Prohibition Without A Forum: Article 16 Of The India-UAE Bit 2024, Third-Party Funding, And The Law Of The Seat
Shriya Singh, B.A. LL.B., Amity Law School, Amity University Noida
ABSTRACT
Article 16 of the India-UAE Bilateral Investment Treaty 2024 provides that third-party funding of an investor in case of a dispute shall not be permitted. It provides nothing further. It does not say who decides whether funding exists, on what standard, at what stage, or with what consequence. No tribunal has yet been asked to apply it. When one is, it will have to characterise the provision, and the available characterisations are three: a condition on the host State’s consent to arbitrate, which makes the objection jurisdictional and terminal; a requirement of admissibility, which suspends the claim rather than defeating it; or a rule of procedure, which the law of the seat may displace. Each produces a different result on identical facts. This article argues that the third characterisation is the most difficult for India, because the treaty separately requires the arbitration to be seated in a State party to the New York Convention, and every realistic seat within that class permits third-party funding. India has therefore drafted a prohibition that only a foreign tribunal applying a foreign procedural law will ever be asked to enforce, and has given that tribunal no instruction on how. The article develops three further difficulties: that Indian law does not prohibit funding domestically and the Delhi High Court has recently affirmed its legitimacy in a Singapore-seated arbitration funded by an Indian financier; that a prohibition on funding is structurally asymmetric because a respondent State never requires it; and that the clause disadvantages Indian investors abroad. It concludes that India should replace Article 16 in future treaty practice with a disclosure and security-for-costs regime, and that if the prohibition is retained it must at minimum be given an operative consequence.
Keywords: third-party funding; India-UAE BIT 2024; investor-State dispute settlement; law of the seat; lex arbitri; jurisdiction and admissibility; New York Convention; Tomorrow Sales Agency; access to justice; Model BIT.
