Disclosing Third-Party Funding Agreements in International Arbitration: Defining the Boundaries of Transparency

[Rohaan is a student at Maharashtra National Law University, Nagpur.]

The use of third-party funding (TPF) in international commercial arbitration is now a common and a well-established practice. As a result, discussions have moved from whether TPF should be disclosed to how much of it needs to be revealed. The main question for most arbitral tribunals is not if disclosure is needed, but how much a funded party must share about its financial arrangements with the tribunal and the other party. While transparency is important for maintaining the integrity of the arbitral process, it is not always an absolute good. This article argues that revealing the existence and identity of a funder is a necessary procedural safeguard. However, forcing the broad disclosure of funding terms unjustly infringes on party autonomy, business confidentiality and essentially the procedural fairness.

The Baseline Standard: Disclosing Existence and Identity

Across major arbitral frameworks, a decisive consensus has emerged regarding the minimum threshold of required transparency. Modern institutional rules, including the General Standard 7(a) of the 2024 IBA Guidelines on Conflicts of Interest, require the disclosure of two specific elements, the existence of the funding arrangement and the identity of the funder. For example, Article 11(7) of the 2021 ICC Rules of Arbitration places a clear duty on parties to disclose any non-party entity that has entered into an agreement to fund claims or defences. Similarly, the Rule 38.1 of the recently updated SIAC Rules of 2025, the gives tribunals the explicit power to order the disclosure of a party’s funding agreement and the identity of the funder. This disclosure provision, however existed inherently within the SIAC Rules of 2016, when read alongside the SIAC Practice Note on arbitrator’s conduct in cases involving external funding. Moreover, Rules 14 of the 2022 ICSID Arbitration Rules established a strict, ongoing obligation for parties to file a written notice that discloses the name and address of any non-party from which they receive funding.

The ICCA-Queen Mary Task Force Report on Third-Party Funding in International Arbitration (ICCA Report) outlines the reasons for this guideline as mainly administrative and protective. The objective is to ensure the tribunal’s independence and fairness and party should proactively reveal the existence of a TPF arrangement and the funder’s identity to the arbitrators and the arbitral institution as soon as they first appear or through their Notice of Arbitration, and such a disclosure is usually considered sufficient to deal with potential conflicts of interest.

The Contentious Frontier: Demands for Substantive Terms

While disclosing the funder’s identity is now a common practice, modern arbitration has seen a rising effort to disclose the substantive terms of funding agreements. Non-funded parties are increasingly challenging this standard, arguing that mere disclosure of identity is not sufficient and petitioning tribunals to the production of the actual Funding Agreement, or at least its core economic and structural provisions. Non-funded entities typically justify these expansive document production requests by relying on two primary arguments.

Assessing funder control and the real party in interest

Non-funded parties frequently argue that they must ascertain the extent to which the funder exercises control over the dispute. In modern litigation finance, funders are rarely passive. They often have the right to look over budgets, approve the choice of counsel, or look over settlement offers. The non-funded entities usually assert that if a funder holds veto power over a settlement, the funder functions as a de-facto party, raising serious concerns of the integrity of the arbitral process. In Bacilio Amorrortu v. The Republic of Peru, the tribunal held that the funded entity bears no obligation to furnish particulars concerning the quantum of control, retained by its funder in respect of the arbitral proceedings.

The catalyst for security for costs

The most common and compelling reason for disclosure of substantive terms is to obtain security for costs. The ICCA Report highlighted that non-funded entities have a valid concern about hit-and-run arbitrations, in which an undercapitalised funded parties uses external funds to pursue a claim but does not have the resources to pay for an adverse costs award if they lose. To ensure a funder is actually liable for adverse costs, non-funded entities usually request disclosure of the funding agreement. The disclosure is sometimes seen necessary because funding agreement often contain discretionary termination rights, non-liability clauses and even a complete absence of adverse cost coverage.  In RSM Production Corporation v. Saint Lucia, the presence of a third-party funder and a history of non-payment led to a successful order for security for costs. Generally, disclosure is not required and also not appreciated by the funded party before a formal application for security for costs is submitted to the tribunal by the counterparty. In Speers and Johnson v. MakeMyTrip and Hotel Travel, disclosure was limited strictly to the identity of the third-party funder. Since there was no application for security for cost, the tribunal preferred not to go further into substantive details of the funding arrangement to avoid any potential bias. However, in the case of Muhammet Çap v. Turkmenistan, the ICSID tribunal mandated the early disclosure of agreements essentially to protect the integrity of the proceedings while the security for costs application was pending. 

Denial of Disclosure to Substantive Terms

While identifying the funder is essential to safeguard the tribunal’s impartiality, extending this obligation to encompass the substantive terms of the funding agreement constitutes a significant overreach and the funded party would be placed at a substantial disadvantage in relation to the other party, violating the principle of equal treatment. Article 18 of the UNCITRAL Model Law provides for the equal treatment of parties. Funding agreements inherently contain privileged assessments of the case’s merits, detailed litigation budgets and at times, predetermined settlement thresholds. If a non-funded respondent gains access to these commercial terms, they acquire an unfair tactical advantage. In P&ID v. Nigeria, it was held that a breach of this principle would occur where a party’s arbitration strategy is placed in the control of the opposing party by such a broad disclosure. The IBA Rules on the Taking of Evidence permit document disclosure where the documents are adequately identified, relevant to the dispute and material to the outcome of the case.

Funded parties frequently and rightfully resist demands for the disclosure of substantive TPF arrangements by relying on the presence of after-the-event (ATE) insurance or adverse cost insurance. Major international instruments on TPF recognize insurance policies of this nature as a form of third-party funding, thereby rendering them subject to disclosure obligations as well, albeit it has been it has been held that adverse costs insurance policies rarely provide the same level of security and when the funded parties have a unstable financial situation, the substantial terms of both the TPF arrangement and ATE insurance should be disclosed to enable the non-funded party to secure the necessary security for cost.

Conclusion: Preserving the Equilibrium of Arbitral Fairness

In conclusion, transparency in international arbitration is important for maintaining the credibility of the process but it should not be treated as unlimited access to substantial terms. The current approach adopted by most institutions, which requires disclosure of  solely the existence and identity of a third-party funder strikes a fair and reasonable balance. This basic requirement helps identify possible conflicts of interest and protects the independence and impartiality of the tribunal. However, going further and routinely requiring disclosure of the detailed commercial terms of funding arrangements would amount to an excessive procedural intrusion.

Broad disclosure obligations unfairly disadvantage funded parties by compromising their business confidentiality and revealing sensitive strategic information to the opposing side. Indeed, tribunals should be aware of the risks of transparency being used as a weapon. Procedural tactics, such as requests for security for costs should not be used as an indirect means to investigate a party’s funding arrangements, especially when protections like comprehensive ATE insurance already address the risk of adverse costs.

Ultimately, the objective of regulating TPF must be strictly confined to protecting the structural integrity of the arbitral process and not to changing the substantive playing field. The international arbitration community can ensure that third-party funding continues to promote access to justice by setting clear boundaries on disclosure requirements and avoiding unnecessary interference with private funding arrangements.