Third-party funding in international arbitration and its impact on procedure / Jonas Von Goeler.
2016
K2400 .G64 2016 (Map It)
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Details
Title
Third-party funding in international arbitration and its impact on procedure / Jonas Von Goeler.
Published
Alphen aan den Rijn, The Netherlands : Kluwer Law International, [2016]
Call Number
K2400 .G64 2016
ISBN
9789041150158 (hardback)
9041150153
9041150153
Description
xxxvi, 481 pages ; 25 cm.
System Control No.
(OCoLC)941071750
Bibliography, etc. Note
Includes bibliographical references (pages 439-462) and index.
Record Appears in
Table of Contents
Foreword
xxiii
Preface
xxvii
List of Abbreviations
xxix
ch. 1
Introduction
1
1.01.
Dilemma of Costs in International Arbitration and a Way Out
1
1.02.
Terminology: Litigation Funding and Third-Party Funding
2
1.03.
Litigation Funding: Perspectives, Perceptions, and Emotions
3
1.04.
Dealing with Reality: International Arbitral Procedures Involving Funded Parties
4
1.05.
Aim and Method of This Work
6
1.06.
Scope and Structure of This Work
7
Part I Third-Party Funding in International Arbitration
9
ch. 2
Various Forms of Third-Party Funding in International Arbitration
11
2.01.
Litigation Funding Agreements
12
A.
Case Assessment
13
1.
Assessment Process
13
a.
Initiative and Timing
13
b.
Multi-step Process
14
c.
Multi-disciplinary and Rigorous Process
14
d.
Time and Costs
16
e.
Exclusivity Period, Confidentiality Agreement, and Waiver of Counsel's Professional Secrecy
17
2.
Assessment Criteria
18
a.
Quantum of the Claim
18
b.
Investment Costs and Time until Expected Recovery
19
c.
Facts, Law, and Evidence
20
d.
Respondent Solvency and Enforceability of the Award
20
e.
Claimant's Legal Team
21
f.
Decision Makers Involved
21
g.
Portfolio Management Considerations and Investment Policy
22
h.
Previous Unsuccessful Attempts at Obtaining Funding for the Claim
22
3.
Assessment Methodology
23
a.
Approaches
23
b.
Claim's Probability of Success; Selection Rates
25
4.
Case Assessment and the Funder's Ability to Exert Control over the Claim
26
B.
Litigation Funding Agreement: Investment and Return
28
1.
Funder's Investment
28
a.
Cost Categories
28
b.
Case Budget
29
2.
Funder's Return
30
C.
Litigation Funding Agreement and Ancillary Agreements: Further Essential Terms
32
1.
Obligations of the Funded Party Relating to Case Assessment and Case Monitoring
32
2.
Risk Sharing with Counsel
33
3.
Priorities Agreement
34
4.
Control Rights of the Funder
35
5.
Termination Rights of the Funder
35
6.
Dispute Resolution Clauses
37
7.
Confidentiality Agreement and Nondisclosure Agreement
38
D.
Case Monitoring
39
1.
Monitoring Process
39
2.
Case Monitoring and the Funder's Ability to Exert Control over the Claim
41
a.
Control via Contractual Rights to Control Strategic Decisions
41
b.
Control via Case Budgeting
42
c.
Control via Termination Rights and Provisions on the Consequences of Settlement
44
d.
Restrictions on Control Depending on Applicable Law
45
3.
Case Monitoring and Alignment of Interests
46
4.
Result
48
E.
Litigation Funding Agreements for Respondents
49
F.
Related but Less Standardized Transactions: Litigation Finance
50
2.02.
Other Forms of Third-Party Funding
51
A.
Success Based Legal Fee Arrangements
51
1.
Contingency Fee Arrangements
52
2.
Conditional Fee Arrangements
52
B.
Insurance Policies
53
1.
Legal Expenses Insurance
53
a.
Before-the-Event Insurance
53
b.
After-the-Event Insurance
53
2.
Liability Insurance
54
a.
Before-the-Event Insurance for Liability
54
b.
After-the-Event Insurance for Liability
54
3.
Political Risk Insurance in the Context of Investment Protection
56
C.
