A Study Of The Third Party Funding Disclosure Rule In ICSID Arbitration

With the gradual legalization of third-party funding in litigation or arbitration in various jurisdictions,the process of "legalization" of third-party funding in international investment arbitration continues to advance.Third-party funding for international investment arbitration is likely to cause doubts about the impartiality and independence of arbitrators,damage to the cost interests of the respondent country,break the balance in the arbitration confrontation,and eventually aggravate the structural imbalance and legitimacy crisis of the international investment arbitration mechanism.However,the above-mentioned problems largely stem from the concealment and "black-box operations" of third-party funding.The ICSID Center began to revise the 2006 version of the ICSID Arbitration Rules since 2016,and made efforts to address the concerns surrounding the issues of third-party funding.After six revised drafts,a set of third-party funding disclosure rule were finally established in 2022.The revision of the ICSID Arbitration disclosure rule for third-party funding not only affirmed the value of the thirdparty funding in assisting the funded party in obtaining ICSID Arbitration,but also introduced a compulsory obligation of disclosing third-party funding in the arbitration rules for the first time,and clarified the discretionary power of the arbitral tribunal for further disclosure.By combining compulsory disclosure obligation and arbitral tribunal’s discretionary power to further disclose,third-party funding will be exposed in the arbitration proceeding,which will help the check of arbitrators’ interest conflicts and the assessment of impact of third-party on the arbitration proceeding in order to ensure the fairness and integrity of the investment arbitration process.This article will focus on the third-party funding disclosure rule in ICSID Arbitration which just came into force in2022,and carry out discussions in four chapters:Chapter 1 provides an overview of the rule on the disclosure of third-party funding in ICSID arbitration,and clarifies the basic issues of third-party funding disclosure,including third-party funding in the "narrow sense" and "broad sense",the definition and connotation of third-party funding disclosure,and the main composition of third-party funding disclosure obligations in ICSID Arbitration.The chapter will clarify the necessity of the ICSID third-party funding disclosure rule in preventing conflicts of arbitrators’ interests,protecting the respondent country’s cost interests,and ascertaining the facts on whether the arbitral procedure is abused.The third-party funding disclosure obligation in the context of 2006 version of the ICSID Arbitration Rules and the "mandatory" trend of third-party funding disclosure obligations in the field of international investment arbitration together serve as the basis for ICSID Arbitration to revise the rule on thirdparty funding disclosure.Chapter 2 studies the specific content of the rule on disclosure of third-party funding in ICSID arbitration,analyzes the disclosure obligation model,scope of disclosure,subject of disclosure and disclosure procedure stipulated in the rule on third-party funding disclosure in ICSID arbitration,examines the advantages of the combined disclosure mode in which both mandatory disclosure and the tribunal’s discretionary power to further disclosure are requested,and further discusses the continuous characteristics of mandatory disclosure,the "penetrating" disclosure requirement,and the "minimized" mandatory disclosure scope,etc.The rule on the disclosure of third-party funding is not independent of other clauses,and the coherence or relevance with other ICSID arbitration procedures,such as arbitrator selection procedure,early dismissal procedure,fee guarantees,and fee allocation,should also be analyzed.Chapter 3 mainly studies the 6 revised drafts the ICSID Arbitration Rules,the official annotations of the drafts,and the horizontal comparison with other third-party funding disclosure rules for the purpose of finding disadvantages of the disclosure rule.It is found that the rule was revised mainly for the prevention of arbitrators’ conflict of interests,and failed to fully respond to the practical needs for third-party funding disclosure.The disclosure rule also lacks detailed circumstances for the disclosure of third-party funding agreements,and the single monitoring mechanism for the fulfillment of disclosure obligations is not enough.On this basis,further suggestions are put forward for the thirdparty funding disclosure rule,including expanding the third-party funding disclosure purpose to ensure procedural fairness and justice,constructing a tiered disclosure system for the disclosure of third-party funding agreements,and supervising the fulfillment of disclosure obligations from the perspective of both arbitral fees and procedures.Chapter 4 is the enlightenment of the revision of the ICSID disclosure rule for thirdparty funding to China.The revision will have an important impact on China in scenarios whether the Chinese government is the respondent country in investment arbitration,or Chinese investors are claimants in investment arbitration,and an impact on the internationalization of China’ arbitration.The third-party funding disclosure in China’s investment arbitration is faced with problems as lack of domestic legal basis for thirdparty funding disclosure obligations,lack of consistency in third-party funding disclosure rules in investment arbitration,and no third-party funding disclosure requirements in BITs.In this regard,China should act from domestic,bilateral and multilateral levels in continuing the reform and improvement of third-party funding disclosure rules in domestic investment arbitration rules,BITs,and multilateral investment arbitration rules.