Third-party funding in CRCICA cases and the obligation to disclose it has become an important practical issue in institutional arbitration after the 2024 Rules of the Cairo Regional Centre for International Commercial Arbitration (CRCICA) expressly regulated the matter for the first time. The importance of this rule lies in promoting greater transparency regarding the economic interests connected with the dispute and enabling arbitrators, the Centre, and the parties to identify potential conflicts of interest at an early stage, without turning disclosure into automatic production of the full commercial terms of the funding agreement.

For companies, investors, and international law firms handling disputes before CRCICA, the issue is not limited to identifying the existence of an external funder. It also extends to determining when disclosure must be made, what information must be disclosed, what Article 53 does not require, and how funding interacts with arbitrator independence, costs, and confidentiality.

What Is Third-Party Funding in Arbitration?

Article 53 of the CRCICA 2024 Rules does not provide a detailed or exhaustive definition of Third-Party Funding. Instead, it proceeds from a practical situation in which a party to the arbitration receives funding from a third person or entity relating to the arbitration proceedings and their outcome.

In international practice, the term is generally used to describe an arrangement under which an external funder provides full or partial financing for the costs of the dispute and may have an economic interest in the outcome of the case. The CRCICA Rules, however, do not confine Article 53 to a single commercial model and do not require that the funder’s return necessarily take the form of a percentage of the amount awarded.

Accordingly, the correct analysis begins with the actual terms of the funding agreement, the status of the funder, its relationship with the funded party, and the extent to which the funding is connected with the arbitration proceedings and their outcome, rather than assuming that every form of financial support necessarily constitutes third-party funding or that all funding must follow the same commercial structure.

Article 53 of the CRCICA 2024 Rules: What Must Be Disclosed?

Article 53 of the CRCICA 2024 Rules, entitled Third-Party Funding, introduced a disclosure obligation for a party receiving third-party funding relating to the arbitration proceedings and their outcome. The provision requires disclosure of two specific matters:

• The existence of the funding.
• The identity of the third-party funder.

This obligation continues from the commencement of the arbitration and throughout the proceedings. A one-time disclosure is therefore not necessarily sufficient where the funder changes, an additional funder is introduced, or a material change occurs in the identity of the entity holding the previously disclosed economic interest.

The Centre’s published forms and procedures also reflect this obligation. The Notice of Arbitration and the Response to the Notice of Arbitration should indicate the existence of a funding arrangement and identify the third-party funder where applicable.

Must the Full Funding Agreement Be Produced?

No. Article 53 itself does not impose automatic disclosure of the full funding agreement, the return percentage, the funding cap, case-management strategy, termination provisions, or the internal valuation of the claim. The express minimum requirement is disclosure of the existence of the funding and the identity of the funder.

In a particular case, additional information may become procedurally relevant to a specific issue, such as arbitrator independence or a procedural request concerning costs. That, however, is different from saying that the CRCICA Rules create a general duty to produce the entire funding agreement to the opposing party.

When Must the Funding Be Disclosed?

The timing depends on when the funding arrangement arises:

• If the funding is already in place when the arbitration begins: disclosure should be included in the Notice of Arbitration or the Response, depending on the party’s procedural role.
• If the funding is entered into during the arbitration: the disclosure should be updated during the proceedings so that information concerning the existence of the funding and the identity of the funder remains current.
• If the funder or funding structure changes: it should be assessed whether the change requires a fresh disclosure in order to maintain compliance with Article 53.

Early disclosure is important because it enables conflicts checks before the tribunal’s composition becomes settled, or immediately after a relevant change occurs, rather than allowing the relationship to emerge only at a late stage after substantial time and costs have been incurred.

The Relationship Between Third-Party Funding and Arbitrator Independence

The clearest practical objective of Article 53 is to support the conflicts-disclosure framework. Article 12 of the CRCICA Rules requires an arbitrator to disclose any circumstances likely to give rise to justifiable doubts as to impartiality or independence, and that obligation continues throughout the arbitration.

If the funder has a professional or financial relationship with an arbitrator, the arbitrator’s law firm, or another relevant person, identifying the funder becomes necessary to determine whether that relationship requires further disclosure or may support a challenge to the arbitrator under Article 14.

