Submission on Third-Party Funding

A joint submission by CCSI, IISD, and IIED to UNCITRAL arguing that third-party funding in ISDS requires holistic reform to prevent regulatory chill and distortions in dispute settlement. The authors critique proposed 'access to justice' and 'sustainable development' exceptions for funding, citing implementation difficulties and a lack of evidence that such funding benefits SMEs.

• The authors argue that third-party funding (TPF) is a central part of the "financial engine" of Investor-State Dispute Settlement (ISDS) and is linked to several systemic issues, including perceived conflicts of interest, high arbitration costs, and the pursuit of large damage awards. They suggest that TPF may contribute to "regulatory chill" and advocate for a holistic reform approach that addresses these integrated financial dimensions.
• The submission critiques Draft Provision 4, which proposes allowing TPF for investors complying with sustainable development provisions. The authors contend that the dysfunctionalities and distortions TPF introduces to dispute settlement processes occur regardless of whether an investment meets sustainable development goals, making the rationale for such an exception unclear.
• The authors challenge the "access to justice" justification for TPF found in Draft Provision 3. They state there is inconclusive evidence that TPF actually helps small and medium-scale enterprises (SMEs) because their claims may be too small to attract funders. Furthermore, they argue that access to justice does not equate to access to ISDS, as investors often bypass domestic legal avenues.
• The submission identifies significant implementation hurdles for the Draft Provisions, specifically regarding how to assess if a claimant is unable to pursue a claim without funding and how to define "investment in compliance with sustainable development requirements." They suggest that any reference to sustainable development must be linked to specific international instruments to be meaningful.
• The authors express concern that the proposed sanctions in Draft Provisions 6 and 7 are too lenient and give tribunals too much discretion, which may fail to deter funders and claimants from circumventing rules. They recommend stricter sanctions and the use of mandatory language (e.g., "shall" instead of "may") for tribunals.

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} }