITRAL, ‘Report of Working Group II (Arbitration and Conciliation) on the Work of its FiftyFourth Session, 101. 9  E. De Brabandere and J. Lepeltak, 7; G. Shaw, 6. 10  Aspects considered include: merits and prospect of success of a claim; specific terms of a treaty or an agreement; enforceability of an award against a state; substantive applicable law to the dispute; future additional costs which may arise during proceedings; and expertise of the legal team of a party seeking funding. E. De Brabandere and J. Lepeltak, 6-7; S. Khouri, K. Hurford and C. Bowman, 5; G. Shaw, 3. 2

#

2.2. Legal and ethical dimensions of third party funding in investment arbitration

Third-party funding is not problematic  per se. Historically, third-party funding of litigation was prohibited by the ethical doctrines of ‘champerty’ and ‘maintenance’ in common law.

11

  Today,

these prohibitions have lost their relevance and third-party funding has become common practice in international commercial and treaty arbitration. 12

Despite its clear advantages, third-party funding raises a number of legal and ethical concerns, which have sparked debate, and with which investment tribunals are only starting to engage.

13

Third-party funding provides several benefits, but also potential drawbacks, for the parties to an arbitral dispute. On the one hand, third-party funding has an ‘access to justice’ dimension because it allows an investor 14  who is either impecunious or who may be reluctant to bear the financial risks associated with arbitration to institute a claim against a host State. 15  Third-party funding permits a certain ‘levelling of the playing field’ between states and investors. 16

On the other hand, it has been argued that third-party funding encourages frivolous claims against host-states. 17  This concern is, however, arguably overstated. 18 The potential rise of nonmeritorious claims prompted by third-party funding is tempered by the fact that funders will generally not risk financially supporting parties with unfounded claims. In principle, third-party funder’s due diligence investigations previous to entering into funding agreements, which constitute highly commercial and objective assessments claims, 19  may even decrease the

11

 V. Frignati, 505; G. Shaw, 4; S. Khouri, K. Hurford and C. Bowman, 2  V. Frignati, 505 13  J. Honlet, 711. 14  Respondent states may also be funded by third-party, although this practice is rare: “Examples of such third-party funding include a US non-profit’s financing of Uruguay’s defence in Philip Morris Brands Sarl, Philip Morris Products SA and Abal Hermanos SA v Oriental Republic of Urugua y, ICSID case no ARB/10/7; Grenada’s outside funding in RSM Production Corporation v Gr enada, ICSID case no ARB/05/14; and Jordan’s funding arrangement in ATA Construction, Industr ial and Trading Company v Hashemite Kingdom of Jordan , ICSID case no ARB/08/2, G. Shaw, 5, footnote 34; B. Osmanoglu, 328. 15  RSM Production Corporation v Saint Lucia (Decision on Saint Lucia’s request for security for costs of 13 August 2014), 87; J. Honlet, 712; S. Khouri, K. Hurford and C. Bowman, 3-4. 16  G. Shaw, 4; V. Frignati, 507; D. Yeoh, 115. 17  S. Khouri, K. Hurford and C. Bowman, 2. 18  E. De Brabandere and J. Lepeltak 7; S. Khouri, K. Hurford and C. Bowman, 2. 19  “Figures indeed show that only a very small number of claims submitted to third party funders are effectively funded by the major third party funders”, E. De Brabandere and J. Lepeltak, 7; S. Khouri, K. Hurford and C. Bowman, 5. 12

$

likelihood of frivolous claims. 20 Another concern is the risk of third-party funders exerting undue influence, pressure or control over parties and their counsel, which may compromise the integrity of the overall arbitral process, due to the potential tensions between those players’ respective interests. 21  Although a party’s counsel must ensure the proper protection of his or her client’s best interests at all times, 22 the dynamics introduced by third-party funders may engage counsel’s professional ethics obligations, particularly in respect of the attorney-client privilege. 23  Finally, much debate has centred around whether third-party funding arrangement should be considered by arbitrators as a relevant factor upon allocating costs or security for costs, areas in which they have a broad discretion.  24

