Third Party Funding in Arbitration: An Overview

World has not been the same since the dawn of last decade. With increasing number of cross-border transactions international commercial and investment arbitrations have also increased concurrently. Arbitration is more efficient and time saving procedure (compared to domestic jurisdiction), but various expenses such as legal fees, arbitrator’s fees, attendant costs, venue costs, regular fees, miscellaneous expenses etc. makes arbitration a difficult process for parties. In order to help the weaker financial claimants, the concept of third-party funding came into existence. Third party funding is a concept in which a party which has no prior interest in the legal dispute provides finance to one of the parties with a hope getting a share in the damages awarded or a part of the settlement. The evolving phenomenon of third-party funding has taken the legal world by storm. However, it is important to note that India has been silent spectator with regard to this issue and continues to maintain the same stance. While many developing countries have made changes in their legislations in order to accommodate this process, India is yet to make a move. In this paper we have a discussed the concept of third-party funding in detail along with its pros and cons, practices in foreign countries and the status of third-party funding in India.