Last week we had a thought-provoking discussion with Velimir Živković, Miljana Bigović, Niamh Leinwather, and Michail Risvas on whether third party funding (TPF) in arbitration is declining, why it matters, and how it shapes proceedings.

Why TPF Exists

Živković opened with a clear definition: “If you have a meritorious claim but are unable to provide the funds necessary to pursue it, you can obtain funding from a third party… in return for a percentage of the final award.” He noted that while arbitration has many advantages, “it is not a cheap way to resolve disputes,” creating a market for funders to step in.

From Boom to Decline

Bigović recalled TPF’s heyday: “It had its prime time about 2019, 2020, 2021… In the last two years I’ve had one situation where a party was interested in obtaining funding.” She observed that outside investor–state arbitration, most parties prefer to self-fund if they can.

Leinwather echoed this from the institutional perspective: “In previous years almost eight to ten percent of cases had a funder. In 2023, it has dwindled significantly.” She also cited ICSID data: between 2022 and 2025, around 16% of cases were funded, before the decline set in.

Disclosure and Conflicts

Rules now require disclosure of funders, as Leinwather explained: “Any funder in the background needs to be disclosed at the get-go… the reason is conflict-checking.” She emphasised that while institutions insist on disclosure of the funder’s identity, the funding terms remain at the tribunal’s discretion.

Patricia Gannon pressed the panel: “Why does it matter, the source of funding?” Leinwather responded: “Because you need to know if there’s conflict somewhere along the way. Maybe certain funders are always working with certain law firms.”

Difficulties in Securing Funding

Despite more players in the market, obtaining funding is far from simple. Živković noted: “For a lot of funders, they do not want to get involved unless the value of the dispute is around $5 million… My estimate is that from the applications made, only about 5% of the claims get actually funded.”

Bigović underlined enforceability as a key hurdle: “Clients are eager to pursue a claim without asking how they will enforce an award. Funders are more careful, because their fee depends on actual recovery.” She added that funders have become “more conservative when assessing risks” after decisions like PacifiCorp in the UK.

Risvas broadened the point: “I’m not convinced that third party funding has adapted to the specific needs of arbitration… arbitration is diverse, and one size does not fit all.”

Psychological and Strategic Effects

Beyond finance, TPF influences perceptions. Bigović admitted: “If you have a third party funder on board, it validates the claim. Psychologically, it makes you question your position if you’re on the other side.”

Živković shared a practical anecdote: “We had a sports arbitration dragging for two years. Once we obtained funding and disclosed the funder, the other party suddenly became much more open to negotiations, and we settled.”

Leinwather also observed this effect: “From a strategic point of view, if you know there’s a funder in the background, you know how thorough their analysis is… In one or two cases we saw settlement soon after funding was disclosed.”

The Practitioner’s Experience

Bigović described funders’ varying levels of involvement: “Some trust the law firm and step back. Others want to approve every single thing. If you need quick approval but the funder is slow, you can end up in a messy situation.” This can complicate timelines and increase the workload on counsel.

Future Outlook

Risvas suggested patience: “Arbitration has been around for 50 years; funding in arbitration is far more recent. If we want to be optimistic, perhaps in the next five to ten years we will see third party funding grow and adjust.”

Živković concluded that while TPF is far from dead, its availability remains limited: “It is often all-or-nothing. Something is better than nothing, but only a small fraction of cases are funded.”

Conclusion
The discussion revealed that TPF is no longer booming, but it continues to shape arbitration. While its rigorous requirements mean only a few claims succeed, its presence carries strategic weight, influencing both respondents and tribunals. As Živković remarked, “Obtaining third party funding may be difficult, but its impact reaches far beyond finance.”

The group agreed to host another Session on this issue in the enar future with some third party funders attending.