Most significantly and directly relevant to the present discussion, the new dynamics created by third-party funding in investment arbitration raise cause for concern in relation to the independence of arbitrators, which may directly compromise the integrity and effectiveness of arbitral proceedings. 3. The impact of third-party funding on the independence and impartiality of investment arbitral tribunals

The core problem considered here is as follows: if the existence of a third-party funding arrangement is not disclosed to the tribunal by the parties at the outset, an arbitrator may not know that he or she may be in a position of conflict of interest. For example, an arbitrator may not be aware that she has been indirectly appointed by a third-party funder in several different proceedings. 25

20

 Disclosure of third-party funding could further reduce the incentive of frivolous claims, G. Shaw, 7.  A classic scenario would be where it is in a funded party’s interest to settle a dispute at an early stage, but in a third-party funder’s interest to see a dispute drag-on, in the hope that a more profitable sum be awarded to that same party. Contradicting interests and undue influence may also affect counsel whose services are paid for by the thirdparty, S. Khouri, K. Hurford and C. Bowman, 7; G. Shaw, 2. 22  ie. through lawyers’ professional code of conduct rules, D. Yeoh, 120. 23  A claimant’s counsel is “an important check and balances on the funder and is obliged to ensure the proper protection if his or her client’s interests” E. De Brabandere and J. Lepeltak, 9; V. Frignati, 512; J. Trusz, 1657. 24  E. De Brabandere and J. Lepeltak, 10-13; J. Honlet, 704-707. 25  J. Trusz, 1652. The 2014 IBA Guidelines provides ‘lists’ of scenarios of conflicts of interests classified by ‘red’, ‘orange’ or ‘green’ depending on their degree of severity and whether they warrant disclosure. For instance, situations in the Orange list contain scenarios that are not automatically conflicts of interest but nonetheless warrant disclosure, B. Osmanoglu, 335. 21

%

The potential consequences arising from a conflict of interest between an arbitrator and a thirdparty funder of one of the parties to a dispute are significant and may disrupt the overall arbitral process. Beyond concerns of legitimacy and integrity of arbitral tribunals, the need for a disclosure regime of third-party funding agreements is also prompted by concerns of effectiveness. For instance, investigations deriving from a challenge to the independence or impartiality of an arbitrator on the basis of a conflict of interest may lead to considerable delays, especially if an arbitrator is a member of a large law firm. 26 In the event that an arbitrator must recuse him or herself or is disqualified, the arbitration will have to start anew with a newly appointed arbitrator. 27  Another, arguably worse, scenario, is where annulment proceedings are instituted after the issuance of a final award on the basis of lack of independence or impartiality of an arbitrator because of a conflict of interest with a third-party funder. 28  Annulment would translate into considerable time and resource expenditures which could have been avoided through mandatory disclosure of third-party funding arrangements,

3.1. The principles of independence and impartiality in international investment arbitration

International arbitration is expected to be conducted by impartial and independent arbitrators.

29

In contrast to the principle of impartiality, which relates to an arbitrator’s lack of impermissible subjective bias towards a party or subject matter of a dispute, independence refers to the arbitrator’s relationships with other parties or players involved in a dispute. 30  Independence is assessed on an objective basis, and requires an arbitrator to disclose any conflicts of interests with the parties and with third-party funders. 31  The principles of independence and impartiality of arbitrators also include the absence of an appearance of dependence or partiality. 32

The principles of independence and impartiality are provided in the rules of the major arbitral institutions. Articles 11 and 12 of the United Nations Commission on International Trade Law

26

 B. Osmanoglu, 334.  J. Trusz, 1668. 28  see J. Trusz, 1669. 29  The independence and impartiality of international arbitrators is considered to be a fundamental principle in arbitral proceedings, see E. De Brabandere and J. Lepeltak, 17; B. Osmanoglu, 332; M. Kurkela and H. Snellman, 156; J. Trusz, 652. 30  J. Trusz, 1652; M. Kurkela and H. Snellman, 157. 31  J. Trusz, 1652; E. De Brabandere and J. Lepeltek, 17. 32  E. De Brabandere and J. Lepeltak, 17. 27

