Third-Party Funding In Arbitration

To overcome risking of its own finances or obtain additional financing to pursue legal action, an individual or firm can approach a third party to agree to finance all or part of its legal costs

- Saurabh Bhagotra

Originally, arbitration was designed as a more cost-effective method of dispute resolution as compared to litigation. Unfortunately, high-value arbitration proceedings have ended up being quite expensive as they are often managed like a court case. A claimant is at a disadvantage if he or she does not have the financial resources to instruct a team of lawyers to properly deal with the matter under arbitration. This goes against the principle of a right to justice for all.

To overcome the issue of risking its own finances or to obtain additional financing to pursue legal action, an individual can approach a third party (with no prior connection to the case or party) to agree to finance all or part of its legal costs, in expectation of receiving a substantial percentage of a monetary order, should the party be successful.