Loan Agreements
56
D.
Corporate Finance Instruments
56
E.
Factoring
57
F.
Legal Aid
57
G.
Strategic Third-Party Funding
58
2.03.
Comparison of Litigation Funding with Other Forms of Third-Party Funding
59
A.
Qualification of the Litigation Funding Agreement as an Existing Type of Contract under German Law and French Law
60
1.
German Law: Atypical Silent Partnership
60
2.
French Law: Contract Sui Generis
61
B.
Debate in International Arbitration: In Search of Definitions
61
1.
Relevance and Purposes of Developing Definitions
62
2.
Litigation Funding and Other Forms of Third-Party Funding: Differences and Similarities
63
a.
Litigation Funding as For-Profit Funding
63
b.
Litigation Funding as a Direct Investment in the Claim
64
c.
Litigation Funding as a Specialized Investment in the Claim
65
d.
Litigation Funding and Professional Rules
65
e.
Litigation Funding and the Ability to Pool and Spread Risk
66
f.
Litigation Funding and Secondary Markets in Legal Claims
66
g.
Litigation Funding and Success Based Legal Fee Arrangements
67
h.
Litigation Funding and Insurance
68
i.
Litigation Funding and Loans
68
3.
Consequences for Approaching Disclosure in International Arbitration Proceedings
68
C.
Result
70
ch. 3
Litigation Funding in International Arbitration
73
3.01.
Rise of Litigation Funding as a Means of Financing International Arbitration Proceedings
74
A.
Supply
74
1.
Funders of International Arbitration Proceedings
75
2.
Capital Raised and Investment Activity
77
B.
Demand
80
3.02.
Policy Debate: Benefits and Risks Associated with Litigation Funding in International Arbitration
82
A.
Potential Benefits of Litigation Funding
82
1.
Promotes Access to Justice
82
a.
Financially Distressed and Financially Stable Parties
83
b.
Limitations
84
c.
Impecunious Parties and Agreement to Arbitrate
85
2.
Levels the Playing Field
87
B.
Potential Risks of Litigation Funding
88
1.
Commodifies Claims
88
2.
Stirs Up Disputes
91
a.
Contributes to More Arbitration Disputes
91
b.
Encourages Frivolous Claims
92
3.
Discourages Settlement
95
4.
Burdens the Attorney-Client Relationship
96
a.
Litigation Funders Will Assume Control
97
b.
Threatens Counsel's Independence and Impartiality
98
c.
Compromises Loyalty to the Client
99
d.
Conflicts with Professional Secrecy Obligations
100
e.
Might Cause Waiver of Otherwise Applicable Privilege Protection
101
f.
Creates Additional Duties for Counsel to Inform and to Advise about Litigation Funding
101
C.
Debate in the Context of International Investment Arbitration
102
3.03.
Regulation of Litigation Funding in International Arbitration
104
A.
Structuring the Discussion
105
B.
ALF Code
106
C.
Further Regulatory Attempts and Future Directions
108
1.
Holistic Approaches to the Regulation of Litigation Funding
109
a.
General Prohibition
109
b.
Regulation on the Arbitration Level
109
c.
Regulation in the United States
110
d.
Regulation in Australia
110
e.
Regulation in France
111
f.
Regulation on the European Union Level
111
2.
Regulating Financial Aspects
111
a.
Capital Adequacy
111
b.
Capital Markets
112
i.
Securitization of Claims
112
ii.
Corporate Governance Rules for the Funding of Listed Companies
113
3.
Regulating Professional Conduct
116
4.
Regulating Procedural Aspects
117
3.04.
Summary
117
Part II Impact of Third-Party Funding on Arbitral Procedure
121
Fact-Finding and Evidence-Taking
123
ch. 4
Disclosure of Third-Party Funding in International Arbitration Proceedings
125
4.01.
No General Duty or Practice to Disclose Third-Party Funding as Such
126
A.
No General Duty or Practice to Disclose
126
B.
Voluntary Disclosure and Inadvertent Disclosure
127
C.
Disclosure for Reasons Not Linked to the Arbitration Proceedings
128
1.