Reference may also be made to the IBA Guidelines on Conflicts of Interest in International Arbitration in their updated 2024 version. These Guidelines are not, by themselves, binding law in every arbitration, but they are an important practical reference for assessing economic relationships and relationships between funders and arbitrators. CRCICA’s practice notes likewise refer to them as a useful reference when evaluating disclosures.

Does Non-Disclosure Automatically Lead to Arbitrator Challenge or Annulment of the Award?

A breach of the disclosure obligation should not be confused with the existence of a specific automatic sanction. The CRCICA Rules do not state in Article 53 that non-disclosure automatically results in the invalidity of the arbitration or the award.

The consequences depend on the actual effects of the breach. If late disclosure reveals a relationship giving rise to justifiable doubts about an arbitrator’s independence, a challenge may arise. If a party breaches a procedural order issued by the tribunal, procedural or financial consequences may follow. The parties’ conduct may also be taken into account when allocating costs.

As for annulment proceedings before the Egyptian courts, an application cannot succeed merely by invoking the phrase “failure to disclose funding.” The issue must be connected to one of the grounds for annulment under Article 53 of Egyptian Arbitration Law No. 27 of 1994, such as a material defect in the constitution of the tribunal, deprivation of a party’s opportunity to present its case, or a procedural invalidity affecting the award, depending on the circumstances of the case.

Third-Party Funding and Security for Costs

A common mistake is to assume that disclosure of a third-party funder automatically requires the funded party to provide Security for Costs. The CRCICA 2024 Rules do not establish such a rule in Article 53.

Article 26/6 concerns the possibility of requiring the party requesting interim measures to provide appropriate security connected with those measures. This is a different issue from general security for the opposing party’s costs in the arbitration.

Accordingly, if a separate application for Security for Costs is made, its procedural and legal basis should be assessed in light of the CRCICA Rules, the law of the seat, the tribunal’s powers, and the specific facts concerning the party’s solvency, conduct, and ability to satisfy a costs award. The mere presence of an external funder does not, by itself, establish insolvency or bad faith.

Does Funding of a Subsidiary by Its Parent Company Fall Under Article 53?

The CRCICA Rules do not provide a detailed definition of “third party” that resolves in advance every intra-group corporate funding structure. It is therefore not correct to state that all funding from a parent or sister company must always be disclosed, nor is it correct to assume that such funding is always excluded.

In such cases, the analysis should consider the funder’s separate legal personality, the nature of its economic interest in the outcome of the arbitration, the control relationship within the group, and any potential impact on conflicts of interest. Where there is genuine doubt as to whether arbitrator independence may be affected or Article 53 may apply, a brief precautionary disclosure is often safer than allowing the issue to emerge later.

Confidentiality and Legal Privilege When Sharing the File with the Funder

Third-party funding generally requires the funder to review certain dispute documents in order to assess the merits of the case, the costs, and enforceability of any award. Document sharing, however, should be handled carefully, particularly where the materials include legal opinions, lawyer communications, trade secrets, or sensitive financial information.

The CRCICA Rules do not contain a general provision making all material supplied to a funder automatically protected from disclosure to the opposing party. The consequences of sharing such material depend on the applicable law, relevant confidentiality and privilege rules, and any procedural orders issued by the arbitral tribunal.

• Enter into an appropriate confidentiality agreement before exchanging case documents.
• Identify the material the funder actually needs and avoid opening the entire dispute file without necessity.
• Clearly mark confidential or legally protected material.
• Review the law of the seat and the law applicable to legal privilege before sharing sensitive legal opinions.

Third-Party Funding and Allocation of Arbitration Costs

Article 49 of the CRCICA Rules governs the allocation of arbitration costs. As a general rule, unless the parties agree otherwise, the unsuccessful party bears the costs in principle, while the tribunal retains discretion to allocate them differently where it considers that reasonable in light of the circumstances of the case.

Article 49 also permits the tribunal to consider the parties’ contribution to procedural efficiency and the avoidance of unnecessary delay and expense. Accordingly, a party’s conduct in relation to disclosure or compliance with procedural orders may become relevant to a costs decision in particular circumstances, but there is no automatic costs penalty merely because third-party funding exists.

