Letter to the Hon. Sen. Orrt (NYS Senate) Regarding Litigation Finance (Lawsuit Lending) (2018)

The Assignment of Investment Treaty Claims: Doctrinal and Policy Perspectives

“…This situation creates major agency costs, as the funder's profit is heavily dependent on the claimant's cooperation and effective dispute management.174 In order to remedy these agency costs, it is natural that funders seek to influence the proceedings.175 It has been reported that many Lafaras Journal of World Investment & Trade (2023) 1-39 TPF arrangements contain specific contractual clauses176 providing for consultations with the funder before pivotal decisions, such as the settlement or discontinuance of the claim.177 Others envisage a more extended role of funders ranging from the selection of counsels and arbitrators178 to the day-to-day dispute management. 179 The concern lies within the fact that it is another entity that formally appears in the proceedings and another that substantially exercises control thereupon.180 It has been suggested that this influence may result in an abuse of process.181 The concern is even greater given that most TPF arrangements remain confidential182 and thus the identity of the funder, who is actually moving the threads of the formal claimant, remains unknown. 183 This perception of opaqueness is avoided when TPF is concluded through an assignment of the funded claim.…”