Disclosures by Listed Funded Parties and Funders to Comply with Public Disclosure Requirements
128
2.
Disclosure Following Disputes between Funded Party and Funder
128
D.
Interim Result
130
E.
Statutory Disclosure Rules in the Context of (Class) Litigation
130
4.02.
Duties to Disclose Facts Related to Third-Party Funding in Order to Handle Specific Procedural Issues
131
A.
Handling Disclosure Based on Established Rules and Practices
132
1.
IBA Guidelines 2014
133
2.
Standards Governing Document Production
133
a.
Arbitral Cases Handling Disclosure of Funding Agreements Based on General Standards of Document Production
134
b.
Approaching Disclosure of Funding Agreements Based on Articles 3 and 9 IBA Rules on Evidence
137
3.
Interim Result
140
B.
Trends towards a General Duty to Disclose Third-Party Funding - And Why They Should Not Be Followed
141
1.
Broader Implications of Third-Party Funding Invoked to Justify Disclosure: A Closer Look
142
a.
Regulating the Relationship between Funded Party and Funder
142
b.
Ensuring Procedural Equality
145
c.
Taking into Account Ethical Rules Prohibiting the Funding Structure behind a Party in Arbitration
146
d.
Procedural Good Faith and Counsel's Duty of Candour
146
e.
Arbitrator Proactivity
148
2.
Interim Result: Approaches towards Disclosure - Thinking inside the Box versus Thinking outside the Box
149
3.
Maintaining the Current Disclosure Regime is Preferable
150
a.
Imposing General Disclosure of Third-Party Funding Is Unworkable
151
b.
Imposing General Disclosure of Third-Party Funding Is Unnecessary
154
c.
Addressing Privilege Concerns and Risks of Adverse Influence on the Tribunal
158
4.03.
Conclusion
160
ch. 5
Privilege Protection of Documentary Evidence and Third-Party Funding
163
5.01.
Privilege and Waiver in International Arbitration Proceedings: Legal Framework and Discretionary Approaches
165
A.
Lex Arbitri
165
B.
Party Agreement
165
C.
Arbitrator Discretion
166
D.
Result and Consequences for the Following Analysis
169
5.02.
Privilege Applicable to Litigation Funding-Related Documents and Potential Waiver of Privilege by Exchange of Documents with Litigation Funders
169
A.
Disclosure of Litigation Funding in the Context of Document Production Requests
171
1.
Disclosure of a Litigation Funder's Existence as a Precondition for Document Production Requests
171
2.
Interrelationship between Specificity/Relevance/Materiality and Privilege Defences
172
3.
Can Document Production Be Ordered Directly against the Litigation Funder?
173
B.
Documents Created by Counsel and Shared with Litigation Funders
174
1.
Arguments against Privilege Protection
175
a.
Leader Techs. v. Facebook
175
b.
Main Argument Flowing from Leader Techs. v. Facebook: Lack of 'Common Interest' with Litigation Funder, in Particular Where No Funding Agreement Has Been Concluded
177
i.
Approaching the 'Common Interest' Issue from a Reasonable Expectations Perspective
178
ii.
Where No Funding Agreement Has Been Concluded
180
iii.
Result: Formal Distinction between Common Legal and Commercial Interests Unpersuasive from a Reasonable Expectations Perspective
180
c.
Bray & Gillespie Management LLC v. Lexington Insurance Co.
181
d.
Lack of Industry-Specific Confidentiality Requirements for Litigation Funders
181
2.
Arguments in Favour of Privilege Protection
182
a.
Mondis Technology Ltd. v. LG Electronics, Inc.
182
b.
Devon IT, Inc. v. IBM Corp.
184
c.
Walker Digital, LLC v. Google, Inc.
186
d.
Arguments by Analogy between Litigation Funders and Other Third Parties
187
i.
Independent Auditors
187
ii.
Prospective Buyers of Companies in Litigation
188
iii.
Insurers and Counsel Operating under Success Based Legal Fee Arrangements
188
3.
Summary Assessment
190
4.
Result
192
C.
Documents Created by Litigation Funders and Shared with Counsel
192
1.
Applicability of Privilege: Discussion
192
2.
