Submission on Third-Party Funding

The submission argues that third-party funding (TPF) acts as a "financial engine" for investor-state dispute settlement (ISDS) and should be addressed through a holistic reform approach. The authors critique specific draft provisions, questioning the validity of using "access to justice" or "sustainable development" as justifications for permitting TPF. They express concern that current proposed sanctions may not effectively deter rule breaches and call for stricter, more tailored sanctions and clearer policy aims to guide the regulatory framework.

• Third-party funding is described as a central part of the "financial engine" of ISDS and is linked to several systemic issues, including conflicts of interest, high arbitration costs, large damage claims, and the phenomenon of regulatory chill.
• The authors challenge the use of "access to justice" as a justification for TPF, noting that evidence is inconclusive regarding whether TPF actually helps small and medium-scale enterprises (SMEs) and arguing that access to justice does not necessarily equate to access to ISDS.
• The submission questions the rationale for permitting TPF for investments that comply with sustainable development provisions, arguing that the distortions TPF introduces to dispute settlement processes occur regardless of whether the investment meets such objectives.
• The authors argue that the proposed sanctions in the draft text may be insufficient to deter funders and claimants from circumventing rules, suggesting that tribunals should be required rather than permitted to apply stricter sanctions.
• Implementation of certain draft provisions is flagged as problematic, specifically the assessment of whether a claimant is unable to pursue a claim without funding and the practical application of "sustainable development requirements" without explicit links to international instruments.

APA

International Institute for Sustainable Development (2021). Submission on Third-Party Funding. https://www.iisd.org/system/files/2021-09/iisd-iied-ccsi-uncitral-september-2021.pdf

Chicago

International Institute for Sustainable Development. Submission on Third-Party Funding. 2021. https://www.iisd.org/system/files/2021-09/iisd-iied-ccsi-uncitral-september-2021.pdf.

Wikipedia

{{cite press release |author=International Institute for Sustainable Development |title=Submission on Third-Party Funding |date=2 September 2021 |url=https://www.iisd.org/system/files/2021-09/iisd-iied-ccsi-uncitral-september-2021.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@misc{internationalinstituteforsustainabledevelopment2021submission, author = {{International Institute for Sustainable Development}}, title = {{Submission on Third-Party Funding}}, publisher = {International Institute for Sustainable Development}, year = {2021}, month = sep, url = {https://www.iisd.org/system/files/2021-09/iisd-iied-ccsi-uncitral-september-2021.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }