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What is Third Party Funding and why it is a necessity in the legal domain?

In the realm of law, few topics evoke as much debate and intrigue as third-party funding of disputes. Recently, the Singapore International Arbitration Centre (SIAC) hosted an Oxford-style debate that explored the nuanced perspectives surrounding this contentious issue.

As the debate unfolded, it became apparent that this question is far from black and white; it delves into the intricate interplay between commerce and the pursuit of justice.

Levelling the playing field with the help of Third-Party funding

Barrister Rishab Gupta, speaking for the motion, artfully framed the debate by invoking John Rawls' definition of justice. As John Rawls argued justice is about ensuring equal opportunities and resources. He contended that third-party funding plays a crucial role in achieving this objective by levelling the playing field. It provides access to justice for those who might otherwise be unable to pursue their claims. Moreover, he pointed out that third-party funders can act as gatekeepers against frivolous claims, ensuring that only meritorious cases receive support. To illustrate this, he referred to the infamous case of Pearson v. Chung, where a judge sued a dry cleaner for $57 million over a pair of lost pants. If Pearson had sought funding from a third party, they would likely have dissuaded him from pursuing such a frivolous claim.

In essence, Barrister Gupta argued that while third-party funding is undoubtedly a business, it also serves the cause of justice by democratizing access to the legal system and discouraging frivolous litigation.

How third-party funding is a concern for business and not justice?

Shaneen Parikh, Partner at Cyril Amarchand Mangaldas, challenged Gupta's interpretation of the motion. She emphasized that the motion did not assert that third-party funded disputes are only about business, but rather that they are about business, not about justice. This critical nuance shifted the focus of the debate.

He also argued that third-party funding can empower individuals and smaller entities (the Davids) to take on larger opponents (the Goliaths) in legal battles. This, she contended, ultimately leads to justice. Parikh asserted that third-party funding is not solely a business venture but a multifaceted tool that facilitates justice for those who might otherwise be unable to afford legal representation.

How does regulation stand as a necessity to acknowledge the aspects of business?

Advocate Somasekhar Sundaresan, speaking in favor of the motion, introduced a vital perspective—the need for regulation. Sundaresan emphasized that because third-party funding is a business activity, it requires oversight and regulation. He argued that funding often comes with strings attached and a desire for returns, underscoring the inherently commercial nature of third-party funding.

Sundaresan acknowledged the "David versus Goliath" scenario where underprivileged litigants could seek funding from the market. However, he maintained that funding typically follows the prospect of success, making it inherently business-oriented. Drawing an analogy, he likened justice to a temple in a spiritual country like India, with the path to justice paved with various businesses, including third-party funding.

The Primacy of Justice

Senior Advocate Ritin Rai vehemently argued against the motion, asserting that his opponents had redefined its intent. He highlighted that the focus should remain on "third-party funding" rather than solely on the funders themselves. Rai contended that pursuing justice does not transform into a purely business endeavor simply because a party seeks third-party funding.

Rai emphasized that business is not inherently profit-driven and can serve a broader purpose. He maintained that third-party funding primarily exists to enable justice for those who would otherwise be unable to attain it. Rai made a compelling point that if third-party funding fails to achieve this primary goal of enabling justice, it loses its significance, both as an idea and as a business venture.

The Verdict of Reflections

In the end, the judges declared the opposition side, consisting of Ritin Rai and Shaneen Parikh, as the winners of the debate, although they acknowledged that it was a close call. This outcome highlights the complex and multifaceted nature of the third-party funding debate.

The discussion at the SIAC event underscores that third-party funding of disputes exists in a delicate balance between business interests and the pursuit of justice. It is neither purely one nor the other. Instead, it represents a symbiotic relationship where the business aspect can serve as a catalyst for achieving justice, while regulation remains a crucial safeguard.

As legal scholars and practitioners, it is essential to appreciate the nuanced perspectives presented in this debate. Third-party funding is not a monolithic concept but a dynamic force that can either obstruct or enhance the cause of justice, depending on how it is harnessed and regulated. Ultimately, it is our responsibility to navigate this delicate equilibrium, ensuring that justice remains at the forefront while recognizing the role of business in facilitating access to the legal system for all.


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