Arbitration funding is becoming increasingly more prevalent in England and Wales. Funders are legally sophisticated and understand a wide breadth of claim types, with each funder having a varying risk profile and appetite. Recent product developments include funders seeking to identify and fund bundles or portfolios of claims. Other innovations include pre-funding to allow claimants to determine the merits of an action and providing funding for general working capital.
The third-party arbitration funding market is clearly developing in the Netherlands. A number of international funders are active on the Dutch market and, for the past few years, several national funders have been equally active. It is difficult to say at this stage whether external regulation is required. Once funders cater more frequently to less experienced claimants (eg, small and medium-sized enterprises and consumers), regulation may become desirable.
The Canadian courts have confirmed in a series of recent cases that third-party funding is permitted in Canada. Previously, in Canada's common law jurisdictions (ie, all provinces aside from Quebec), opportunities for third-party funding were constrained by the longstanding common law principles of maintenance and champerty. However, the law has evolved to permit third-party funding, subject to certain restrictions.
Third-party arbitration funding has not yet become popular in Poland, but its growing importance in the field of international arbitral practice means that it is gradually entering the Polish market. In particular, foreign sponsors are willing to cover a party's legal fees and expenses incurred in arbitration, as the Polish market is still developing and such investment is needed.
While third-party funding is expressly recognised in the context of civil suits in several states, the legality of third-party funding in arbitrations cannot be adduced from the select group of Indian states which allow third-party funding in civil suits. However, a constitutional bench of the Supreme Court has noted that a champerty contract in which returns are contingent on the success of the case is not per se illegal.
Third-party funding is uncommon in Cyprus. Opinions vary on whether such activities are permissible since this issue has not yet been put before the courts. The Cyprus courts could adopt similar principles to those of English law in relation to this matter in order to allow third-party funding in litigation or alternative dispute resolution proceedings. However, those seeking to adopt such a procedure must be careful since the Cyprus courts might be reluctant to allow it.
Third-party funding is uncommon in Greece and, to date, there is no known or recorded precedent of an arbitration funded by a third party. Although Greece has no specific regulation for third-party funding, it does not prohibit third-party funding in arbitration either. As such, those intending to engage in third-party funding are strongly advised to address potential risks (especially issues of financial interests) in carefully drafted funding agreements and other matters in the arbitration agreement itself.