&

[UNCITRAL ] Arbitration Rules provide for the independence and impartiality of arbitrators and

their corresponding duty to disclose circumstances that may give rise to a challenge of those principles. 33  Article 14(1) of the International Centre for the Settlement of International Dispute’s [ICSID] Convention requires that arbitrators be of “high moral character […] and may be relied upon to exercise independent judgment 34  and Article 57 of the ICSID Convention provides for the disqualification of an arbitrator on account of “any fact indicating a manifest lack of the qualities required by paragraph (1) of Article 14”. 35 The 2014 IBA Guidelines provide for the impartiality and independence of arbitrators vis-à-vis the parties “at the time of accepting an appointment’ and ‘shall remain so until the final award has been rendered or the proceedings have otherwise finally terminated”. 36 Article 7 of the 2014 IBA Guidelines imposes on both the parties and the arbitrators a duty to perform ‘reasonable enquiries’ to identify, investigate and communicate any potential conflict of interest as well as ‘any facts or circumstances that may cause his or her impartiality or independence to be questioned’. 37 Failure to disclose a potential conflict is not excused by lack of knowledge if the arbitrator makes no reasonable attempt to investigate”. 38  Although not formally binding, the 2014 IBA Guidelines provide a standard of ‘best practices’ in international arbitration. 39

Independence and impartiality of arbitrators in investment arbitration, which are paramount for securing the integrity and effectiveness of proceedings, cannot be ensured without transparency attained through a shared duty of disclosure of third-party funding agreements on the parties and arbitrators alike. 40

3.2. International investment arbitration as public international law

The threat posed by third-party funding on the independence of arbitrators raises particular concerns in the context of international investment arbitration. The distinctive features of investment treaty arbitration allow it to review the exercise of public authority of sovereign 33

 UNCITRAL Arbitration Rules.  ICSID Convention, Art. 14(1) 35  ICSID Convention, Art. 57. 36  2014 IBA Guidelines, Art. 1. 37  2014 IBA Guidelines, Art 7. 38  2014 IBA Guidelines, Art. 7. 39  IBA Conflicts of Interest Subcommittee, 52. 40  J. Truzs, 1665, 1673. 34

'

states and therefore involve public interests which “excee [d]  the private bilateral relations between the parties”. 41  Because of its public international law foundation, 42  international investment arbitration demands enhanced transparency, and is clearly distinguishable from other types of (private) commercial arbitration. 43  Certain distinct features of investor-state arbitration, such as similar applicable substantive law and even similar fact patterns across disputes add a layer of complexity to arbitrators’ requirement of independence. 44  The phenomenon of ‘repeat arbitrators’ in the highly specialised field of investment arbitration 45  – where an arbitrator is appointed by the same investor-claimant in various disputes, creating a potential financial dependence between the two – further jeopardizes the independence of a tribunal.

46

  In other

words, the involvement of a third-party funder, who may also be repeatedly funded by a same third-party, further problematizes potential conflicts of interests between arbitrators and funded parties.

The requirement of transparency is heightened in the context of international investment arbitration. This was highlighted by the UNCITRAL Working Groups in its reports leading up to the creation of the 2014 UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration, who emphasized that increased procedural transparency can contribute to “fostering the public interest inherent in investor-state arbitration and contribute to responding to “challenges regarding the legitimacy of international investment law and arbitration”.

