Originally from Handbook on Third-Party Funding in International Arbitration

1.1.  TPF Regime in Austria

1.1.1. Is TPF commonly used in your Jurisdiction? If yes, since when (is it a new trend or a well-established practice)? 

Third-Party Funding (“TPF”) is well established for arbitral proceedings having their seat in Austria. Although there are no specific rules or restrictions addressing TPF under Austrian arbitration law, the usage of TPF is widely accepted among parties, counsels and arbitrators alike. Recent years have witnessed an increase of TPF in arbitrations seated in Austria. However, exact figures are missing, since there is no obligation to disclose Third-Party Funding under Austrian arbitration law and most arbitrations taking place in Austria remain confidential.

Under the funding agreement, funders commit to provide the necessary funds for a party’s lawsuit. If the funded party prevails, the funder is allowed to realize a specified percentage of the proceeds of the case (or a multiple of the financed costs). In Austria, the funder’s return typically ranges between 20 to 50 percent of the total amount awarded.  Unlike state-financed legal aid, funders will not only cover the legal fees of the funded party, but also reimburse the opposing party in case the funded party loses the case (or the arbitral tribunal orders the funded party to pay for its opponent’s costs). Typically, TPF agreements are arranged on a non-recourse basis. Hence, the funded party is only required to reimburse the funder if it prevails. 

Furthermore, TPF aims at enhancing the equality of arms between the parties pursuant to Section 6 EMRK. The funding model in question is usually used by less powerful claimants involved in litigations against a financially potent respondent. The respondent’s judicial sphere is not prejudicially affected through TPF.