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

Nowadays,Third-party funding is gradually widely used in the field of international investment arbitration,and the investment industry with litigation financing as the main business is also taking shape.The existence of Third-party funding broadens the path to“access to justice” and guarantees investors’ legal rights.But the improper behavior of litigation financing institutions also aggravates the crisis of legitimacy of international investment arbitration: the third-party funder aggravates the problems of conflict of interest,as a result,the neutrality of arbitrators is affected,the will of investors to arbitration is manipulated,and the host country faces the risk of indiscriminate litigation.The third-party funder is not bound by the arbitration confidentiality rules,and are prone to use the protected information obtained in the funding process to launch "copycat litigation" against the host country,which could threaten the national sovereignty of the host country.The application of the rules on transfer of arbitration costs,the rules for bearing adverse costs and the rules for security for costs will be more confusing.In recent years,the demand of cost financing for investor-state dispute resolution has increased in around the world and the international community is actively exploring effective regulatory solutions.In China,there are still problems in the regulation of third-party funding which are not clear in the choice of regulatory mode and the comprehensiveness of regulation needs to be improved.In order to improve the efficiency of regulation,the author suggests: firstly,to clearly choose the permissive model which third-party funding would generally be allowed except for certain types thereof;secondly,implement a dual regulation model which means carrying out the improvement of arbitration regulations and the strengthening industry supervision at the same time;thirdly,detailed the disclosure,confidentiality and fees’ allocation rules according to the national conditions of our country,and meanwhile,with the development trend of the domestic industry to adjust professional ethics,timely formulate industry self-discipline rules.By regulating third-party funding in international investment arbitration in an all-round and whole-process manner,it may be possible to contribute Chinese wisdom and Chinese solutions to promote the reconstruction of the investor-state dispute resolution mechanism.