47

Moreover, the fact that the UNCITRAL Rules on Transparency only apply to treaty-based investor-State arbitration (and not to other forms of investor-State, State-State or international commercial arbitration) 48 illustrates the ‘public interest’ nature of this type of arbitration. 49

41

 E. De Brabandere, 151; G. Van Harten and M. Loughlin, 123.  See E. De Brabandere. 43  “[B]ecause of the need for transparency in international investment arbitration, considering the involvement of a sovereign State acting in its sovereign capacity, third party funding may be even more irreconcilable with proceedings in international investment arbitration”, E. De Brabandere and J. Lepeltak, 19; L. Malintoppi, 351; G. Shaw, 6. 44  E. De Brabandere and J. Lepeltak, 17 45  G. Shaw, 8. 46  E. De Brabandere and J. Lepeltak, 17. 47  E. Shirlow, 649, citing UNCITRAL, Report of Working Group II (Arbitration and Conciliation) on the Work of its Fifty-Third Session (Vienna, 4-8 October 2010), 25 and UNCITRAL, ‘Report of Working Group II (Arbitration and Conciliation) on the Work of its Fifty-Fourth Session, 112. 48  UNCITRAL Convention Arbitration Rules, Art. 1; E. Shirlow, 631. 49  E. Shirlow, 631. 42

(

Moreover, the consequences of a successful challenge to an arbitrator’s independence and impartiality due to a conflict of interest with a third-party funder has not only severe repercussions for the parties involved, but can also lead to costly public expenditures due to the participation of a state: 50  “since investment tribunals may award substantial damages to foreign investors for a state’s exercise of its sovereign powers, secrecy in the procedure is indeed improper”. 51

3.2. Disclosure as a safeguard to preserving the impartiality and independence of arbitrators

Intrinsically linked to independence and impartiality of arbitrators is the principle of transparency, secured in this context, through disclosure. In contrast to many domestic  jurisdictions,52  there is no rule imposing on parties an obligation to disclose the existence of third-party

funding

arrangements

in

international

investment

arbitration. 53  Moreover,

international investment tribunals have no general competence to regulate third-party funding, 54 nor is there a global body or regime tasked with overseeing third-party funding investment arbitration. 55  Therefore, disclosure obligations can be interpreted from the more general provisions relating to conflicts of interest and the declarations from arbitrators required by certain arbitral rules. For instance, the ICSID Convention Arbitration Rules provide that arbitrators sign declaration disclosing any “(a) [ p]ast and present professional, business and other relationships (if any) with the parties and (b) any other circumstance that might cause my 56

reliability for independent judgment to be questioned by a party”.

The 2014 IBA Guidelines explicitly address disclosure of third-party funding by extending the duty to disclose any relationship between the arbitrator and an “individual having a controlling

50

 G. Shaw, 8.  E. De Brabandere, 151. 52  For example, Part 44.15 of the English Civil Procedure Rules, S. Khouri, K. Hurford and C. Bowman, footnote 35. 53  E. de Brabandere and J. Lepeltek, 16; G. Shaw, 9. 54  The third-party funding agreement is “legally disconnected” from the arbitration agreement, which means that the tribunal does not have jurisdiction over it. E. De Brabandere and J. Lepeltak, 16, 18; see J. Trusz, 1672. 55  S. Khouri, K. Hurford and C. Bowman, 10; G. Shaw, 9. 56  ICSID Rules, Rule 6. 51

)

influence on the party in the arbitration” or with “any person or entity with a direct economic interest in [...] the award to be rendered in the arbitration” […] “at the earliest opportunity”. 57

The broad scope of the duty to disclose found in Article 7 undoubtedly extends to an arbitrator’s relationship with a third-party funder. Significantly, as mentioned above, Article 7(d) provides that a failure by an arbitrator to disclose a conflict is not excused by lack of knowledge.

