CYIL Vol. 7, 2016

CYIL 7 ȍ2016Ȏ THIRD PARTY TO PICK UP THE BILL?… regulating. Within the investment arbitration community itself opinions diverge. For some it is time to regulate the “wild west” of third party funding development. 35 For others, “regulation is unnecessary for many reasons.” 36 Between two extremes – status quo, i.e. no regulation, and a complete ban on third party funding in proceedings, the third way should be pursued. However, it is worth noticing that this issue in general keeps escaping the regulators’ hawk eye for the time being. There is virtually no regulation as investment treaties nor the ICSID Convention address third party funding. 37 With a notable exception of the new approach of the European Union which proposes for the Transatlantic Trade and Investment Partnership (TTIP) regulation of third party funding, 38 a recently inserted identical provision in the CETA 39 and more detailed provision into the EU – Vietnam FTA 40 and the Slovakia – Iran investment treaty 41 concluded just at the beginning of this year, the authors are not aware of any other ongoing efforts of treaty-makers in this area. For costs issues this lack of regulation applies as well. We have shown in the text above that tribunals’ approaches differ and even within arbitrators community there are voices calling for setting some form of rules, as the example of the Edward Nottingham’s dissent in RSM Production Corporation v. Saint Lucia illustrates. First and foremost, regulation should be focused on preventing negative effects on the third party funding on the arbitration proceedings and the position of respondent. 42 In terms of costs, cost-shifting rules could be more predictable. A system of obligatory moderate advance deposit to cover for potential costs orders, particularly in case of establishment multilateral investment court in the future, may be the right way to approach the regulation of the matter. 35 FRANCISCO BLAVI, ‘It’s About Time To Regulate Third Party Funding’ ( Kluwer Arbitration Blog , 17 December 2015) accessed 4 May 2016. 36 CATHERINE KESSEDJIAN, ‘Good governance of third party funding’ (2014) 130 Columbia FDI Perspectives , p. 2. 37 ANNA JOUBIN-BRET, ‘Spotlight on Third-Party Funding in Investor-State Arbitration’ (2015) 16(4) Journal of Investment &Trade , p. 732; NADIA DARWAZEH, ADRIEN LELEU, ‘Disclosure and Security for Costs or How to Address Imbalances Created by Third-Party Funding’ (2016) 33(2), p. 134. 38 European Commission, Draft text – Investment Chapter, Section 3 – Resolution of Investment Disputes and Investment Court System, Sub-Section 2: Alternative Dispute Resolution and Consultations [2015] art. 8. 39 European Commission, Comprehensive Economic and Trade Agreement, Chapter 8 – Investment, Section F – Resolution of investment disputes between investors and states [2016] art 8.26. 40 European Commission, Agreed Text of EU-Vietnam Free Trade Agreement, Chapter II – Investment, Section 3. Resolution of Investment Disputes, Sub-Section 1: Scope and Definitions [2016] art. 11. 41 Agreement between the Slovak Republic and the Islamic Republic of Iran for the Promotion and Reciprocal Protection of Investments [2016] art. 21.6. 42 WILLEM VAN BOOM, ‘Third-Party Financing in International Investment Arbitration’ (2011), p. 54.

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