ICDPASO Commercial Arbitration Rules Interpretation SeriesArticle 49: Arbitration Funded by Third Parties

Third-party funding (TPF) in arbitration refers to an arrangement where an external party (a person not a party to the arbitration) bears some or all of the costs of one party in exchange for a share of the proceeds if the case is successful. This mechanism is designed to leverage third-party capital to help parties pursue claims. However, it also presents potential challenges to procedural fairness, including impacts on the transparency of proceedings, the impartiality of the arbitral tribunal, and the scope of inquiries necessary to identify conflicts of interest. In response to this development, the International Commercial Dispute Prevention and Settlement Organization (ICDPASO) incorporated Article 49 into its Commercial Arbitration Rules to address arbitration funded by third parties. This article aims to analyze the provision's underlying logic and practical significance.

I.Text of Article49 “Arbitration Funded by Third Parties”

(1) The Arbitral Tribunal may, at the request of either party or at its own discretion after consulting the parties, require the parties to disclose the funding provided by a person other than a party to the arbitration (such as a third-party funder or insurer), or require the parties to disclose the economic interest that a person other than a party to the arbitration (such as a third-party funder, insurer, parent company, or ultimate beneficial owner) has in the outcome of the arbitration.

If there is any change in the foregoing information after the initial disclosure, the funded party shall disclose such change without delay.

(2) The Arbitral Tribunal may, as it deems necessary, require the funded party to disclose relevant information; if an arbitrator has an interest in the funding party, the arbitrator shall recuse himself/herself.

II.Provision Positioning and Systemic Logic

Article 49 of the ICDPASO Rules permits and supports the involvement of third-party funding while ensuring its compliant operation through the coordinated mechanisms of information disclosure and arbitrator challenge.

The systemic logic of this provision can be understood on three levels: First, it brings the funding relationship from "behind the scenes" into the open, enhancing procedural legitimacy through transparency. Second, it extends the review of arbitrators' potential conflicts of interest from the "party dimension" to the "funder dimension," using symmetrical information to help identify conflicts. Third, it establishes the disclosure obligation as a continuing duty rather than a one-time notification, dynamically managing changes in the funding relationship that may occur as proceedings advance. Together, these three levels constitute the normative framework within the ICDPASO Rules for addressing third-party funding.

III. Core Points and Jurisprudential Analysis

(A) Article 49(1): Information Disclosure Mechanism

1.Dual Structure for Triggering Disclosure: The provision states that the arbitral tribunal may initiate the disclosure process "at the request of either party" or "at its own discretion." The rationale for this dual structure is as follows: although disclosure is often requested by the non-funded party to identify potential conflicts of interest, that party may be unaware of the funding relationship's existence due to information asymmetry. Granting the tribunal the power to initiate disclosure ex officio is an institutional response to the practical dilemma that "one cannot request what one does not know." In this role, the tribunal is not merely a passive adjudicator but also assumes a function in safeguarding procedural fairness.

2.Penetrative Scope of Disclosure: The provision explicitly requires disclosure of two key categories of information: the funding relationship itself ("who is funding") and the funder's economic interest in the outcome ("why they are funding"). It extends the disclosure obligation from the funded party to its "parent company or ultimate beneficial owner," etc. In modern multinational commercial activities, funders may sometimes conceal their true identity through multi-layered corporate structures. If the disclosure obligation were limited to the direct contracting party, the mechanism for identifying conflicts of interest might not function effectively. Extending the disclosure scope to the ultimate beneficial owner can be seen as the ICDPASO Rules' response to this commercial reality.

3.Continuing Disclosure Obligation: The provision clearly states that if there is "any change in the foregoing information after the initial disclosure, the funded party shall disclose such change without delay." This transforms disclosure from a point-in-time obligation into a continuing duty. Funding relationships are not static; the funder might withdraw, change, increase funding, or adjust the profit-sharing arrangement during the proceedings. If disclosure were only required once, at the time of tribunal constitution, subsequent conflicts of interest could go unnoticed. The establishment of a continuing disclosure obligation ensures transparency throughout the entire lifecycle of the arbitration.

