Usually, the claimant expects his international arbitration lawyer to prepare the documents required by the Funders. Funders consider some of the important things to determine whether a particular case fits the funders’ funding profile, in the context of investment disputes against state entities. Let’s have a look at 7 important things funders consider in investment disputes:

1. Funders wonder whether the claimant is going to be a good witness or might be too emotional in relation to the claimant’s profile.
2. Concerning enforceability, funders wonder where the Respondent’s assets will be several years later. Funders assume that state assets will not disappear by the end of the investment dispute but some countries are difficult to enforce against.
3. Some funders have a maximum capital available for some specific cases.
4. Concerning jurisdiction, Claimant’s counsel must first find a funder, which accepts to finance investment disputes. It was difficult in the past to find funding for treaty cases because the background of most lawyers was commercial arbitrationrather than treaty arbitration. This has now evolved and the funders can now rely on investment disputes specialists able to draft lengthy jurisdictional analysis.
5. Claimant’s counsel will be expected to prepare a memo about the case, including merits, liability, and quantum. Funders have a very conservative approach to quantum and, although they will look at lost profits, funders will mostly take into account the value of the initial investment, which is the key figure.
6. Funders will ask claimant’s counsel to prepare a budget for the case which will include arbitrators’ fees, legal fees, experts’ fees, costs of enforcement and all other costs necessary to see the case to the end, and will compare this figure to the minimum damages value for the case. Most often, if funders seek to invest 5 million in a case, they will be looking for a minimum claim value of 50 million (which is likely to exclude lost profits).
7. The profile of the Respondent can give the funders more or less comfort in investment disputes. While funders will feel relatively confident when the respondent is an EU member state, they might lack knowledge of how some South American states would behave in investment disputes.

Funders usually consider the above-mentioned criteria in investment disputes. Even if all criteria are met and the case fits the funders’ profile, it is possible that a case gets rejected because funders seek to diversify their investments and prefer to invest in commercial cases if they already have too many treaty cases. This factor is out of the control of the claimant.

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