Commercial Arbitration

A private dispute resolution process in which parties to a commercial agreement submit their disputes to one or more neutral arbitrators — rather than a national court — for a binding decision, pursuant to a contractual arbitration clause or post-dispute submission agreement. Commercial arbitration is favored in cross-border transactions because it offers party autonomy over procedure, confidentiality, neutral forum selection, and access to the New York Convention enforcement framework. Litigation funders are active in financing commercial arbitration claims, particularly large international arbitrations under ICC, LCIA, or ICSID rules, where claim values are substantial and adverse parties are creditworthy institutions or sovereign entities. Arbitration proceedings are generally more cost-predictable than court litigation but can involve significant arbitrator fees and institutional administrative costs that must be included in the funded budget.

Funders view arbitration's cost predictability and confidentiality as underwriting advantages relative to court litigation, but they price arbitrator fees and institutional administrative costs as a distinct budget line, since those costs are borne regardless of outcome and can be substantial in large ICC, LCIA, or ICSID proceedings. The confidentiality of arbitration also affects a funder's diligence process, since publicly available case law and dockets — a standard diligence input in court litigation — are largely unavailable for private arbitration.