58

 This

imposes a duty on the arbitrator to assess the nature of the third-party funding relationship and is a further indication that the duty to disclose third-party funding relationships is shared by both the parties and arbitrators in a dispute. 59

Moreover, international investment tribunals have recently explicitly addressed issues of disclosure of third-party funding in procedural orders and awards, providing some insight into the way in which arbitral tribunals are grappling with the issues mentioned above. In  EuroGas  Inc and Belmont Ressources Inc v Slovak Republic, the tribunal ordered the claimant to disclose

the identity of a third-party funder (the existence of which had already made public by the claimant) to allow the arbitrators to verify whether they were in a position of conflict of interest. 60 In  Muhammet Çap & Sehil insaat Endustri ve Ticaret Ltd Sti v Turkmenistan, an ICSID tribunal went even further and ordered the claimant to disclose the identity of the thirdparty funder as well as the terms of the funding agreement. 61  In a preceding Procedural Order (No 2), in which the tribunal had denied a request by Turkmenistan for disclosure of third-party funding, the tribunal nonetheless reasoned that it could order such disclosure based on its “inherent powers to make orders of the nature requested where necessary to preserve the rights of the parties and the integrity of the process”. 62  These ICSID arbitral decisions are not only innovative in that they compel the disclosure of third-party funding arrangements to the tribunal

57

 Compare with the previous 2004 IBA Guidelines, 2014 IBA Guidelines, Art. 7.  2014 IBA Guidelines, Art. 7(1). 59  The duty of arbitrators to disclosure relationship with third party funding corporations combined with the duty on a party to disclose to an arbitral institution that it is receiving funding are both part of a four-part solution to the problems raised by third-party funding proposed in an article by Jennifer Trusz, J. Trusz, 1673 ff. 60  EuroGas Inc and Belmont Re ssources Inc v Slovak Republic, ICSID case No ARB/14/14. Transcript of the First Session on Hearing and Provisional Measures (17 March 2015) at 145; J. Honlet, 708. 61  Muhammet Çap & Sehil ins aat Endustri ve Ticaret Ltd Sti v Turkmenistan, ICSID case No ARB/12/6, Procedural Order No 3 (12 June 2015). 62  Muhammet Çap & Sehil ins aat Endustri ve Ticaret Ltd Sti v Turkmenistan, ICSID case No ARB/12/6, Procedural Order No 2 (23 June 2014); J. Honlet, 708. 58

*

but they also acknowledge the role of a third-party funder as an interested party in investor-state arbitration. 63

There is a discernable trend towards increased transparency and a regime of disclosure of thirdparty arrangements in arbitral decisions and regulatory schemes. Although the most progressive advances are in the form of non-binding guidelines, they nonetheless contribute to the positive development of regulating third-party funding in investment arbitration and securing independence and impartiality of arbitral tribunals.

4. Recent developments: towards increased transparency of third-party funding

Last month, both Singapore and Hong Kong reformed their laws which previously included common law prohibitions of third-party funding in international arbitration, announcing a shift in the legal landscape this respect. 64  This is unsurprising considering that Hong Kong and Singapore are amongst the five most preferred venues for international arbitration, along with London, Paris and Geneva; 65  decriminalizing and regulating third-party funding will likely contribute to securing more arbitration in those centers. More specifically, the Law Commission of Hong Kong recently proposed legislative amendments to the Arbitration Ordinance and associated regulations, including the requirement that within 15 days, a funded party must give written notice of the existence of a funding agreement and of the identity of the funder to the other parties and to the arbitral institution and tribunal. 66  Other proposals made by the Commission include the development of specific standards and rules directly regulating thirdparty funding.

Another recent development was the coming into force of the Singapore International Arbitration Centre [SIAC] Investment Arbitration Rules on 1 January 2017, applicable to disputes involving States, State,controlled entities or intergovernmental organisations. 67 Article 24 (l) of the Rules provide that the tribunal shall have the power to “order the disclosure of the existence of a

63

 J. Honlet, 108-109; D. Desierto (online).  J. Mackojc (online). 65  Queen Mary University of London and White & Case, 2. 66  S. Jhangiani and R. Coldwell (online). 67  Investment Arbitration rules of the Singapore International Arbitration Centre. 64

"+

Party’s third,party funding arrangement and/or the identity of the third ,party funder and, where appropriate, details of the third ,party funder’s interest in the outcome of the proceedings, and/or whether or not the third ,party funder has committed to undertake adverse costs liability”. 68 They are the first rules of a major arbitral institution to grant express authority to arbitral tribunals to order the disclosure of third party funding agreements. 69

Finally, on 12 February 2016, the International Chamber of Commerce adopted a Guidance Note on conflict disclosures by arbitrators [Guidance Note ] aiming to “enhance the transparency and predictability of the arbitration process in response to user’s needs”.

