What this guide covers
Third-party funding has become a mainstream feature of large international arbitrations. SIAC Rules 2024 Rule 24A imposes mandatory disclosure of funding arrangements — a key compliance obligation for funded parties. UAE parties using TPF in SIAC arbitrations must also navigate the DIFC and ADGM TPF frameworks.
What is third-party funding in arbitration
Third-party funding (TPF) is an arrangement whereby a commercial funder (not a party to the dispute) finances a party's legal costs in exchange for a share of any recovery — typically 20–40% of the award proceeds, or a multiple of the funded amount. Funders conduct extensive due diligence before committing: assessing merits (typically >60% success probability required), recoverability of any award, and quantum of recoverable loss.
TPF is particularly common in international arbitration because: (i) arbitration costs are high and upfront; (ii) award recovery in foreign jurisdictions is predictable under the NYC Convention; (iii) funders can diversify across a portfolio of cases. Major funders active in UAE/SIAC arbitrations include Burford Capital, Omni Bridgeway, Longford Capital, and Augusta Ventures.
SIAC Rule 24A — mandatory disclosure
Rule 24A.1 of the SIAC Rules 2024 requires a party to promptly disclose, to the Registrar, the tribunal, and all other parties: (i) the existence of a funding arrangement; (ii) the identity of the third-party funder; and (iii) whether the funder has agreed to assume the party's liability for adverse costs. Disclosure must be made when the funding arrangement is entered into, or — if earlier — at the time of filing the NOA or Response.
Failure to disclose is not a ground for automatic dismissal of claims, but the tribunal may take non-disclosure into account in costs allocation and may require belated disclosure with adverse inference. The purpose of disclosure is to enable the tribunal and parties to identify potential conflicts of interest involving the funder — funders often have existing relationships with arbitrators that require disclosure under IBA Guidelines.
Security for costs and TPF
The existence of a funding arrangement is a relevant factor (not determinative) in applications for security for costs. SIAC tribunals have held that: where a claimant is funded and the funder has not committed to cover adverse costs, the respondent has a legitimate concern about the claimant's ability to satisfy a costs award. Tribunals typically order security for costs in proportion to the estimated reasonable costs of the proceedings — not the full amount claimed.
Funders increasingly address this issue proactively by including an adverse costs coverage commitment in the funding agreement, or by having the funder post security directly. This reduces the risk that a security for costs application will stall the proceedings.
TPF in DIFC and ADGM
UAE onshore law does not expressly permit TPF — champertous agreements are void under UAE Civil Code principles. However, DIFC Law Amendment Law No. 1 of 2021 expressly permits TPF for DIFC arbitrations and DIFC court proceedings. ADGM recognises TPF by practice direction. For SIAC arbitrations with a DIFC or ADGM seat, TPF is legally permitted and regulated.
For SIAC arbitrations with a Singapore seat, Singapore's Civil Law (Amendment) Act 2017 expressly permits TPF for international arbitration proceedings conducted in Singapore and related court proceedings. Funders must comply with SIAC's Rule 24A disclosure requirements regardless of seat.
Practical checklist
- Disclose funding arrangement in the NOA or immediately upon entering into the arrangement — do not wait to be asked
- Identify funder conflicts: provide the funder's identity to your counsel and SIAC at commencement so arbitrator conflict checks can be run
- Adverse costs coverage: negotiate funder commitment to cover adverse costs in the funding agreement — this pre-empts security for costs applications
- Singapore seat for TPF certainty: if TPF is central to the case economics, Singapore seat provides the clearest legal framework
- Due diligence on funder: check the funder's track record, capital adequacy, and process for settlement approval — funders with approval rights over settlement can complicate negotiation
- Confidentiality of funding terms: the existence and identity of the funder must be disclosed; the commercial terms of the funding agreement (percentage, multiple) are confidential and need not be disclosed
What we'd typically advise
For UAE parties pursuing a SIAC arbitration with a meritorious claim but constrained legal budget, TPF is increasingly the right tool. The key negotiating points in a funding agreement are: (i) funder approval rights over settlement (minimise or exclude); (ii) portfolio arrangement (if you have multiple disputes, a portfolio deal reduces the funder's required return per case); (iii) adverse costs coverage (include it — saves the security for costs application fight). We can introduce clients to leading funders and assist in evaluating term sheets.
Frequently asked questions
Does the tribunal need to approve the funding arrangement?
No — the tribunal does not approve or disapprove TPF arrangements. The obligation is disclosure only. Once disclosed, the tribunal proceeds. The disclosure enables conflict checks and costs allocation considerations.
Can a funder control how the arbitration is conducted?
Funders typically have the right to receive updates on proceedings and may have consultation rights, but should not control litigation strategy or settlement decisions — that would raise champerty concerns. Professional funders adhere to the Association of Litigation Funders code of conduct which limits their control rights.
What happens to the funding agreement if the award is set aside?
If the award is set aside and the funded party recovers nothing, the funder loses its investment — it funded the costs but gets no return. Many funding agreements define "recovery" to include partial success — the funder gets a proportionate share of any recovery even from settlement before a full award.
Can the respondent obtain TPF for its defence costs?
Yes — defensive TPF (for counterclaim defendants) is available. It is less common than claimant-side funding because the economics are harder (a successful defence saves costs but does not generate a recovery for the funder to share). Counterclaim funding is more viable where the respondent has a substantial counterclaim alongside the defence.
Does the UAE allow contingency fee arrangements as an alternative to TPF?
UAE law and legal profession regulations prohibit contingency fee arrangements for licensed advocates. DIFC and ADGM law firms have more flexibility under common-law frameworks. TPF is the practical alternative for UAE onshore clients seeking risk-sharing arrangements.
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Published 20 May 2026. General information only — not legal advice. Contact us for matter-specific advice.