The funding model is particularly prevalent in complex commercial disputes
Seyaad Arif
Published on May 29, 2024, 16:46:47
Arbitration has witnessed significant growth globally, with third-party funding (TPF) emerging as a notable aspect in recent years. TPF involves an entity unrelated to the dispute providing financial assistance to one party in exchange for a share of the proceeds if the case is successful.
In the Middle East and North Africa (MENA) region, countries like the UAE, Egypt, Saudi Arabia, Oman, Kuwait, Bahrain, Turkey and Qatar have shown increasing interest in TPF, reflecting its evolving legal landscape and commercial dynamics.
Third-party funding in arbitration is a practice where an external entity finances some or all of the costs associated with a party's pursuit or defense of a claim in exchange for a portion of the proceeds recovered from the successful resolution of the dispute. This funding model is particularly prevalent in complex commercial disputes where the cost of arbitration proceedings can be substantial.
What are the Advantages of Third-Party Funding
Disadvantages and Risks
The Funder's Involvement and Compensation
Funders play an active role in the arbitration process, collaborating with legal teams. If the claimant prevails, the funder receives a predetermined share of the damages awarded.
TPF offers opportunities for increased access to justice and risk mitigation but presents challenges related to control, conflicts of interest and cost implications. Regulatory frameworks and ethical standards will shape its future trajectory.
(Seyaad Arif is a barrister practicing via SOA LAW, a regulated Bar Standards Board Entity in England & Wales, specialising in Adjudication, Construction Law, Dispute Resolution, International Arbitration and Litigation. He also assists clients in Egypt, Oman, Saudi Arabia and the United Arab Emirates)
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