70

For the purposes of

disclosure, the Guidance Note states that arbitrators should consider, upon assessing whether to make disclosure, “relationships with any entity having a direct economic interest in the dispute or an obligation to indemnify a party for the award”, 71  therefore adopting the same broad language as in Article 7 of the 2014 IBA Guidelines which includes third-party funders.

72

5. Conclusion

Third-party funding highlights the tension between the limited jurisdiction of investment tribunals to resolve inter partes  disputes, and the need to secure effectiveness and integrity of international arbitral proceedings. 73  Third-party funding introduces an additional player to international investment arbitral proceedings thereby increasing the probability of a conflict of interest existing between third-party funders and arbitrators. Transparency, through disclosure, can act as a guarantor of independence and impartiality in investment arbitral proceedings and remedy some of the legal and ethical concerns raised above. The public international law foundation of international investment arbitration, as structurally distinct from commercial arbitration, demands a higher threshold of transparency through the disclosure of the existence and (at a minimum) identity of third-party funders, due to the public interests involved in investment arbitral proceedings to which sovereign states are parties.

68

 Investment Arbitration rules of the Singapore International Arbitration Centre.  M. Mangan and H. Defriez (online). 70  The Guidance Note is incorporated in the ICC Note to arbitrators and to parties (22 September 2016), ICC Press Release. 71  ICC Guidance Note. 72  A. Goldsmith and L. Melchionda (online). 73  E. De Brabandere and J. Lepeltak, 4; J. Trusz, 1672. 69

""

Formal and explicit rules or provisions requiring disclosure by third-funded parties are currently inadequate to address the rising phenomenon; 74  however, recent arbitral awards, orders, legislation, and non-binding guidelines and guidance notes which provide ‘best practices’, indicate a demand for more transparency at the international level. These developments hint at a gradual shift in the regulatory framework around third-party funding, which will likely contribute to an increase in the effectiveness and integrity of international investment tribunals.

74

 It noteworthy that the scenario where a third-party funder is funding both the claimant and the state in a dispute is largely unregulated, G. Shaw, 11. "#

BIBLIOGRAPHY

I. Articles and Books Eric De Brabandere and Julia Lepeltak, ‘Third Party Funding in International Investment Arbitration’, Grotius Centre for International Legal Studies, Working Paper 2012/1 (2012). Eric De Brabandere,  Investment Treaty Arbitration as Public International Law: Pro cedural  Aspects and Implications, (2016). Bernardo M. Cremades Jr., ‘Third Party Litigation Funding: Investing in Arbitration’, Transnational Dispute Management , (2011), 8:4. Diane Desierto, ‘Revisiting ‘Interested Parties’ in Investor-State Arbitration: Ticaret Procedural Order No. 3’s Compelled Disclosure of Third-Party Funders’,  EJIL: Talk!, (accessed 22 February 2017). Valentina Frignati, ‘Ethical implications of third-party funding in international arbitration’,  Arbitration International, (2016) 32, 505. Aren Goldsmith and Lorenzo Melchionda, ‘The ICC’s Guidance Note on Disclosure and ThirdParty Funding: A Step in the Right Direction’, Kluwer Arbitration Blog, (accessed 27 February 2017). Jean-Christophe Honlet, ‘Recent decisions on third-party funding in investment arbitration’, ICSID Review, (2015) 30:3, 699. Susanna Khouri, Kate Hurford and Clive Bowman, ‘Third party funding in international commercial and treaty arbitration - a panacea or a plague? A discussion of the risks and benefits of third party funding’, Transnational Dispute Management, (2011) 8:4, 1. Martti Kurkela and Hannes Snellman,  Due Process in International Commercial Arbitration, (2005). Sapna Jhangiani and Rupert Coldwell, ‘Third-Party Funding for International Arbitration in Singapore and Hong Kong – A Race to the Top?’, Kluwer Arbitration Blog, (accessed 22 February 2017). "$

