Turmoil but Growth in Third‑Party Arbitration Funding

This article is part of the "International Arbitration Perspectives" series. 

After more than a decade of expansion, from an almost unknown asset class to a US$20 billion industry, third-party funding experienced a turbulent 2025. Key names in the sector are re-evaluating their business models and going through increased consolidation.¹ A major funder is also the target of a civil fraud suit in the Jersey courts, over allegations that it conspired with arbitration lawyers to procure a US$15 billion award against Malaysia.²

Despite these challenges, international arbitration claims have continued to attract third-party funding. Funded claims have notably been brought against Kazakhstan under the Energy Charter Treaty (ECT),³ and against Morocco under the UK-Morocco BIT.⁴ Data from ICSID show that 7% of newly registered cases in 2025 involve a funder.⁵

Assignability of Awards

2025 saw a divergence in case law regarding the assignability of ICSID awards, which will have significant ramifications for the structuring of third-party investments in arbitral awards, funding arrangements and enforcement strategies.

Courts in Belgium, the United States and Australia recognised the assignment of arbitral awards issued against the Kingdom of Spain under the Energy Charter Treaty (ECT) and then purchased by other investors.⁶ In contrast, the English Commercial Court ruled that ICSID awards cannot be assigned, and, accordingly, refused to substitute a purported assignee as claimant in enforcement proceedings.⁷

Regulation of Third‑Party Funding

There has also been divergence in jurisdictional and institutional approaches to the regulation of third-party funding. Importantly, in November 2025, the European Commission (EC) announced it would not regulate third-party funding.⁸ Similarly, in the UK’s Arbitration Act 2025, the absence of a provision regulating third-party funding was conspicuous—which comes in stark contrast to the position in Singapore or Hong Kong, where funding is expressly regulated.⁹

From an institutional perspective, the new SIAC Rules 2025 require disclosure of third-party funding, just as the 2024 HKIAC Administered Arbitration Rules and the 2022 ICSID Arbitration Rules do. It remains to be seen whether other institutions will follow (notably the LCIA and the ICC, which currently do not include specific rules on third-party funding – although the ICC does suggest disclosure in its Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration). The SIAC Rules 2025 also expressly empower tribunals (1) to direct a party to withdraw from a funding arrangement that may create a conflict of interest, and (2) to take into account funding costs when apportioning the costs of the arbitration.

From a soft law perspective, 2025 has been marked by the release of a guide to third-party funding in arbitration by the Chartered Institute of Arbitrators. The guide provides highly detailed and practical guidance for parties, tribunals and institutions on how third-party funding works, how it affects proceedings and how to manage a funded case effectively.¹⁰ It recommends, amongst other things, disclosing the existence and identity of the funder as early as possible, with a view to mitigate the risk of a potential conflict of interest adversely affecting the proceedings.

Secondaries Gaining Momentum

From an industry perspective, last year saw a significant strengthening of secondaries market.¹¹ The secondary market allows funders and investors to buy and sell existing stakes in litigation/arbitration investments before the underlying case is resolved, which provides liquidity for investors who may need to exit the claim early, as well as a way for new investors to gain exposure to already funded cases. This trend—showing the maturation of third-party funding as an asset class—is expected to continue through 2026.

^{1 Litigation Capital Management announced a ‘strategic review’ amid operational uncertainty, Burford Capital acquired a strategic stake in legal consultancy Kindleworth, and Therium is pivoting to an advisory-based model, hitting pause on its own funding operations. See respectively, London Stock Exchange Regulatory News Service, Litigation Capital Management Limited, ‘Class Action Investment and Strategic Review’ (15 September 2025) ; Burford Capital, ‘Burford Capital Makes Strategic Investment in Kindleworth to Back the Launch and Expansion of Next-Generation Law Firms’ (Burford Capital, 9 September 2025) ; Robert Li, ‘Therium winds down funding; launches funding advisory arm’ (CDR News, 6 October 2025).}

^{2 Petronas South Caucasus S.A.R.L. and Anor v Therium Group Holdings Limited and Ors [2025] JRC 310.}

^{3 Victoria Oil & Gas Plc (in Administration), Victoria Energy Central Asia UK Limited and Victoria Energy Central Asia LLP v Republic of Kazakhstan ICSID Case No. ARB/25/13.}

^{4 Khemisset UK Limited and Potasse de Khemisset S.A. v Kingdom of Morocco ICSID Case No. ARB/25/22.}

^{5 International Centre for Settlement of Investment Disputes, ‘Annual Report 2025’ (17 October 2025).}

^{6 Blasket Renewable Investments LLC v Kingdom of Spain [2025] FCA 1028 in Australia, Blasket Renewable Investments LLC v Enaire 2025/QR/53 in Belgium, Blasket Renewable Invs., LLC, v. Kingdom of Spain, 2024 WL 4298808 (D.D.C. 26 September 2024) in the USA – NB. The Australia ruling remains subject to appeal.}

^{7 Mark Clarke, Jonathan Brierley, James Lack, ‘International Arbitration: English Court Rules that ICSID & ECT Awards Cannot be Assigned’ (Akin, 13 November 2025).}

^{8 ‘High-Level Forum on Justice for Growth’ (European Commission, 18 November 2025).}

^{9 Section 49A Singapore Legal Profession (Professional Conduct) Rules 2015 (as amended 1 March 2017) in Singapore and Section 98U Arbitration and Mediation Legislation (Third Party Funding)(Amendment) Ordinance 2017 in Hong Kong.}

^{10 Chartered Institute of Arbitrators, ‘Guideline on Third-Party Funding’ (11 September 2025).}

^{11 Notably, Nera Capital closed a US$50 million fund to acquire interests in existing funded claims, and Omni Bridgeway span off current exposure in more than 150 legal assets into a continuation vehicle, with Ares Management taking a 70% stake for over US$200 million. Respectively see, Dippy Singh, ‘Secondary litigation funding market hots up with new entrant’ (CDR News, 12 November 2025) ; Madeleine Farman, ‘CVs offer access to diversified portfolios in litigation fund market – Omnia Bridgeway’ (Secondaries Investor, 2 May 2025).}