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How Third-Party Funding for International Arbitration Works (Part-2)

In the previous section of this blog, we have talked about obtaining third party Funding for international arbitration. Below are some of the things that you need to consider to demystify the process of obtaining third-party funding –

5. Dispute Amount

In order for a case to be successfully funded, the dispute value is important to consider. There are funders those will simply not consider claims whose value is less than USD 20 million. However, there are many funders those are more flexible in this regard, comparing the amounts to be invested versus the prospective returns.

Usually, funders demand hard evidence of potential damages, while discounting claims for lost profits, moral damages and other forms of compensation that are less frequently awarded in practice.

It is said that, the lower the cost of funding the dispute, and the greater the amount of potential compensation, the greater the chances that a third-party funder will actually fund a dispute. Furthermore, the ratio of potential returns to the costs of funding must be 10-to-1, but there seems to be no hard and fast rule in this respect. There are litigant those has suffered considerable losses, the chances of obtaining compensation are in fact small due to issues such as the statute of limitations.

6. Risk Enforcement

Regarding the risk of enforcement, there may still be uncertainty for funders even if a case is straightforward. The enforcement of arbitral awards depends on national judicial systems. Final success may depend on the accessibility and transparency of a judicial system, or the availability of assets in multiple jurisdictions. The successful litigant is merely one of many creditors waiting for enforcement on the same capital of a company that decides to be liquidated following a negative arbitration rules.

 7. Third-Party Funder Contract

The ratio of potential returns to the amount of funding is high when the odds of success are favorable and, the funder will be willing to enter a contractual relation with a prospective litigant. The contract will generally grant exclusivity to the third-party funder during a due diligence procedure and should not be confused with a final contract for litigation funding. The initial contracts are usually strict, preventing litigants from seeking funding elsewhere during the risk assessment phase and providing no guarantee that funding will actually be provided.

8. Fee of Funder

Litigants should be aware of the success fees to be paid to the funder, when searching for third party funding. These fees typically represent 20%-45% of the amount of compensation to be awarded, depending on the ratio of the amount of potential compensation to the cost of the dispute. Interestingly, at least one ICC arbitrator has ruled that the costs of funding may be recuperated from the losing party, but there is no constant jurisprudence in this regard. The arbitrator’s decision in that case was appealed unsuccessfully.

Are you looking for the international arbitration firm to resolve your disputes? If yes, then get in touch with Aceris Law Llc.

Aceris Law LLC is a leading international arbitration boutique that provides legal representation for commercial, construction and investment arbitrations in all jurisdictions. For more information, feel free to visit https://www.acerislaw.com.



This post first appeared on Three Things That Makes An International Arbitration Law Firm Reliable, please read the originial post: here

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How Third-Party Funding for International Arbitration Works (Part-2)

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