Jonathan Mackojc, ‘10 Hot Topics for International Arbitration in 2017’, Kluwer Arbitration  Blog, (accessed 21 February 2017). Loretta Malintoppi, ‘Remarks on Arbitrators’ Independence, Impartiality and Duty to Disclose in Investment Arbitration’, The Law and Practice of International Courts and Tribunals, Martinus Nijhoff, (2008) 7:3, 351. Mark Mangan and Henry Defriez, ‘SIAC Investment Arbitration Rules’, Oxford University Press online, (accessed 21 February 2017). Burcu Osmanoglu, ‘Third-Party Funding in International Commercial Arbitration and Arbitrator Conflict of Interest’,  Journal of International Arbitration (2015), 32:3 (2015) 325. Queen Mary University of London and White & Case, ‘2015 International Arbitration Survey: Improvements and Innovations in International Arbitration’ (consulted 21 February 2017). Gary Shaw, ’Third-party funding in investment arbitration: how non-disclosure can cause harm for the sake of profit’,  Arbitration International, (2016), 1. Esmé Shirlow, ‘Dawn of a New Era? The UNCITRAL Rules and UN Convention on Transparency in Treaty-Based Investor-State Arbitration’,  ICSID Review, (2016) 31:3, 622. Jennifer A. Trusz, ‘Full Disclosure? Conflicts of Interest Arising from Third-Party Funding in International Commercial Arbitration’, (2013) 101 Geo LJ 1649, 1675. Willem H. van Boom, ‘Third-Party Financing in International Investment Arbitration’, Rotterdam Erasmus School of Law, (2011) 25, (accessed 22 February 2017). Gus Van Harten and Martin Loughlin, ‘Investment Treaty Arbitration as a Species of Global Administrative Law’,  The European Journal of International Law, (2006), 17:1, 121. Derric Yeoh, ‘Third party funding in international arbitration: a slippery slope or levelling the playing field?’,  Journal of International Arbitration, (2016) 33:1, 115. II. Conventions, Rules and Guidelines ICSID Convention (as amended and effective April 10, 2006), .

"%

UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration ((with new article 1, paragraph 4, as adopted in 2013), . UNCITRAL, ‘Report of Working Group II (Arbitration and Conciliation) on the Work of its Fifty-Third Session (Vienna, 4-8 October 2010) UN Doc A/CN.9/712. UNCITRAL, ‘Report of Working Group II (Arbitration and Conciliation) on the Work of its Fifty-Fourth Session (New York, 7-11 February 2011)’ UN Doc A/CN.9/717. International Bar Association Guidelines on Conflicts of Interest in International Arbitration (adopted by resolution of the IBA Council on Thursday 23 October 2014), . IBA Conflicts of Interest Subcommittee, ‘The IBA Guidelines on Conflicts of Interest in International Arbitration: The First Five Years 2004–2009’,  Dispute Resolution International, (2010), 4:1, 5. International Chamber of Commerce ‘Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration’ (22 September 2016), . International Chamber of Commerce Press Release, ‘ICC Court adopts Guidance Note on conflict disclosures by arbitrators’, . Investment Arbitration Rules of the Singapore International Arbitration Centre, . III. Arbitral Orders and Awards  RSM Production Corporation v Saint Lucia, ICSID case No ARB/12/10, Decision on Saint Lucia’s request for security for costs (13 August 2014).  EuroGas Inc and Belmont Ressources Inc v Slovak Republic, ICSID case No ARB/14/14. Transcript of the First Session on Hearing and Provisional Measures (17 March 2015).  Muhammet Çap & Sehil insaat Endustri ve Ticaret Ltd Sti v Turkmenistan, ICSID case No ARB/12/6, Procedural Order No 3 (12 June 2015). "&