Comparison Between What Must Be Disclosed and What Is Not Automatically Required

Common Mistakes in Dealing with Third-Party Funding

• Delaying disclosure until the tribunal is fully constituted: This may prevent the parties and arbitrators from conducting conflicts checks at the appropriate time.
• Automatically producing the full funding agreement: This may disclose commercial or strategic information that Article 53 does not require.
• Assuming funding proves financial weakness: Many companies use funding for budget management or risk transfer rather than because of financial distress.
• Assuming non-disclosure automatically causes annulment: The consequences must be assessed under the applicable challenge, annulment, and procedural rules.
• Failing to update disclosure: A change of funder or the emergence of a new economic interest during the proceedings may require updated information.

Practical Best Practices for Companies and Arbitration Teams

• Conduct an early Conflict Check: Include the funder’s identity in the relationship-check process before finalizing arbitrator and expert nominations.
• Prepare a concise and accurate disclosure: State the existence of the funding and the funder’s name and legal status without unnecessary disclosure of commercial terms.
• Update disclosure when circumstances change: Review the funding position periodically throughout the proceedings.
• Regulate information sharing with the funder: Use confidentiality agreements and access protocols for sensitive documents.
• Review the effect of funding on costs: Distinguish commercial funding from any separate application concerning solvency or Security for Costs.

When Is Specialized Counsel or Local Counsel in Egypt Required?

Local Counsel becomes particularly important where the seat of arbitration is in Egypt or where ancillary proceedings, annulment, or enforcement may take place before the Egyptian courts. Situations in which early involvement may be advisable include:

• Reviewing the funding agreement before execution from the perspective of the law of the seat and confidentiality.
• Drafting the disclosure notice under Article 53 without revealing unnecessary information.
• Assessing whether a funder’s relationship with any arbitrator or expert may raise an independence or challenge issue.
• Responding to requests for additional disclosure or applications for Security for Costs.
• Evaluating the effect of any disclosure breach on possible annulment or enforcement proceedings in Egypt.

How Can Specialized Legal Support Help?

El Rouby Law Firm provides legal support to companies, investors, and international law firms in arbitration matters involving third-party funding arrangements, whether before a dispute arises or during proceedings before CRCICA.

1. Review of funding agreements: Analyzing disclosure and confidentiality obligations and their effect on dispute management.
2. Preparation of disclosure notices: Drafting disclosures compliant with the CRCICA Rules while protecting commercial information that is not required to be disclosed.
3. Conflicts management: Coordinating checks on the funder’s relationships with arbitrators, experts, and parties to the dispute.
4. Representation in procedural matters: Handling requests for additional disclosure, costs issues, and responses to funding-related objections.
5. Enforcement and annulment support in Egypt: Assessing the effect of funding and disclosure issues on the integrity and enforceability of the award.

Conclusion

The CRCICA 2024 Rules do not prohibit third-party funding. Rather, they address it from the perspective of transparency and conflicts of interest. The central rule is simple and precise: disclose the existence of the funding and the identity of the funder at the commencement of the arbitration and throughout the proceedings. The commercial terms of the funding agreement, Security for Costs, and the consequences of non-disclosure remain separate issues to be determined under other provisions and the circumstances of each dispute.

Proper management of third-party funding therefore requires balancing compliance with transparency obligations on the one hand and protection of confidentiality and legal strategy on the other, while maintaining an ongoing conflicts check throughout the case.

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Frequently Asked Questions

What must be disclosed where there is third-party funding before CRCICA?

The existence of the funding and the identity of the third-party funder must be disclosed, and the obligation continues throughout the arbitration proceedings.

Must the entire funding agreement be produced to the opposing party?

Not automatically under Article 53. The provision requires disclosure of the existence of the funding and the identity of the funder. Additional requests may arise in a particular case depending on relevance, necessity, and the tribunal’s decisions.

Does the existence of a funder automatically lead to Security for Costs?

No. The existence of funding does not automatically create a requirement for Security for Costs and does not, by itself, establish that the funded party is insolvent.

Does failure to disclose the funding invalidate the arbitral award?

Not automatically. The consequences of non-disclosure must be assessed, including whether it resulted in a material legal defect falling within the applicable statutory grounds for annulment.

Why do the CRCICA Rules require disclosure of the funder’s identity?

Because the identity of the funder may be relevant to assessing arbitrator independence and conflicts of interest. Early transparency therefore helps protect the integrity of the tribunal’s constitution and the proceedings.