Result
194
D.
Litigation Funding Agreements and Related Communications
195
1.
Applicability of Privilege
195
a.
Interrelationship with Specificity, Relevance, and Materiality
195
b.
Discussion
196
c.
Synthesis
198
2.
Waiver of Applicable Privilege
199
a.
In Case of Voluntary Disclosure
200
b.
Where the Litigation Funding Agreement Enters the Public Domain
200
5.03.
Conclusions: Guidelines
201
A.
Guideline 5a
202
B.
Guideline 5b
202
C.
Guideline 5c
202
D.
Concluding Remarks
203
B Arbitration-Specific Issues
205
ch. 6
Jurisdictional Issues and Third-Party Funding
207
6.01.
Jurisdictional Issues in International Commercial Arbitration
208
A.
Funder as a Non-signatory to the Arbitration Agreement
209
B.
Relevant Procedural Scenarios for Determining Jurisdiction
210
1.
Inclusion of the Funder as an Additional Party by Way of Joinder
210
a.
Inclusion to Establish Liability
211
b.
Inclusion to Establish Liability for Costs
211
c.
Other Potential Reasons for Inclusion
211
d.
Procedural Mechanism: Joinder
212
2.
Substitution of the Funded Party by Virtue of Assignment or Subrogation
212
C.
Inclusion of the Funder as an Additional Party to the Arbitration
214
1.
Implied Consent
214
2.
Group of Companies Doctrine
216
3.
Non-consensual Theories
217
a.
Estoppel
217
b.
Alter Ego
218
4.
Jurisdictional Approach
219
5.
Result and Consequences for the Conduct of Arbitral Proceedings
219
D.
Substitution of the Funded Party by the Funder
221
1.
Assignment
221
a.
Where the Funding Agreement Stipulates an Express Assignment of Rights under the Main Contract
222
b.
Where the Funding Agreement Does Not Stipulate an Express Assignment
222
2.
Subrogation
223
E.
Conclusion: Guidelines
224
1.
Guideline 6.01a
224
2.
Guideline 6.01b
224
3.
Concluding Remarks
224
6.02.
Jurisdictional Issues in International Investment Arbitration
225
A.
Third-Party Funding in the Context of Investment Treaty Jurisdiction
225
B.
Funded Claimant and the Funding Agreement's Impact on the Funded Claim's Admissibility
228
1.
Analysis of Arbitral Case Law
228
a.
CSOB v. Slovakia
228
b.
Compaiila de Aguas del Aconquija S.A. and Vivendi Universal S.A. v. Argentine Republic
230
c.
Teinver S.A., Transportes de Cercanfas S.A. and Autobuses Urbanos del Sur S.A. v. The Argentine Republic
231
d.
RosInvestCo UK Ltd. v. The Russian Federation
233
e.
Saluka Investments BV v. The Czech Republic
234
f.
Quasar de Valores v. the Russian Federation
235
g.
L.E.S.I. - DIPENTA v. Algeria / BIVAC B.V. v. Paraguay
236
h.
Abaclat and Others v. The Argentine Republic / Ambiente Ufficio S.P.A. and Others v. The Argentine Republic / Giovanni Alemanni and Others v. The Argentine Republic
237
2.
Summary Assessment: Guidelines
239
a.
Guideline 6.02a: Funding Agreement Does Not Affect Jurisdiction if Effective after the Initiation of Proceedings
240
b.
Guideline 6.02b: Transfer of Economic Interest to the Funder before Initiation of Proceedings Does Not Affect Jurisdiction
240
c.
Guideline 6.02c: Transfer of Case Control to the Funder before Initiation of Proceedings Does Not Affect Jurisdiction
241
i.
Why Transfer of Case Control Might Matter
242
ii.
How to Evaluate whether a Relevant Transfer of Case Control Has Occurred
242
iii.
Result
244
d.
Guideline 6.02d: Transfer of the Claim to the Funder before Initiation of Proceedings Affects Jurisdiction
244
C.
Funder as Claimant and the Limits of Treaty Claim Assignment
245
1.
Definition of 'Investment'
245
2.
Principle 'nemo potiorem potest transfere quam ipse habet'
247
3.
