Disclosure and Confidentiality - Part I General Report - Chapter 4 - Handbook on Third-Party Funding in International Arbitration
Originally from Handbook on Third-Party Funding in International Arbitration
As the use of Third-Party Funding becomes more prevalent, questions have emerged about the degree of confidentiality that these arrangements should be afforded. Recently, tribunals have inquired into the relationships between parties and their funders, especially in the context of adverse parties’ applications for security for costs. The concerns relate to the sharing of confidential information about the funding in the arbitration (to the arbitral tribunal and the opposing party) as well as the sharing of confidential information about the arbitration proceeding (and the opposing party) to the funder via the funded party. The international arbitration community has not yet agreed upon a general disclosure standard regarding Third-Party Funding. However, the issue is very much under review. These are some of the issues being considered.
4.1. Disclosure of Existence and Identity of a Third-Party Funder
The international arbitration community is debating whether disclosure of the existence and identity of a funder should be mandatory or should be disclosed only if warranted. The Queen Mary University/White & Case 2015 survey found that the majority of the international arbitration community is of the view that Third-Party Funding should be regulated in some way, and that disclosure of the identity of the Third-Party Funder is appropriate. Mandatory disclosure of the existence of Third-Party Funding is finding its way into recently promulgated instruments. For example, the draft Transatlantic Trade and Investment Partnership (“T-TIP”) would require investors filing claims under that agreement to disclose the identities of any Third-Party Funder they rely on to fund the arbitration.
Two main arguments are usually made in favor of some degree of mandatory disclosure. The first is that without disclosure, there may be unknown or unpublicized conflicts of interest arising from an arbitrator’s relationship with a Third-Party Funder. The second is that the terms of such a funding arrangement may be relevant in assessing whether a funded party should be required to post security against an adverse costs award. Adverse parties may also be concerned about confidential information from the arbitral proceeding being shared with third parties whose identities they do not know (an underexplored topic which is discussed below). Additionally, some have argued that disclosure may be necessary to protect a party from having entered into abusive arrangements with its funders. That being said, arbitral tribunals have not focused on this rationale to support disclosure of the existence of Third-Party Funding.