2016.ANA METIN ingilizce.01

Pros and Cons – Discussions on Third Party Funders

In General

Third party financing enables parties to initiate their meritorious

claims without concern over scarcity of their finances. It is argued that

third party financing is favorable and beneficial since it promotes

access to justice for parties who financially cannot support a dispute,

enables them to maintain their cash flows, and pursue their claims.

However, the increase of third party funders’ presence in arbitra-

tion has resulted in numerous discussions and concerns. The main con-

cerns are governing impartiality and independence of arbitrators, and

the necessity of security for costs

; which are briefly assessed, below.

Furthermore, it may be argued that the mere existence of financ-

ing, or the denial of financing, may result in bias as to whether or not

a claim is meritorious. The funders engage in a thorough analysis of a

case they are asked to finance; therefore, their choice of whether or not

to finance a party may affect how a claim is regarded by third persons

(for instance, the arbitrators). On the other hand, a party may also

request a case assessment by a potential funder prior to initiating its

claim. This way, if rejected by a funder, a party who decides to not ini-

tiate its claim may be spared unnecessary legal costs, which is consid-

ered practical and/or favorable

Impartiality and Independence of Arbitrators

In international arbitration, the lack of impartiality and indepen-

dence of an arbitrator may have severe consequences, such as the chal-

lenge and/or annulment of an award. Arbitration rules enable and gov-

ern procedures for the challenge of an arbitrator. Further, if and once

an award is rendered, lack of impartiality or independence may prevent

ARBITRATION LAW

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For further information please see

Carlos González-Bueno

and

Laura Lozano

, Third Party

Funding Again Under the Spotlight

party-funding-again-under-the-spotlight/ (accessed on 18 September 2015).

For further assessment on the impact of third party funders on the parties whose financing

requests have been denied, please see

Victoria A. Shannon

, The Impact of Third-Party Funders

on the Parties They Decline to Finance,

the-impact-of-third-party-funders-on-the-parties-they-decline-to-finance/ (accessed on 22

September 2015).