Political, economic and legal justice and the rule of law have been important public goals for many states, governments and reformers throughout Latin America and the Caribbean. Despite centuries of effort, the social benefits anticipated from such policies continue to elude many people and communities in the region.

The Law and Justice in the Americas program brings Boston College Law School faculty and students together to pursue law reform and justice projects in the Americas. When Program faculty undertake a project, students are invited to apply for the position of Program Fellow. Depending upon the nature of the project, Fellows may prepare a paper under faculty supervision for publication as part of the Program’s Working Papers Series. Not all projects lend themselves to development of a working paper, but where possible, such papers offer Fellows the particular satisfaction of contributing to the literature on a particular subject of interest to the legal and policy communities.

Law and Justice in the Americas Working Paper Series

The Lisbon Treaty has enlarged the EU’s competences in external investment policy. The EU could thus increase its protagonist role in third-party funding (TPF) regulation in a manner analogous to its achievements in the investment regime, where the EU managed to rally the member states behind DG Trade’s vision. A treaty-based analysis combined with a political evaluation suggest the EU is expanding its field of competences either when it has a clear mandate or by establishing a modus vivendi as it has been the case with its external relations, particularly at the United Nations. There is therefore a case to be made that the EU would have the competence and the interest to expand its investment reform leadership to encompass TPF regulation. Hong Kong and Singapore have added provisions on TPF in their respective national arbitration legislation explicitly allowing TPF as part of a neoliberal strategy to attract arbitration while ignoring the risk of increased forum shopping. In contrast, the EU CETA and EU-Vietnam Treaties are the only treaties to conceptualize and impose a disclosure of TPF, which nevertheless falls short of addressing concerning the adverse consequences of TPF in ISDS.

Third Party Funding in Investment Arbitration

The Case for an EU Protagonist Role on Third Party Funding Regulation

Third-party funding (TPF) is a relatively new phenomenon in the field of international investment arbitration. TPF takes place when a non-party to a dispute provides funding to one of the parties (usually the claimant) in return for a percentage of the amount recovered. International investment arbitration is a unique context, however, because investor-states dispute settlement puts States always in the role of respondent and private investors in the role of claimants. Despite this apparent imbalance, TPF proponents argue, among other things, that it provides much needed access to justice for poorer clients and adds value to the system by providing a more disinterested evaluation of legal arguments. Those claims do not stand up to the facts as we have them, however. There have been several efforts to regulate TPF, including mandatory disclosure rules (applied only to the identity of the funder) and more expansive discretionary disclosure. These efforts do not go far enough. Instead, we need mandatory expansive disclosure of the identity of the funder and key terms of the funding agreement. This will provide scaffolding to the international investment arbitration system by avoiding conflicts of interest, aligning with institutional interests in transparency, and providing data for ongoing empirical research.

The Regulation of Third Party Funding: Gathering Data for Future Analysis and Reform

The United Nations Commission on International Trade Law (UNCITRAL) is considering changes to its rules governing international arbitration proceedings. UNCITRAL Working Group III is analyzing possible reforms of the arbitral rules to address the risks associated with the increased prevalence of third-party funded investment arbitration claims. Funders claim that existing regulation is sufficient, arguing in part that funding provides access to justice for impecunious claimants who otherwise would be unable to bring claims. This essay argues that funders’ access to justice reasoning is flawed at best and dangerously misleading at worst. UNCITRAL must take immediate action to address the potential for exploitative practices by funders in the investment context.

Third-Party Funding in Investment Arbitration: Misappropriation of Access to Justice Rhetoric by Global Speculative Finance

Spreadsheet listing cases where investors sued foreign governments under international investment treaties, and where the case was funded on the investor's side by third parties.

Chart of Cases with Third Party Funding

Transcription of a panel at the conference "Reforming International Investment Law: Opportunities, Challenges, Paradigms", sponsored by Boston College Law School and the Pontifical Catholic University of Chile. This transcription was presented in April 2018 as a public comment on the Draft Report of the ICCA/Queen Mary Task Force on Third Party Funding in International Arbitration.

