B.C. legislative amendments confirm important role of third-party funding in international arbitrations

In May 2018, British Columbia modernized its International Commercial Arbitration Act by largely adopting the 2006 amendments to the UNCITRAL Model Law on International Commercial Arbitration. These recent changes make B.C. a more arbitration-friendly jurisdiction for complex international commercial disputes by, among other things, expanding the scope of agreements that can be arbitrated, broadening the powers of arbitral tribunals, and confirming the de facto confidentiality afforded to all parties to international arbitrations conducted in the province.

The 2018 changes also expressly confirm that the recognition or enforcement of arbitral awards cannot be challenged on “public policy” grounds simply because a third-party litigation funder was involved. Such express confirmation does not appear in the 2006 UNCITRAL Model Law, but was added to the B.C. legislation, because, according to the province’s Attorney General, it “signal[s] that British Columbia recognizes the use of third-party funding as a commercial practice in international dispute resolution” and helps promote B.C. “as a venue for international commercial arbitration because [third-party funding] is a practice that is accepted quite broadly in the international arbitral world”.

The Attorney General discusses the effects of third-party funding in the following terms:

[I]t enhances the possibility of claimants being able to enforce arbitral rights for which they bargained in international contracts. It’s also a common form of risk sharing — access to final dispute resolutions promoted through risk sharing. Similar risk-sharing funding agreements occur in some domestic disputes.

Through the May 2018 amendments to the International Commercial Arbitration Act, British Columbia makes itself an even friendlier international arbitration jurisdiction. According to the B.C. government, the consequence will be “attracting more business to the province and enhancing our reputation as a desirable venue for arbitration”.