Third-Party Funding in UAE Arbitration: Financing Disputes

How external funding works in UAE arbitration, from disclosure duties to funding agreements and after-the-event insurance.

A guide to third-party funding in UAE arbitration: the legal basis, institutional disclosure rules, the main terms of funding agreements, after-the-event insurance and how respondents can respond.

By Nour Attorneys / 22 August 2026

Reviewed by Mohamed Noureldin, Founder, Managing Partner & Senior Legal Consultant

In international arbitration, how a party finances its case can decide whether it succeeds or fails. Third-party funding (TPF) in UAE arbitration is becoming an important way for claimants to pursue strong claims when they lack the money to fund them alone. It removes traditional cost barriers to bringing a claim and changes how disputes are resolved.

The UAE has gradually adapted its regulatory framework to accommodate third-party funding. It aims to balance transparency with confidentiality and to protect legitimate interests without undermining the integrity of the proceedings. Parties who want to plan their dispute resolution strategy well need to understand the rules on TPF, including disclosure obligations and funding agreements. This article explains these rules and how external financing can be used in UAE arbitration.

Related Services: Explore our Arbitration services for practical legal support in this area.

The Regulatory Framework for Third-Party Funding in UAE Arbitration

Third-party funding in UAE arbitration is no longer a marginal concept. It is a recognised tool governed by a developing legal regime. The UAE's adoption of the Arbitration Law No. 6 of 2018 aligns with international standards and explicitly permits third-party funding under certain conditions. This statutory recognition allows parties to set up funding arrangements that support access to justice while preserving the integrity of the arbitration.

Legal Basis and Statutory Recognition

Article 38 of the UAE Arbitration Law No. 6 of 2018 explicitly allows third-party funding, a significant development for arbitration in the UAE. The provision gives claimants and funders a clear legal basis for their financial arrangements without fear that those arrangements will be invalid. The law also imposes obligations on disclosure and confidentiality, which parties must handle carefully to avoid procedural setbacks.

This recognition aligns the UAE with jurisdictions such as Singapore, Hong Kong and England, which have established frameworks for third-party funding in arbitration. However, the UAE's framework includes elements suited to its own legal culture and commercial environment, such as specific disclosure protocols and enforceability criteria.

Institutional Rules and Guidelines

Many arbitral institutions operating in the UAE, including the Dubai International Arbitration Centre (DIAC) and the Abu Dhabi Global Market Arbitration Centre (ADGM AC), have adopted rules or issued practice notes that accommodate third-party funding. These rules require early disclosure of funding and give tribunals powers to deal with any conflicts of interest or ethical concerns arising from a third party's involvement.

For example, the DIAC Arbitration Rules explicitly require disclosure of third-party funding at the outset of proceedings. This promotes transparency and allows arbitrators to put procedural safeguards in place to ensure impartiality. Similarly, the ADGM AC's rules treat funding disclosure as a core part of procedural fairness.

Parties arbitrating under these institutions must therefore structure their funding arrangements with these requirements in mind to avoid challenges or delays.

Confidentiality and Transparency

One regulatory challenge in third-party funding is balancing confidentiality with the tribunal's need for transparency. Funding agreements often contain commercially sensitive terms that parties wish to keep private. However, undisclosed funding arrangements can raise concerns about undue influence or tribunal bias.

The UAE framework addresses this tension by requiring disclosure of the existence and material terms of funding agreements, while allowing parties to redact sensitive commercial details where justified. This balanced approach ensures that tribunals know about funding arrangements while limiting unnecessary exposure of confidential information.

For a more detailed understanding of the legal and procedural framework governing arbitration in the UAE, including third-party funding, see our International Arbitration services.

Disclosure Obligations in Third-Party Funding

Disclosure of third-party funding arrangements in UAE arbitration is both a procedural requirement and a strategic matter. Because arbitration is adversarial, parties need to plan their disclosure carefully to maintain procedural fairness and avoid adverse consequences.

The Scope of Disclosure Requirements

UAE arbitration rules and courts require parties to disclose the existence of third-party funding, the identity of the funder and the essential terms of the funding agreement. This transparency allows tribunals to identify and address potential conflicts of interest.

