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ChinaInternationalEconomicandTradeArbitrationCommission
HongKongArbitrationCenter
GuidelinesforThirdPartyFundinginArbitration(ConsultationPaper:RoundofPublicConsultation*)
1. Introduction
1.1 Theseguidelines (the “Guidelines”) set out certainprinciplesofpractice and conduct
whichCIETACHKACencouragespartiesandarbitratorstoobserveinrespectofactualoranticipatedarbitrationproceedingsinwhichthereisormaybeanelementofthirdpartyfunding.
1.2 For the purposes of these Guidelines, third party funding (“Funding”) arises when aprofessional third person or entity (“Funder”) contributes funds, or other materialsupporttoapartyinarbitration("Fundedparty")andhasadirecteconomicinterestintheawardtoberenderedinthearbitration.
1.3 However, Funding under these Guidelines does not arise merely because a partyarrangesfinancialsupportfromagroupcompany;procuresinsurance;and/orobtainslegalservicesonadeferredorcontingencybasis.
1.4 TheGuidelinesarevoluntary.Accordingly,partiesandarbitratorsshallnotbedeemedtohaveadoptedalloranypartoftheGuidelinessimplybecauseoftheirparticipationinarbitrationproceedingsinwhichthereisanelementofFunding.
1.5 The Guidelines reflect the understanding of the working group members listed inSchedule I to the Guidelines (“Working GroupMembers”) as to certain principles ofinternationalbestpracticeinrelationtoFunding.
1.6 TheGuidelinesmaybecitedasCIETACHKACTPFGuidelines.
2. PartiesseekingFunding
2.1 Arbitration Funding Agreement: A party seeking Funding should ensure that thetermsand conditionsof anyFunding arrangement are set out in a formal arbitrationfundingagreement(“AFA”).
2.2 Legal advice:Priortoentering intoanAFA,apartyseekingFundingshouldconsiderobtaining legal advice to, interalia, establish the permissibility of Funding under thelawsapplicabletothearbitrationandreviewthetermsoftheprospectiveAFA.
2.3 Incorporation of Funder: If a prospective Funder purports to be an incorporatedcompany, aparty seekingFunding should satisfy itself that theprospectiveFunder isdulyincorporatedinaccordancewithapplicablelaws.
2.4 CapitaladequacyofFunder:ApartyseekingFundingshouldfurthersatisfyitselfthataprospectiveFunderhassufficientavailablecapitaltomeetthefundingarrangementsanticipatedinthetermsoftheprospectiveAFA.
2.5 Confidentiality:InapplyingforornegotiatingthetermsofanyFundingarrangement,apartyshouldconsidertheeffectofanyapplicableconfidentialityprovisionsor laws.
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Inparticular,itshouldgiveconsiderationtoanydisclosure,relatingtotheproceedings,whichaFundermayrequirepursuanttoitsdecisiontoFund,orundertheAFA.
2.6 Subjecttotheabove,partiesconcludingcommercialarrangementsmaywishtoagreeintheir arbitration agreements whether and to what extent such information may bedisclosedtoprospectiveFunders.
2.7 To further protect the confidentiality of information disclosed to any prospectiveFunder, a party seeking Funding should also consider entering into a non-disclosureagreementwithallprospectiveFunders.
2.8 Privilege and disclosure: A party seeking Funding should consider whethercommunications between itself and any prospective Funder may be disclosable insubsequentproceedings.Ifnecessary,apartyshouldtakelegaladvicebeforeprovidinganypotentiallyconfidentialinformationtotheprospectiveFunder.
2.9 Conflicts of Interest:ApartyobtainingFundingshouldwithoutdelaydisclosetothetribunalandotherpartyanycircumstancesarising fromthatFunding thatmightgiverisetoanypossibleissuesofconflictofinterestunderapplicablelawsandrules.
2.10 Controlofproceedings:ApartyseekingFundingshouldcarefullyconsiderthenatureand extent of the prospective Funder’s control over proceedings. Where the AFAanticipatessignificantFunderconsultationoncasestrategyandsettlement,legaladvicemayneedtobetakenastotheimplicationsofsucharrangements.
2.11 WithdrawalofFunding:PartiesseekingfundingshouldconsidercarefullythenatureandeffectoftheterminationandwithdrawalprovisionsundertheprospectiveAFA.
3. Arbitraltribunal
3.1 Disclosure: Where the tribunal considers it appropriate, it may invite, or in certaincasesdirect,anyFundedpartytodiscloseitsFunding.Insodoingatribunalshouldgivedue consideration to any relevant duties of disclosure asmay exist under applicablelawsorrules.
3.2 An order that a Funded party disclose its Funding may require disclosure by theFundedpartyofthefactthatitisfunded;thenameandaddressoftheFunder;andanyotherinformationrequiredbyapplicablelawsorrulesorwhichthetribunalotherwiseconsidersnecessary.
3.3 Conflicts of interest:Uponbecomingawareof theexistenceofFunding inrespectofany proceedings, the tribunal should positively consider its own independence andimpartialityinlightofthisinformationandtakeanysuchstepsasarerequiredunderapplicablelawsorrules.
3.4 Securityforcosts:Atribunalmay,totheextentpermittedbyapplicablelawsorrules,consider the nature and extent of a parties’ Funding as a relevant factor whenconsideringanyapplicationforsecurityforcosts.
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ScheduleI.WorkinggroupmembersDr.NicolasWiegand,andDr.DorotheeRuckteschler,CMSHascheSigle(HongKong/Germany)PaulStarr,andJamesMcKenzie,King&WoodMallesonsJamesRogers,andMatthewTownsend,NortonRoseFulbrightChristopherBoog,SchellenbergWittmerRobertRhoda,Bird&BirdJamesMacKinnon,HerbertSmithFreehillsAndrewAglionby,JAMSInternationalCameronHassall,CliffordChance
TheGuidelineswerelastupdatedon20May2016
*WeappreciatealltheopinionstobesenttoBradWangatCIETACHongKongArbitrationCenter([email protected])
Thepublicconsultationwillfinishon19July.
