A Supportive Approach to Third-Party Financing in Arbitration International Investment

Arbitration for international investment comes at a high cost to both the investor and the government in question. One of the new phenomena in international investment arbitration is the financing of litigation by a third party investor. This investor is not interested in the issue of arbitration, but enters it with the hope that it will be profitable from resolving the dispute. International arbitrators have, in principle, no jurisdiction to review a third-party investment agreement because their jurisdiction is limited to litigation between the foreign investor and the host government. The investment agreement, therefore, has nothing to do with the legal relationship between the foreign investor and the host government. It will also point out that the existence of an investment agreement is subject to transparency rules to ensure that the principle of equality is respected, and that a third-party investment investor is an investor in financial claims and claims that acts before a court or arbitral tribunal. With the participation of a third party investment investor, the plaintiff (claimant) may use the necessary resources and intervene in the litigation or arbitration. Instead, the third-party investor is promised a portion of the profits if the lawsuit is successful. If the lawsuit is unsuccessful, the third-party investment investor will bear the costs of participating in the lawsuit or arbitration instead of the plaintiff.