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

Abstract

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.