REUTERS | Vasily Fedosenko

Disclosure of third party funding: a continuing duty?

Recent events suggest a gap in the “Queen Mary” principles of disclosure of third party funding.

Burford Capital recently disclosed that it had successfully sold a second 10% interest in an arbitration it had funded (having earlier sold 10%). Just about a year ago, Burford disclosed that it had sold its entire interest in a funded matter.

Principle A.1. of the ICCA-Queen Mary Task Force Principles on Third-Party Funding says that a party should, on its own initiative, disclose the existence and identity of a third party funder. Principle A.2. says that arbitral institutions and arbitrators have the authority to request this information.

The point of these disclosures is to allow checking for conflicts of interest (Principle A.4). When the original funder sells a stake, the same principles seem to suggest promptly informing the institution and the arbitrators of the new owner/participant’s interest, to permit checking of conflicts by the arbitrators with the new participant. But neither the Queen Mary report, nor any institutional rules of which the author is aware, make the disclosure duty continuing. Indeed, but for Burford’s announcement, it is unclear whether the arbitral party would have a right to know when its funder sells a participation.

Burford’s disclosures suggest a gap. Whenever and by whatever means disclosure of third party funding is required, it would seem prudent for that duty to be continuing. Likewise the party to the arbitration should assure its arrangement with its funder will make it privy to that information.

Share this post on: