Have there been any significant developments with regard to third party funding recently?

International Arbitration (2nd Edition)

Malaysia Small Flag Malaysia

There are no express statutory prohibitions on third party funding in arbitration and litigation in Malaysia, though, such a fee arrangement may be the subject of judicial scrutiny under the common law rules of champerty and maintenance. However, there is presently no judicial guidance regarding the validity of third-party-funded claims in Malaysia.

Malaysia is perceptive and has been noticeably receptive of international trends in arbitration. The Malaysian legal community has been keeping abreast with the current international discourse and reforms on third party funding and is considering the importation of such ideas into the jurisdiction. This is an area to be observed in the next few years.

Chile Small Flag Chile

Third party funding has no regulation in Chile. Nevertheless, the Chilean Civil Code (CCC) does regulate the assignment of litigious rights, whether by exchange or sale. Under Article 1.913 of the CCC, the debtor shall be obliged to pay to the assignee only the amount paid by the latter for the right assigned, plus interest from the date the assignment was notified to the debtor. Although there is no specific regulation as to the way in which the litigious rights shall be transferred, the national doctrine and case law estimate that the CCC rules for the transfer of personal credits are to be applicable.

Portugal Small Flag Portugal

There are no rules or specific restrictions on third-party funders in Portuguese law.

This issue is still something new and not explored. However, recently there was an increase in the number of conferences and articles where this issue has been addressed which opens the perspective of being also a hot topic in the near future.

Luxembourg Small Flag Luxembourg

Third-party funding is virtually unknown in Luxembourg. However, there are no legal or regulatory obstacles to third-party financing in Luxembourg.

Switzerland Small Flag Switzerland

Despite the recent increase of third party funding, the issue remains unregulated under Swiss law. There are no rules or restrictions on third-party funders in Switzerland. While, the Swiss Federal Tribunal has expressly confirmed that third party funding is, as a rule, admissible, certain limitations on influencing the client-attorney relationship will need to be respected by third party funders. In particular, in order to avoid any conflict of interest, the third party funder should not unduly interfere with the client-attorney relationship.

Germany Small Flag Germany

No. Third-party funding is generally permitted both in arbitration and litigation in Germany. However, neither German arbitration law nor the DIS Arbitration Rules expressly regulate third-party funding.

Ukraine Small Flag Ukraine

No, third party funding remains to be not regulated and not prohibited in Ukraine. Currently funding is not widespread either.

Panama Small Flag Panama

In Panama, there have not been any significant developments with regard to third party funding recently.

UAE Small Flag UAE

The local arbitration market has not been significantly impacted by Third Party Funding although the option has been promoted within the region to interested stakeholders.

Sweden Small Flag Sweden

Swedish law does not restrict third-party funding. However, third-party funding is still not regularly used in arbitration proceedings, at least not openly.

Spain Small Flag Spain

Third-party funding within arbitration is becoming increasingly common, with several specific cases where the arbitration associated costs were funded by non-parties to the arbitration.

However, no legal framework regarding third-party funding in arbitration has been approved, neither court decisions have been issued. This creates uncertainties regarding the consequences of third-party funding in related matters, such as security for costs, awards of costs against third-party funders or valid assignment of claims to the funder.

Serbia Small Flag Serbia

Serbian law does not contain rules of third party funding (other than a rule on nullity of agreements by which at attorney purchases a disputed claim from the client who entrusted the attorney with regard to enforcing such claim, and agreements by which an attorney is entitled to receive a share of the disputed claim). In practice, third party funding is not developed in Serbia.

Philippines Small Flag Philippines

There is currently no express rule on third party funding in the Philippines. However, the Philippine legal profession adheres to the rule against champertous contracts.

India Small Flag India

There is no significant development with regard to the third party funding in India. There is actually no rule or any law against/for third party funding currently in India

Ecuador Small Flag Ecuador

No, third party funding remains undeveloped in Ecuador.

Egypt Small Flag Egypt

There have been no significant developments, and third party funding remains to be a practice that effectively still does not exist in Egypt.

Norway Small Flag Norway

There has not been any significant legal development with regard to third party funding in Norway recently. However, it is to be noted that third party funders emerge and try actively to promote their services. Our impression is that these providers mainly direct their services towards litigation in the ordinary courts, not so much towards arbitration. As far as commercial arbitration is concerned, the parties will more often than not be self-sufficient with funds to conduct the necessary proceedings.

Croatia Small Flag Croatia

We are not aware of any such developments (or other legislative developments regarding arbitration) in Croatia.

Cyprus Small Flag Cyprus

Third party funding is not known in or specifically permitted in Cyprus.

France Small Flag France

On 21 February 2017, the Paris Bar Council (Conseil de l’Ordre) approved a resolution confirming that third-party funding of legal proceedings facilitates access to justice in international arbitration and is allowed under French law. The resolution addressed the potential interference by a third party in the relationship between the lawyer and the client and the issue of whether the funding arrangement should be disclosed to the arbitrators.

The resolution provides that French lawyers (avocats) should not communicate with, or give advice to, the third party providing funds to their client. A French lawyer may only have a meeting with the funder if the client is present. In addition, a lawyer should advise the client to disclose the existence of any funding arrangement to the arbitrators and inform the client of the adverse consequences (annulment of the award or enforcement problems) that lack of disclosure may create.

Italy Small Flag Italy

The concept of third party funding has only recently attracted the attention of the Italian arbitration community. To date, there is no regulation of third-party funding in Italy. Also, it is our understanding that Italian courts have not been called to decide on funded matters yet.

Nigeria Small Flag Nigeria

There are no rules on third-party funding in Nigeria. Third-party funding in arbitration is not prohibited in Nigeria. However, there are no known third party funders that are active in the Nigerian market.

Austria Small Flag Austria

There have not been significant developments on third party funding in Austria. However, particularly in state litigation, it is more common than in the past that third party funders are involved.

United States Small Flag United States

No. There have not been any significant recent developments.

Greece Small Flag Greece

The concept of third-party funding is unknown to Greek law. This does not mean however that this arrangement would be considered prohibited. On the contrary, the combination of traditional instruments of contract and procedural law could result in a functional equivalent.

Israel Small Flag Israel

Israeli law does not prohibit third-party litigation funding. At the same time, the Israel Bar Association prohibits persons who are not attorneys from performing actions that may be exclusively dealt with by an attorney. Accordingly, when litigation is funded by 'private' parties, this gives rise to concern that the funding party is able, practically speaking, to 'buy' the prosecution, and therefore ethical concerns are liable to arise.

United Kingdom Small Flag United Kingdom

In Essar Oilfields Services Ltd v Norscot Rig Management PVT Ltd [2016] EWHC 2361 (Comm), the English Commercial Court confirmed that arbitrators have the power to award the costs of a third party funder. These are considered to be "other costs of the parties" under s.59(1)(c) of the 1996 Act.

Romania Small Flag Romania

Third-party funding is not frequently used in Romania. In fact, litigation funding by a third party is not officially provided for within the Civil Procedure Code. Therefore, third-party funding of the proceedings is permitted, being no provision interdicting such procedure. The third-party funding will be governed by the agreement concluded between the funder and the beneficiary.

Turkey Small Flag Turkey

No specific regulation or restriction concerning third-party funding in arbitration is regulated under Turkish law.

Updated: June 26, 2018