TPF and ISDS: A Public Comment on the Draft Report of the ICCA/Queen Mary Task Force on Third Party Funding in International Arbitration

From the introduction:
Mexico is in a state of siege. In recent years, organized crime and drug-related violence have escalated dramatically, taking innocent lives and leaving the country mired in bloodshed. The Mexican government, under the leadership of President Felipe Calderón, has responded in part by significantly extending the reach of its security operations, deploying thousands of federal police officers and military troops to combat the activities of drug cartels, and collaborating with the United States on an extensive regional security plan known as the Mérida Initiative. In the midst of the security crisis, however, the government has somewhat paradoxically adopted judicial reforms that protect human rights and civil liberties rather than erode them, specifically the presumption of innocence standard in criminal proceedings and the implementation of oral trials. Assuming that the new laws on the books will be applied in practice, these reforms represent an important commitment on the part of the government to uphold human rights and civil liberties. This is in stark contrast to the infamous judicial reforms in Colombia—the institutionalization of anonymous or “faceless” prosecutions in special courts—implemented after a surge in leftist and cartel brutality, and the murders of several prominent public and judicial officials in the 1980s.

New Standards of Justice: Uncovering Motivations for Mexico’s Recent Judicial Reforms amid a Security Crisis

A comparative assessment of the successes and failures of the judicial reform efforts of 
El Salvador and Brazil in the 1980’s produces striking results.  The reforms varied greatly in scope and were conducted in very different socio-political and economic backgrounds.  While El Salvador’s reforms seemed narrow and ill-planned,  on paper it appeared that Brazil’s broad reforms would be a successful model for any country with a fledgling democracy.  Brazil’s reforms were an exercise in constitutionalism, implementing genuine separation of powers and receiving legislative and executive support.  I was very surprised that these different approaches produced strikingly similar negative effects on the people’s assessment of the judiciary.  From this outcome I concluded that while judicial reform of a corrupt or inefficient judiciary is an important step in ensuring the rule of law in society, it can not be the vehicle through which democratic reform is implemented.  Quite to the contrary, for successful judicial reform to take place there must be considerable penetration of the law in society through enforcement of unbiased legislation, consistency in the laws and their enforcement, and sufficient time for the reform to have an effect on society.

Modern Judicial Reform in El Salvador and Brazil

Parallel legal systems can and do exist within a single sovereign nation, and rural Guatemala offers one example.   Such parallel systems are generally viewed as failures of legal penetration which compromise the rule of law. The question  addressed in this paper is whether the de facto existence of parallel systems in Guatemala benefits the indigenous population, or whether the ultimate goal of attaining access to justice requires a complete overhaul of the official legal system.  Ultimately, the author concludes that while the official justice system needs a lot of work in order to expand access to justice, especially for the rural poor, the existence of a parallel legal system can be a vehicle for, rather than a hindrance to, expanding such access.

Law and Justice in the Americas Working Paper Series

Items in this collection

The Case for an EU Protagonist Role on Third Party Funding Regulation

The Regulation of Third Party Funding: Gathering Data for Future Analysis and Reform

Third-Party Funding in Investment Arbitration: Misappropriation of Access to Justice Rhetoric by Global Speculative Finance

Chart of Cases with Third Party Funding

TPF and ISDS: A Public Comment on the Draft Report of the ICCA/Queen Mary Task Force on Third Party Funding in International Arbitration

New Standards of Justice: Uncovering Motivations for Mexico’s Recent Judicial Reforms amid a Security Crisis

Modern Judicial Reform in El Salvador and Brazil

Supporting Parallel Legal Systems as a Means of Improving Access to Justice in Guatemala

From Inquisitorial to Accusatory: Colombia and Guatemala's Legal Transition

Judicial Review: Fostering Judicial Independence and Rule of Law

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