Treaty Shopping and the Limits of Free Assignability
248
a.
Treaty Shopping
248
b.
Limits of Free Assignability in the Absence of Treaty Shopping?
249
4.
Concluding Remark
249
6.03.
Conclusion and Outlook
250
ch. 7
Impartiality and Independence of Arbitrators and Third-Party Funding
253
7.01.
When to Disclose: Evaluating Relationships between Arbitrators, Litigation Funders, and Funded Parties
255
A.
Requirement of Arbitrator Impartiality and Independence
255
1.
Arbitration Laws and Rules
255
2.
IBA Guidelines 2014
257
a.
Overview of Relevant Changes
257
b.
Amendments Relating to Funding: Analysis
259
i.
General Standard 6
259
ii.
General Standard 7
263
3.
Own Approach: A Broader Concept of 'Affiliate' Based on the IBA Guidelines 2004
263
B.
Broader Concept of 'Affiliate' Based on the IBA Guidelines 2004: Application to Select Situations and Examples
267
1.
One of the Parties Is Funded by a Litigation Funder That Supports a Client of the Arbitrator's Law Firm in a Separate Dispute
267
a.
Materiality
267
b.
Involvement with the Claim
268
c.
Result
269
2.
Arbitrator's Law Firm Currently Renders Professional Services for the Litigation Funder
269
3.
Arbitrator Is Biased towards or against Parties Supported by Litigation Funders
271
a.
Bias towards Parties Supported by Litigation Funders
271
b.
Bias against Parties Supported by Litigation Funders
272
4.
Arbitrator Has Repeatedly Been Appointed Thanks to the Same Litigation Funder
274
C.
Conclusions
275
7.02.
How to Disclose: Implementing Disclosure to Prevent Conflicts of Interest
276
A.
Risks for Arbitrator Impartiality and Independence Arising from Undisclosed Third-Party Funding
276
1.
When Funding Is Discovered in the Course of the Arbitral Proceedings
276
2.
When Funding Is Discovered after the Rendition of the Arbitral Award
279
3.
Result
280
B.
Different Approaches to Counter These Risks
280
1.
Mandatory Disclosure of Third-Party Funding Supported by Arbitral Institutions)
281
2.
Duty of Funded Party and Funder to Disclose Potential Conflicts
282
3.
Discussion
283
a.
Advantages of Mandatory Disclosure
283
b.
Disadvantages of Mandatory Disclosure
283
i.
Lack of Conceptual Clarity; Split Conflicts Standards
283
ii.
Lack of Coherence and Feasibility: The 'Third-Party Funding Conflicts Check Torpedo'
285
iii.
Internal Review by Arbitral Institutions Raises Due Process Concerns
286
iv.
Idea to Prohibit Arbitrators from Taking into Account Funding Other Than in Relation to Conflicts of Interest Is Paternalistic
287
v.
Who Would Be Willing and Able to Enforce Mandatory Disclosure?
288
vi.
Mandatory Disclosure Is Unnecessary
289
c.
Interim Result
290
C.
Result
291
ch. 8
Confidentiality in International Arbitration Proceedings and Third-Party Funding
293
8.01.
Existence and Scope of Confidentiality in Commercial and ICSID Arbitration: Overview
294
A.
International Commercial Arbitration
295
B.
ICSID Arbitration
296
8.02.
Conflicts between Confidentiality and Litigation Funding
298
A.
Disclosures from Funded Parties to Funders for Purposes of Case Assessment and Case Monitoring
299
1.
Confidentiality Interests Affected
299
a.
Trial by Press Release
300
b.
Distraction from and Aggravation of the Dispute
301
c.
Misuse of Information Obtained by the Funder for Future Transactions
301
d.
Do Confidentiality Obligations Apply Already during Case Assessment?
301
2.
Potential Exceptions to Confidentiality
302
a.
Disclosure to Protect the Funded Party's Rights
302
b.
Disclosure to Advisors
304
c.
Interim Result
305
3.
Assessment
305
a.
Exception to Confidentiality Should Apply
306
b.
Scope of the Exception: How to Protect Confidentiality Interests
306
c.
