An international arbitration expert sees expanding frontiers for funding

An international arbitration expert sees expanding frontiers for funding

Dana MacGrath spent 20 years helping clients assert their rights in international arbitrations and commercial litigation, and along the way, built one of the world’s leading international arbitration practices. MacGrath has had a special focus on large, complex commercial arbitrations, often involving the energy space.

A former partner at Sidley Austin LLP, MacGrath also has chaired several arbitration-related professional organizations and is currently president of the board of directors of ArbitralWomen, a nonprofit that promotes the equal representation of women and diversity in international dispute resolution.

Now, she is leveraging her extensive experience to help companies and law firms with meritorious claims ensure they have the funding they need to access arbitration forums and tribunals around the globe. MacGrath joined Bentham IMF in January as an investment manager and legal counsel, and she is now responsible for leading the company’s investments in international arbitration matters and contributing to commercial litigation funding efforts.

MacGrath recently spoke with the Bentham blog about her career, how litigation funding is viewed in the international arbitration community, the benefits of funding for arbitration parties, and her transition from Big Law.

How do you think your experience will enhance your work in the litigation funding space?

My experience with cases of all different kinds in various arbitration systems gives me a unique skillset that will help me evaluate and analyze a case from a funding perspective and identify cases that are best fit for funding.

I also have a deep reservoir of knowledge about arbitration procedures, which are quite different from the procedural issues we are used to seeing in litigation within the U.S. Understanding those procedures and the lifespan of an arbitration is critical—for example, commercial arbitrations administered by the International Chamber of Commerce (ICC), London Court of International Arbitration (LCIA), the International Centre for Dispute Resolution (ICDR) and the International Centre for Settlement of Investment Disputes (ICSID). You really can’t assess how a case will unfold if you don’t have the experience with the arbitration procedures

How prevalent is litigation finance in the international arbitration community?

In international arbitration, litigation funding is almost a household term. We’re increasingly seeing jurisdictions, including Hong Kong and Singapore, enacting legislation that acknowledges arbitration funding. And in certain areas, such as the treaty arbitration field—where there’s a dispute between a private investor and a nation-state—the role of funders on the side of investors has been quite visible. This is a natural outgrowth of the transparency of the treaty arbitration forum, which addresses disputes that are much more public than typical business-to-business arbitrations.

An example of the prevalence of litigation funding in the international arbitration community more generally is that in 2018, the Willem C. Vis International Commercial Arbitration Vis Moot problem included a procedural issue relating to third party funding. That’s how mainstream the issue of funding in arbitration has become. The Vis Moot takes place in Hong Kong and Vienna each year and more than 400 teams from around the world compete—arbitrated by leading arbitrators, scholars and arbitration practitioners. All eyes were on third party funding in Spring 2018 at the Vis Moot.

Why is funding such a benefit for aggrieved parties in investor-state arbitration?

The investor in a treaty arbitration may have lost everything of commercial value when the government suspended or took over the project.  The investor needs to assert its claim against the government, but it may not have the resources to do so because the conduct of the state may have deprived the investor of its central asset. Arbitration funding steps in to make it possible to assert those claims.

Is disclosure of funding required in these cases?

It’s different from jurisdiction to jurisdiction. Generally speaking, in Asia there is a call for disclosure of funding and the identity of the funder for the purposes of conflicts checks, so that any arbitrator that may have a connection to the funder would be able to make any needed disclosures.

What drew you to litigation finance?

What I find empowering about litigation funding in the arbitration space is that it enables claims to be brought that might not otherwise have been possible to assert. For example, often complicated joint venture relationships, complex transactions in the energy space, and cross-border transactions relating to licensing of intellectual property can lead to conflicts among the parties and sizable claims. Funding makes it possible to assert those meritorious claims in arbitration.

Have you seen cases where parties have had to walk away because they ran out of money?

Actually, you rarely see it because the cases just aren’t brought if there’s no money to pay the arbitration legal fees and costs. If commercial parties in international arbitration were more informed about the tools of litigation finance, they would be in a better position to enforce their rights.

Is that one of the opportunities you see, ensuring that parties in the international arbitration space are informed about their options?

Funding has become familiar in the investor state treaty arbitration space, because those arbitrations are more transparent. Parties in commercial arbitrations may be less informed about how funding could help them. Multinational companies that do business all over the world are usually current on business trends; the time is ripe for them to learn more about the benefits of funding for commercial arbitration. 

Tell us about your work with ArbitralWomen?         

I am proud to be the president of ArbitralWomen. It is a wonderful organization with a rich twenty-five-year history. In recent years, we’ve made great strides to increase the visibility of women in the international dispute resolution field and to better track the statistics of women appointed as arbitrators and their role in arbitration matters. We are working to help make diversity front-of-mind for people in this field.

And how has your transition from Big Law to litigation finance been thus far?

It’s been great. I have had a mix of training and learning about Bentham’s ethos and the underwriting process and the kinds of matters we handle. I’m still in the early days, but I have had a lot of exciting meetings with law firms and companies about what we can do in the arbitration space.

To discuss how you can use litigation finance in your international arbitration dispute, contact us for a consultation.