Research On The Legal Issues And Regulations Of Third Party Funding In International Investment Arbitration

Third-party funding is a kind of venture capital activity emerging in the field of investment arbitration in recent years.It provides opportunities for investors to seek relief and transfer risks with the mode of "legal service + capital".However,funders’ involvement in arbitration will lead to a series of problems,including conflict of interest,confidentiality,arbitration cost bearing,risk of abuse of litigation,etc.How to effectively regulate third-party funding has become an urgent issue for arbitration and legislative bodies around the world to solve.The International Bar Association’s Guidelines on Conflicts of Interest in International Arbitration regulates third-party funding from the perspective of preventing conflicts of interest.The Code of Practice of the British Association of Funders of Litigation is regulated by a "soft law" approach to industry self-regulation;The draft amendment to the Arbitration Rules of CISID,the civil legislation of Singapore,the Investment Arbitration Rules of CIIC,and the European Union International Investment Agreement regulate third-party funding from the aspects of disclosure obligation,confidentiality obligation and the payment of arbitration fees.In order to enhance international competitiveness,China’s International Economic and Trade Arbitration Commission,Beijing Arbitration Commission(hereinafter referred to as CIETAC and BAEC)and Hong Kong explored to regulate third-party financing by amending investment arbitration rules and reforming legislation respectively.Relevant rules focus on issues such as disclosure of third-party funding,confidentiality obligation,sharing of arbitration fees and guarantee,etc.Specific regulations,such as the time and consequences of disclosure,confidentiality obligation of the sponsor and the payment of arbitration related costs,are yet to be detailed and clarified.To regulate third-party financing in China,it is prudent to improve the arbitration rules first,and then carry out legislative reform and formulate industry norms according to the practical development of third-party financing.