The Role of Litigation Funding in International Arbitration

Litigation funding has served as a strong financial resource in international legal matters for decades, helping to alleviate financial burdens like those above while allowing counsel to achieve other important goals, as well:

• Meeting critical arbitration deadlines;
• Managing client expectations;
• Leveraging the speed and efficiency of international arbitration;
• Helping clients obtain, enforce, or avoid arbitration awards; and
• Helping clients preserve vital business relationships.

Litigation funding provides an alternative means to finance international arbitration, and it carries many benefits not offered by traditional funding mechanisms. Perhaps the most significant benefit of litigation funding in the realm of international arbitration is that it is non-recourse, so it is risk-free to firms that use it. Capital secured through this method is collateralized only by strong legal cases or matters chosen by the firm. If collateralized matters are unsuccessful, no repayment is required. During the due diligence process, litigation funding companies usually consider a wide range of factors like these:

• The nature of the underlying dispute;
• The merit of the law firm’s legal position in the arbitration;
• The firm’s track record in similar matters;
• The procedural posture of the matter;
• The country in which enforcement is anticipated; and
• Relevant case precedent, governing laws, and rules.

International arbitration provides a time-tested forum to resolve contractual disputes between entities in different countries but not all law firms have the means to enter this lucrative practice arena, and even firms with more than adequate capital may prefer to direct their liquid assets elsewhere. International arbitration and litigation funding have long provided strong financial underpinnings for commercial and governmental entities alike in international arbitration proceedings around the globe.

Topics: International Arbitration, Litigation Funding, Due Diligence Process

Work cited: Pravati Capital, May 14, 2019

https://pravaticapital.com/litigation-funding-and-international-arbitration/