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  • Swiss Legal Finance

Third-party funding in arbitration cases in Switzerland

Updated: Apr 25

In the first blog post in this series - “Third-party litigation funding: levelling the playing field” - we discussed the fast-growing practice of third-party funding (TPF) in litigation proceedings. We looked at how it can help less well-funded plaintiffs get their day in court, and we described certain features of this practice in Switzerland. Finally, we mentioned the interest of third-party funding as a potential investment. In this article, we’ll focus on the benefit of third-party funding in arbitration proceedings.  



Arbitration in Switzerland


Arbitration is a procedure in which a dispute is submitted, by agreement of the parties, to one or more arbitrators who render a binding award. By choosing arbitration, the parties opt for a private dispute resolution procedure instead of going to court. It is often used for international commercial disputes.

Arbitration proceedings take place outside the judicial system, yet the resulting decisions are legally binding and enforceable. Cases can be complex, involve large sums of money at stake, and are often argued by lawyers with niche skills and experience. This means that arbitration can be more expensive and more technical than litigation. These two factors can make third-party funding an attractive option and parties are increasingly turning to TPF. It is a mechanism that is here to stay.

Switzerland is regularly chosen as the seat of arbitration. Most arbitrations in the country are international, and the main seats are Zurich and Geneva - although sports arbitration cases are usually heard in Lausanne.


The Swiss arbitration market is ripe for third-party funding. In addition to being relatively quick, appeals are limited and it is usually easier to enforce an award in another country than it is to enforce a court judgment.



Benefit of TPF


The benefits of TPF in international arbitration are clear. Parties who are unable or unwilling to bear the costs of arbitration can access the necessary funds, and it provides a more convenient financing structure that allows funds that would otherwise be spent on the arbitration to be allocated to other parts of the business.


The intervention of a third-party funder also demonstrates that the funded party is taking the matter seriously, has a “fighting fund” to pursue its claim(s) and has a case with a good chance of success.


Finally, it removes the risk of “losing” in that if the funded party is unsuccessful, the funder will pay the costs.


If you’d like to learn more about third-party litigation funding, drop us a line at Swiss Legal Finance: info@swisslegalfinance.ch or call us 022 512 37 37. And be sure to check out our website: www.swisslegalfinance.ch.


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