4.International Consensus and ICDPASO's Position: Disclosure of third-party funding has become common practice among international arbitration institutions. SIAC Arbitration Rules (2025) Article 38.1 requires a party to disclose the existence of any third-party funding agreement and the funder's identity and contact details in its Notice or Response, or as soon as practicable upon concluding such an agreement①. Article 38.2 further provides that the funded party must promptly notify the Tribunal, the parties, and the Registrar of any changes to a previously disclosed funding agreement②. ICC Arbitration Rules (2021) Article 11③ requires a party to promptly notify the Secretariat, the arbitral tribunal, and the other parties of the existence of a funding agreement with a non-party, that non-party's economic interest in the outcome, and the non-party's identity. Hong Kong SAR's Arbitration Ordinance Section 98U④ requires the funded party to give written notice to all parties of the fact that a funding agreement has been made and the name of the funder. HKIAC Arbitration Rules (2024) Article 44⑤ specifically addresses disclosure in third-party funded arbitration, requiring a party to notify all other parties of the fact that a funding agreement has been made and the identity of the funder. Compared with these rules, Article 49 of the ICDPASO Rules has two distinctive features: First, a relatively broader scope of disclosure subjects. In addition to the funder's identity, it explicitly requires disclosure of the "insurer, parent company, or ultimate beneficial owner," showing a clear intention to prevent concealment of beneficial interests through complex structures. Second, a more proactive triggering mechanism, with a relatively clear role for the tribunal to initiate proceedings ex officio.

(B)Article 49(2): Arbitrator Recusal Mechanism

1.Extended Scope of Challenge Obligation: The provision states: "if an arbitrator has an interest in the funding party, the arbitrator shall recuse himself/herself." This extends the subject of review for arbitrator challenge from the signatories of the arbitration agreement to the funder, who is not a party to the arbitration agreement. The rationale for this extension is that the core of a conflict of interest lies in the connection between the arbitrator and the outcome of the dispute, not merely the formal connection with specific legal entities. Although the funder is not a party to the arbitration, it has a direct economic interest in the outcome. If an arbitrator has a professional or financial relationship with the funder, the impartiality of the decision could be affected.

2.Source of Tribunal's Power: Inherent Procedural Management Authority.The provision states: "The Arbitral Tribunal may, as it deems necessary, require the funded party to disclose relevant information." This indicates that the tribunal's power to require disclosure can be understood as inherent to its procedural management authority, requiring no separate party authorization.

3.Preventive Regulation of Conflicts:Distinction Between Disclosure and Intervention Paths. Unlike ICDPASO's "disclosure + challenge" model, some arbitral institutions have adopted a more interventionist approach. For instance, the Singapore International Arbitration Centre has adopted a "prohibition + withdrawal" model. SIAC Arbitration Rules (2025) Article 38.3⑥ provides that after the constitution of the Tribunal, a party shall not enter into a third-party funding agreement which may give rise to a conflict with any Tribunal member; if such an agreement is made, the Tribunal may direct the party to withdraw from it. Both paths have different emphases, but both aim to identify potential conflicts early in the proceedings, thereby avoiding procedural delays and wasted resources that could result if an arbitrator is forced to withdraw later due to a discovered relationship with the funder.

IV. Practical Advantages of this Article

First, it facilitates source-level governance of procedural fairness. This provision is not a remedial mechanism activated after a conflict of interest arises. Instead, by mandating disclosure of the funding relationship at the outset, it enables the tribunal, the parties, and the arbitrators themselves to become aware of potential conflict factors early on, thereby preventing rather than curing conflicts of interest. This source-level governance approach may have advantages in terms of institutional cost compared to relying on post-hoc challenges by parties or subsequent challenge by arbitrators.

