Originally from Handbook on Third-Party Funding in International Arbitration

A fundamental tenet of international arbitration is the independence and impartiality of arbitrators.  That is, arbitrators must not have an interest in the outcome of the case, they must be unrelated to and independent from the disputing parties and their counsel, and they must be unbiased with regard to a party or an issue before the tribunal. The increasing involvement of Third-Party Funders in international arbitration has led to considerable discussion about the effect of such involvement on the independence and impartiality of arbitrators. In particular, the independence or impartiality of an arbitrator may be called into question where an arbitrator (or the law firm of the arbitrator) and Third-Party Funder of a disputing party in an arbitration have a pre-existing relationship.  William W. Park and Catherine Rogers, two members of the ICCA-Queen Mary Task Force on Third-Party Funding in International Arbitration, summarize this issue well, commenting that Third-Party Funding raises “real and important concerns about potential conflicts”, especially given “the increase in the number of cases involving Third-Party Funding, the highly concentrated segment of the funding industry that invests in international arbitration cases, the symbiotic relationship between funders and a small group of law firms, and, relatedly, the often close relations among elite law firms and leading arbitrators”. 

This chapter first discusses how a conflict of interest may arise by virtue of the involvement of a Third-Party Funder in an arbitration. It then reviews developments in the rules commonly applied in international arbitration and the decisions of tribunals that have responded to the risk of such conflicts of interest. The chapter concludes with some guideposts on this issue.