Disclosure of Confidential Information Only to Disclosed Funders?
308
d.
Potential Consequences of Undisclosed Funding and Issues Associated with Disclosure
309
e.
Interim Result
311
4.
Result
312
B.
Disclosures from Listed Funded Parties and Funders to the Public to Comply with Statutory Disclosure Requirements
314
1.
Public Disclosure Exceptions to Confidentiality and the Disclosure of Funding
314
a.
Disclosure of International Arbitrations
315
b.
Disclosure of Funding of International Arbitrations by Listed Funded Companies
316
c.
Disclosure of Funding of International Arbitrations by Listed Funders
318
2.
Interim Result: Transparency Prevails
318
3.
How to Protect Confidentiality Interests
320
a.
Limiting the Amount and Type of Information Disclosed to the Public
320
b.
Reasonable Limits regarding Disclosure of Arbitration
320
c.
Reasonable Limits regarding Disclosure of Funding of an Arbitration
321
d.
Public Disclosure Only Following Disclosure of Listed Funder to the Opponent and the Tribunal?
322
4.
Result
324
C.
Other Conflicts
325
1.
Privacy of Arbitral Hearings and Attendance of the Funder
326
2.
Submissions of the Funder as Amicus Curiae
327
3.
Litigation Funding and Accountability towards the Public
327
8.03.
Conclusions: Guidelines
328
A.
Guideline 8a
328
B.
Guideline 8b
329
C.
Concluding Remarks
329
C Costs
331
ch. 9
Security for Costs and Third-Party Funding
333
9.01.
Tribunal's Power to Order Security for Costs and Relevant Criteria
334
A.
Power to Order Security for Costs
334
B.
Synthesis of Relevant Criteria
336
9.02.
Impact of Litigation Funding on Ordering Security for Costs
338
A.
General Criteria Not Affected by the Presence of a Funder
338
B.
Financial Circumstances of the Funded Party and Related Questions of Evidence
339
1.
Disclosure of Funding-Related Facts to Assess the Security for Costs Request
339
2.
Funding Agreement as an Indication of the Funded Party's General Financial Situation
341
3.
Funding Agreement as Additional Quantitative Factor Due to Increased Defence Costs?
343
C.
Funding as a Material Change of Circumstances?
344
1.
Starting Point: The Conclusion of a Litigation Funding Agreement
344
2.
Arbitral Case Law
346
a.
Order of ICC Tribunal Dated 3 August 2012
346
i.
Summary
346
ii.
Comment
347
b.
Guaracachi and Rurelec v. Bolivia
349
c.
Commerce Group Corp. and San Sebastian Gold Mines v. El Salvador
350
d.
RSM Production Corporation v. Saint Lucia
352
i.
Summary
352
ii.
Comment
353
e.
Kardassopoulos and Fuchs v. Georgia
355
3.
Interim Result
355
a.
Situation in Investment Arbitration
356
b.
Situation in Commercial Arbitration
356
D.
Conduct of the Funded Party
357
1.
Bad Faith: Moving Assets to Shield against Liability
357
2.
Obtaining Litigation Funding while Funder Is Not Responsible for Adverse Costs
358
E.
Policy Considerations
360
1.
Avoiding Asymmetries in Treatment between Claimants and Respondents
360
a.
Ordering Security Payment against Respondents?
360
b.
Holding Respondents Liable for the Cost of Posting Security?
361
2.
Risk of Stifling (Exceptionally) Meritorious Claims?
362
a.
Does a Respondent Act in Bad Faith by Seeking Security from a Funded Claimant?
362
b.
Future of the Claim Where the Tribunal Orders Security Payment
362
3.
Ordering Security Payment Directly against a Litigation Funder?
363
4.
Considering Security for Costs Orders against Funded Parties Creates Additional Costs and Delays
364
9.03.
Conclusions: Guidelines
365
A.
Guideline 9a
365
B.
Guideline 9b
365
C.
Guideline 9c
365
D.
Guideline 9d
366
E.
Guideline 9e
366
ch. 10
Awarding of Costs and Third-Party Funding
367
10.01.
Allocation of Party Costs: Overview
369
A.