Second, it helps balance a firm baseline for disclosure obligations with discretionary flexibility. The provision establishes mandatory rules at crucial points – those meeting the disclosure criteria must disclose, and those with a relevant interest must challenge. Simultaneously, it reserves ample discretion for the tribunal – through the flexible standard "as it deems necessary" and the procedural trigger allowing action "at the request of either party or at its own discretion" – enabling the tribunal to adjust its management intensity flexibly according to the specific circumstances of the case. This normative structure helps seek a balance between regulatory density and procedural flexibility.

Third, it ensures compatibility with the international rules system. The core obligations in Article 49 are highly compatible with those in SIAC 2025 Rules Article 38 and ICC Rules Article 11: all focus on disclosing the funder's identity, all require continuing updates, and all require considering the funding relationship when reviewing arbitrator conflicts of interest. The disclosure obligations undertaken by parties under the ICDPASO framework do not fundamentally conflict with corresponding requirements under other major arbitral institutions. This systemic compatibility helps reduce procedural coordination costs in trans-institutional,trans-jurisdictional cases and also enhances the institutional resilience of ICDPASO awards when facing due process scrutiny during enforcement abroad.

Conclusion

Article 49 of the ICDPASO Rules is a pragmatic provision responding to real-world needs. By establishing a regulatory framework centered on information disclosure and backed by arbitrator challenge, it addresses, to some extent, the challenges posed by third-party funding to international arbitration. This provision not only reflects the foresight of the rule-makers but also, through the key way of increasing procedural transparency, attempts to strike a balance between encouraging financial innovation and maintaining arbitral fairness, providing a reference rule basis for tribunals managing third-party funded cases.

①SIAC Administered Arbitration Rules (2025) art.38.1 A party shall disclose the existence of any third-party funding agreement and the identity and contact details of the third-party funder in its Notice or Response or as soon as practicable upon concluding a third-party funding agreement. 

②SIAC Administered Arbitration Rules (2025) art.38.2: The funded party shall as soon as practicable notify the Tribunal, the parties, and the Registrar of any changes to the third-party funding agreement in respect of which disclosures had previously been made under Rule 38.1.

③ ICC Arbitration Rules (2021), Article11.7:In order to assist prospective arbitrators and arbitrators in complying with their duties under Articles 11(2) and 11(3), each party must promptly inform the Secretariat, the arbitral tribunal and the other parties, of the existence and identity of any non-party which has entered into an arrangement for the funding of claims or defences and under which it has an economic interest in the outcome of the arbitration.

④See Hong Kong Arbitration Ordinance Cap. 609, Sec. 98U: Disclosure of third party funding of arbitration — (1) If a funding agreement is made, the funded party must give a written notice of— (a) the fact that a funding agreement has been made; and (b) the name of the funder. (2) The notice must be given— (a) if the funding agreement is made at or before the commencement of the arbitration—at the commencement of the arbitration; or (b) if the funding agreement is made after the commencement of the arbitration—within 15 days after the funding agreement is made. (3) The notice must be given to— (a) each other party to the arbitration; and (b) the arbitral institution. (4) For the purposes of subsection (3)(b), if at the end of the time specified in subsection (2) for giving the notice there is no arbitral institution for the arbitration, the notice must be given to the arbitral institution immediately after there is an arbitral institution for the arbitration.

⑤HKIAC Administered Arbitration Rules (2024), Article 44(Disclosure of Third Party Funding of Arbitration), Article44.1 :If a funding agreement is made, the funded 

party shall communicate a written notice to all other parties, the arbitral tribunal, any 

emergency arbitrator and HKIAC of: (a) the fact that a funding agreement has been made; and (b) the identity of the third party funder. 

⑥See SIAC Administered Arbitration Rules (2025)art. 38.3: After the constitution of the Tribunal, a party shall not enter into a third-party funding agreement which may give rise to a conflict of interest with any member of the Tribunal. In such circumstances, the Tribunal may direct the party to withdraw from the third-party funding agreement.