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Home Posts tagged "Third-Party Funding"

Revisiting ‘Interested Parties’ in Investor-State Arbitration: Ticaret Procedural Order No. 3’s Compelled Disclosure of Third-Party Funders

Published on August 3, 2015        Author: 

On 12 June 2015, the arbitral tribunal – composed of Professors Julian Lew, Laurence Boisson de Chazournes, and Bernard Hanotiau – in Muhammet Çap & Sehil Inşaat Endustri ve Ticaret Ltd. Sti v. Turkmenistan [ICSID Case No. ARB/12/6] issued its landmark Procedural Order No. 3, ordering the claimant-investors therein to confirm:

 “whether its claims in this arbitration are being funded by a third-party funder, and if so, shall advise Respondent [Turkmenistan] and the Tribunal of the name or names and details of the third-party funder(s), and the nature of the arrangements concluded with the third-party funder(s), including whether and to what extent it/they shall share in any successes that Claimants may achieve in this arbitration.” (Tribunal’s Decision in Order, para. 13.)

Ticaret Procedural Order No. 3 is the first such order issued in the ICSID (International Centre for Settlement of Investment Disputes) system that directly compels parties to disclose third-party funding arrangements in investor-State arbitration. Most importantly, it is the first publicly known arbitral order to confer (tacit) recognition to the critical role of third-party funders as part of the complex spectrum of interested parties in an investor-State arbitration. Apart from host States and investors, tribunals have thus far accepted that assignments of interest may be made by investor-claimants, without jeopardizing their standing in the dispute. In Ceskoslovenska Obchodni Banka, A.S. (CSOB) v. Slovak Republic [ICSID Case No. ARB/97/4, Decision on Jurisdiction, 24 May 1999, para. 32], held that, even in cases of assignments or subrogations of interest by investor-claimants, the “absence of beneficial ownership by a claimant in a claim or the transfer of the economic risk in the outcome of a dispute should not and has not been deemed to affect the standing of a claimant in an ICSID proceeding, regardless of whether or not the beneficial owner is a State Party or a private party.” The Ticaret Procedural Order No. 3 is the first instance that an investor-State tribunal openly conceded that a third-party funder’s financing arrangements with an investor-claimant could have a significant bearing on the substantive outcomes and procedural fairness of the arbitration. Read the rest of this entry…