Lex Arbitri: Mandatory and Non-mandatory Provisions on Costs Allocation
370
B.
Party Agreement
371
C.
Arbitrator Discretion
372
1.
General Factors
372
a.
Domestic Rules on Costs Allocation
372
b.
Case-Specific Factors Susceptible to Affect the Applicable Costs Allocation Scheme
373
2.
Funding-Specific Factors
374
D.
Trends in Arbitral Practice
375
10.02.
Recovery of Costs by the Prevailing Funded Party
377
A.
Funded Legal Costs and Funding Costs Contingent on Success
377
1.
Did the Funded Party Incur Costs at All Where They Have Been Paid by a Third Party?
378
a.
Significance of the Applicable Costs Provisions
379
b.
Requirements: Arbitral Case Law
380
i.
Supplier v. First Distributor, Second Distributor
381
ii.
ICC Case No. 13645
381
iii.
Price Waterhouse SARL and PW Conseil SARL v. PricewaterhouseCoopers International Limited
382
iv.
Quasar de Valores v. the Russian Federation
382
v.
Synthesis
383
c.
Conclusion: Guidelines
386
i.
Guideline 10a
386
ii.
Guideline 10b
386
2.
Amount of Recoverable Costs: Actual Legal Expenses or Funder's Return?
387
a.
Limits Imposed by Applicable Costs Provisions
388
b.
Reasonableness: Policy Perspective
388
i.
No Costs Recoverable At All Where a Party Need Only Pay Them in Case of Success?
388
ii.
Kardassopoulos and Fuchs v. Georgia: 'No Principle Why Any Such Third Party Financing Arrangement Should Be Taken into Consideration in Determining the Amount of Recovery by the Claimants of Their Costs'
390
iii.
Interim Result
392
iv.
No Costs Recoverable when Incurred under Contingency Fee Arrangements?
393
c.
Reasonableness: Consent Perspectives
394
i.
Perspective of the Funded Party
394
ii.
Perspective of the Opponent
394
iii.
Decision
395
d.
Interim Result: Legal Costs Should Be Recoverable as if No Funding Agreement Existed
396
e.
Level of Substantiation and Duty to Disclose in Costs Submissions
398
i.
Where the Funded Party Claims the Higher Fees Payable to the Funder
399
ii.
Where the Funded Party Claims Fees Based on a Normal Hourly Rate
401
iii.
Concluding Remark
404
3.
Amount of Recoverable Costs: The Significance of Domestic Laws on Funding
404
a.
Where Ethical Rules Prohibit Specific Funding Structures
404
i.
Approaching the Issue: Recognition and Enforcement of Cost Rulings Connected with an Agreement that May Violate Public Policy
405
ii.
Situation under the Standards of the New York Convention
406
b.
Where Cost Rules Allow or Prohibit Recovery of Funding Costs
407
i.
Parties' Expectations Stemming from Their Home Jurisdictions
407
ii.
Costs Rules at the Seat of the Arbitration
408
4.
Conclusions: Guidelines on the Losing Party's Liability for Costs
410
a.
Guideline 10a
410
b.
Guideline 10b
410
c.
Guideline 10c
410
d.
Guideline 10d
411
e.
Guideline 10e
411
B.
Funding Costs Not Contingent on Success
411
1.
Costs for Case Assessment
412
2.
Costs for Before-the-Event Insurance Policy
413
3.
Interest Charged on Loan
414
C.
Funding Costs as Damages
414
10.03.
Recovery of Costs by the Prevailing Non-funded Party from the Funder
416
A.
Costs Award from an Arbitral Tribunal against the Funder
416
1.
Case Law from National Courts in Support of Costs Awards against Funders
416
2.
Significance of the Case Law for International Arbitration
418
a.
Significance for Costs Awards from Arbitral Tribunals
419
b.
Judicial Assistance?
421
B.
Damages Award from a State Court against the Funder
423
Part III Summary
425
ch. 11
Summary of Part I and Part II
427
11.01.
Summary of Part I
427
11.02.
Summary of Part II
431
ch. 12
Concluding Remarks
437
Bibliography
439
Table of Cases and Arbitral Awards
463
Index
475