Research On Disclosure Duty Rules Of Third-party Funding In International Commercial Arbitration

In recent years,with the development of the international commercial arbitration and the gradual reduction of the restrictions on the champerty,the third-party funding has emerged and developed rapidly in the commercial arbitration.Although the third-party funding has many advantages,it should be noted that its existence can easily lead to conflicts of interest.Relationships between the funder and the arbitrator will affect the independence and impartiality of the arbitrator and the arbitration procedure.Therefore,it is necessary to establish a perfect disclosure system to solve this problem.Although the studies on whether to allow the third party to finance arbitration began from 10 years ago,most of the national legislation and arbitration rules still don't regulate this phenomenon.It is difficult to solve such complicated and diverse conflicts of interest arising from the third-party funding by generalizing the disclosure duty of arbitrators in ordinary commercial arbitration.Therefore,disclosure rules must be amended.In this regard,the International Bar Association,the Singapore Parliament,the Hong Kong Legislature and Arbitration Centre have made corresponding attempts.The legal status of the third-party funding in the commercial arbitration has been confirmed by amending legislation.Besides,the disclosure rules for third-party funding has been formulated by new arbitration rules,which is of great significance for reference.Based on an analysis of disclosure obligations in majornational legislation and arbitration rules,this paper will express views on existing rules in the light of the characteristics of third-party funding.At the same time,some reasonable proposals on our country's disclosure rules of third-party funding in the commercial arbitration will be put forward.The whole paper can be divided into the following four chapters:Chapter one is an overview of the third-party funding in the international commercial arbitration,which includes its definition and characteristics.This part also includes the development of third-party funding and the reasons for its rise.The definition of third-party funding is mainly divided into broad sense and narrow sense which this paper chooses.The biggest characteristic of the narrow sense is that the funder has no recourse to the paid expenses.Apart from its ability to provide the party with access to justice and to meet the multiple needs of the parties,the increase of arbitration fee and the promotion of investment company are the very important reasons for the rapid rise of the third-party funding in commercial arbitration.Chapter two analyzes the causes,manifestations and consequences of conflicts of interest,which is the challenge brought by the third-party funding in international commercial arbitration.The special legal status of the funder,the lack of mandatory rules,the characteristics of the investment company and the employment sources of arbitrators,the existence of confidentiality clauses in the financing agreement make it easy to have conflicts of interest in the procedure of appointing arbitrators.Such conflicts of interest have a great impact on the independence and impartiality of arbitrators,which may lead to the increase of the time and money cost of arbitration for parties and the annulment,non-recognition and non-enforcement of arbitration awards.So it is necessary to improve the disclosure system by disclosing the existence of third-party funding and other necessary information in order to judge the conflicts of interest and determine whether the arbitrator can be selected.Chapter three makes a comparative analysis of the existing rules on the disclosure of the third-party funding in international commercial arbitration.Most of rules haven't given the answer to whether third-party funding in international commercial arbitration should be disclosed,the subject of the disclosure obligation,the standard,scope,form,procedure and legal consequences of non-disclosure.The arbitrator can seldom know the existence of the third-party funding if nobody tell them about this fact because of the secrecy of the third-party funding itself.To make disclosure rules more efficient,the funded party should be regulate as the subject of the disclosure duty and must make the disclosure of the existence and basic information of third-party funding.Based on the analysis of the above three chapters,chapter four puts forward some suggestions for amending the disclosure duty rules of third-party funding in commercial arbitration in China.The lack of legislation and arbitration rules is not in accordance with the development requirements of third party funding in our country.The practice of revising rules in Hong Kong deserves to refer to.According to the national conditions,our country should revise the arbitration rules and issue relevant guidelines to affirm the rationality of third-party funding in international commercial arbitration.It's necessary to expand the scope of arbitrators' disclosure duty and give clear standards of disclosure.Besides,legal consequences of failure to perform the disclosure duty should be clarified.