Global uptick in third-party funding of international arbitration continues

Litigation and arbitration funding have become mainstream risk management tools, particularly in in evolving, international disputes. Between October 2024 and March 2025, 87% of global arbitration users favoured funding arrangements driven by efficiency, risk-sharing, and access to justice, according to research by Queen Mary University of London. Moreover, 16% of cases heard before the International Centre for Settlement of Investment Disputes (ICSID), the world’s largest dispute resolution body, between July 2022 and April 2025 involved TPF. 

The growing success of TPF in any jurisdiction hinges on well-structured litigation funding arrangements (LFAs), early disclosure, security-for-costs planning, and maintaining funder independence. However, the rules governing the use of TPF are specific to each jurisdiction and care should be taken around compliance. Conditional fee arrangements (CFAs), for example are recoverable in some jurisdictions, such as Australia, while in other jurisdictions, like England and Wales, they have largely been abolished.

Transparency is crucial and mandatory disclosure and conflict management are increasingly codified either by law or institutional rules. The UK Arbitration Act came into force on 1 August 2025, updating and modernising the existing arbitration regime that applies in England & Wales and Northern Ireland. However, the act did not introduce any regulation related to the disclosure of third-party funding. Instead, this issue continues to be shaped by the fallout from the PACCAR ruling in 2023 which explicitly excluded arbitration from the statutory regime and prompted a widespread review of litigation funding.

In its review (150-pages /1MB PDF), published in June 2025, the UK Civil Justice Council (CJC) confirmed that arbitration funding remains under institutional and market-based governance and “should remain a matter for arbitral centres to determine whether and, if so, how any such regulation should be implemented”.

Institutional and national developments

Many arbitral institutions have now produced guidance on the disclosure obligations of parties involved in third-party funding arrangements.

SIAC introduced updated arbitration rules in 2025 to boost efficiency and transparency in arbitration proceedings, and provide parties with greater certainty in the timeframe for issuing awards. The 2025 rules include a new provision regarding third-party funding. This requires a party to disclose the existence of any third-party funding agreement and the identity of the third-party funder, which is in line with widely adopted best practices.

The tribunal may order disclosure of details of the third-party funder's interest in the outcome of the proceedings and whether the third-party funder has committed to undertake adverse costs liability. The requirements on disclosure and related powers of the tribunal are fairly extensive. Under the 2025 rules, the tribunal is given wide discretion in cost apportionment on account of a third-party funding arrangement being in place, and can take appropriate measures, including issuing an order or award for sanctions, damages, or costs, if a party does not comply with any obligations or orders for disclosure.

The HKIAC Rules were updated in 2024 and include an obligation on a party to inform other parties, the tribunal and the HKIAC of the existence of funding and the identity of the funder. That obligation lasts the duration of the proceedings.

The Qatar International Centre for Conciliation and Arbitration (QICCA) implemented new arbitration rules in January 2025 as part of its efforts to provide more streamlined and efficient arbitration services to its users. Article 9 of those Rules requires disclosure of third-party funding details to QICCA or the arbitral tribunal, including identifying the funder. The obligation is ongoing, throughout the life of the proceedings.

The Abu Dhabi International Arbitration Centre (arbitrateAD) also introduced its own rules in 2024 and expressly acknowledged third-party funding in article 48. Parties are required to notify the case management office, other parties and the tribunal, of the existence and identity of any third-party funding arrangement. This duty is ongoing.

Most recently, in September 2025, the Chartered Institute of Arbitrators (CIArb) published new guidance (73-pages / 8.7MB PDF) on third-party funding, which outlines the different types of funding options, processes of funding a claim, typical LFA terms and discusses after the event (ATE) insurance and the role which it can play alongside third-party funding arrangements in arbitration. The guidance also considers case management of arbitration involving a funded party and the impact of a funding arrangement on arbitration.

National and regional developments

There were also several significant TPF developments that took place at a national and regional level in 2025.

In Australia, in August 2025, the High Court delivered its much-anticipated judgment in Kain v R&B Investments, ruling that the Full Federal Court can make a common fund order in class actions in favour of litigation funders, but lacks the power to do so in favour of solicitors, as doing so would contravene the prohibition on contingency fees under the Legal Profession Uniform Law.

The landmark ruling clarifies the distinct treatment of solicitors and litigation funders in Australian class actions, confirming that while common fund orders may be made in favour of third‑party litigation funders at settlement or judgment, they are not available to solicitors. The decision is expected to entrench Victoria’s position as the preferred forum for solicitor‑funded class actions, given the availability of group costs orders, while at the same time providing greater certainty for third‑party litigation funding across all Australian jurisdictions.

TPF has continued to evolve in the EU. The European Commission’s highly anticipated mapping study published in March 2025 recognised that while arbitration, particularly investment arbitration and high‑value commercial arbitration, is increasingly funded by third parties, the regulatory landscape remains fragmented across the EU and institutional rules and market practice currently fill governance gaps.

While strong stakeholder support exists for improved transparency, mandatory disclosure, conflict checks and cost-recovery frameworks, the Commission has not yet progressed EU-level arbitration-specific TPF legislation. Instead it continues to monitor developments, particularly through the implementation of the Representative Actions Directive.

Challenges and implications

TPF in private arbitration has also given rise to some empirical and ethical challenges, particularly surrounding arbitrators’ impartiality.

In one notable ICSID case, Silver Bull Resources, Inc. v United Mexican States, the claimant sought to disqualify Philippe Sands KC from acting as arbitrator in a $408 million claim over “serious concerns” he had previously expressed about the use of TPF in investment arbitration.

The co-arbitrators determined that Sands had not exhibited “bias” or a “predisposition” (20-pages / 298 KB PDF) against parties that rely on TPF, but had merely articulated concerns regarding the systemic risks associated with the use of such funding. The disqualification proposal was therefore dismissed. However, the case highlights some of the potential pitfalls of disclosure and what questions it raises for objectivity of arbitrators and claimants’ ability to bring challenges that could delay proceedings and lead to further unforeseen costs in arbitration proceedings that are already costly.

While the rules of each tribunal will vary, in general arbitrators are encouraged to update disclosures continuously to prevent potential allegations of bias. The International Bar Association (IBA) Guidelines on Conflicts of Interest in International Arbitration, (21-pages / 132KB PDF) provides internationally recognised standards for the impartiality and independence of arbitrators, as well as disclosures in specific circumstances, which may offer a framework that goes some way towards mitigating potential disclosure challenges.