SAA Papers
Janis Matthys* has written a research paper on “How to Balance Third Party Funding and Confidentiality in International Arbitration?” for Volume 5 of the Selected Papers on International Arbitration series. Here it is a brief summary of his paper:
The last few years have seen a remarkable increase in Third Party Funding (TPF), initially focused on investment arbitration, but now spreading to international commercial arbitration as well. While the great TPF debate appears to focus on the issues of conflicts of interest, security of costs and legal privilege, the possible conflicts of TPF and confidentiality have so far received comparatively little attention. Perhaps not rightly so, as the following example illustrates:
The parties to an arbitration have agreed to arbitrate a dispute with the applicable arbitration rules providing for confidentiality regarding both the arbitration’s existence and the documents submitted throughout the arbitral proceedings. Nevertheless, due to financial difficulties, the claimant submits the case to a funder for monitoring purposes. Subsequently, a funding agreement is reached, and the claimant discusses the details of the case with the funder. Did the claimant violate its confidentiality obligations?
Under the assumption that the parties are bound by wide-reaching confidentiality obligations, sharing detailed information about the case with a funder appears to be outright contradictory. There is a very real concern that the funder might not only disseminate confidential information, but also use information about the opponent itself for the purposes of financing subsequent disputes involving or affecting the opponent, or otherwise profit from this information to the detriment of the latter.
On the other hand, parties seeking funding likewise have a legitimate interest in disclosing information to funders. A funder will require comprehensive information to conduct a thorough assessment of the case. Without disclosing at least some (probably sensitive) information a party will not be able to access funding. As a result, interpreting confidentiality obligations rigorously may lead to essentially excluding TPF and thereby access to justice. These conflicting interests can be difficult to weigh and even more difficult to reconcile.
This paper aims to examine what approach is best suited to strike a balance between confidentiality concerns on one side and the demand for TPF on the other side.
*Janis Matthys graduated from the University of Zurich in 2018 with a Master‘s degree. During his studies, he worked in business law firms in Zurich and Munich and was an Intern at CIETAC Arbitration Center in Hong Kong. Also, Janis Matthys was a team member of the University of Zurich at the 23rd Willem C. Vis Moot Court. Currently, Janis Matthys pursues a PhD in international arbitration at the University of Zurich and is coaching the Willem C. Vis Moot Team of the University of Zurich. He received the CAS in Arbitration from the Swiss Arbitration Academy in 2018.
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