Disclosure should cover:

The identity and background of the third-party funder
The scope and amount of funding provided
The repayment terms and triggers (for example, success fees)
Any control or influence the funder may have over the arbitration or settlement decisions
Confidentiality provisions relevant to the arbitration

Parties must ensure that their disclosures are timely, complete and accurate. Failure to disclose, or partial disclosure, can be used by opposing parties to challenge the validity of the award or to initiate enforcement proceedings.

Timing and Procedural Implications

Disclosure should be made early in the arbitration, ideally when the arbitral tribunal is constituted or at the first procedural hearing. Early disclosure lets the tribunal adjust its approach, including appointing independent experts or amending procedural orders to safeguard impartiality.

Late disclosure may be viewed as a breach of procedural duty and can lead to challenges on grounds of procedural irregularity or bias. Parties should therefore set up internal procedures to identify and disclose funding arrangements promptly.

Tactical Considerations in Disclosure

Disclosure can itself be a strategic step. Claimants may use the disclosure of third-party funding to signal financial strength and commitment to the dispute, which can influence settlement discussions. This may push respondents to reassess the merits of their position and the risks of lengthy proceedings.

Respondents, in turn, should prepare responses that scrutinise the funder's interests and any potential conflicts, including cross-examining funders or seeking disclosure of further documents where justified. This keeps the proceedings balanced.

Parties planning their disclosure approach may need support in dispute resolution and litigation, available through our Commercial Litigation and Arbitration services.

Funding Agreements and After-the-Event Insurance

Third-party funding agreements are detailed contracts that must be drafted carefully to fit the claimant's overall plan for financing the dispute.

Structuring Third-Party Funding Agreements

A typical third-party funding agreement in UAE arbitration will include:

The scope of funding (legal fees, expert fees, arbitration costs)
Funding milestones and disbursement procedures
Repayment mechanisms, often contingent on the outcome (success fees, percentage of recovery)
Control provisions, specifying whether the funder has any influence on settlement or procedural decisions
Confidentiality and non-disclosure clauses
Representations and warranties relating to compliance with applicable laws and arbitration rules
Termination provisions and the consequences of early termination

These agreements must be drafted to comply with UAE law, including the Arbitration Law, the civil and commercial codes, and any applicable regulations concerning financial transactions.

Combining Funding with After-the-Event Insurance

After-the-event (ATE) insurance complements third-party funding by protecting the claimant against adverse cost orders. In the UAE context, ATE insurance can cover:

The respondent's legal fees and arbitration costs if the claimant loses
Enforcement costs in various jurisdictions
Security for costs applications

Using ATE insurance alongside third-party funding gives the claimant two layers of financial protection and reduces its exposure to cost risk. This allows claimants to pursue claims without fear of severe financial loss.

Legal and Tactical Considerations

Parties must draft funding and insurance agreements so that they work together without conflicting obligations. For instance, overlapping coverage or inconsistent repayment terms could undermine the claimant's financial strategy.

Funders and insurers also often require access to case files and periodic updates to assess their risk. Parties must put confidentiality and information-sharing procedures in place that meet these requirements without weakening their procedural position.

For drafting and review of funding agreements and insurance contracts, Nour Attorneys offers Contract Drafting services suited to arbitration financing.

Using Third-Party Funding in UAE Arbitration to Pursue Strong Claims

Third-party funding in UAE arbitration is not just a financial convenience. It is a strategic tool that can shape how a claimant presents and pursues its case.

Improving Access to Justice

Third-party funding reduces the disadvantage faced by claimants with limited resources. With external capital, claimants can take a more assertive procedural approach, including:

Engaging expert witnesses and forensic accountants
Extending discovery and document production exercises
Pursuing enforcement actions in several jurisdictions
Undertaking complex legal research and analysis

This financial support changes the dynamics of the arbitration by limiting the respondent's ability to use delaying or intimidation tactics based on cost pressure.

Example: Third-Party Funding in a Cross-Border Construction Dispute

Consider a UAE-based contractor pursuing a cross-border construction arbitration against a sovereign entity. The contractor faces significant upfront legal costs and potential delays because of the respondent's financial strength.

By entering into a third-party funding agreement with a reputable funder, the claimant obtains capital to pay for expert reports and a thorough document production process. At the same time, it takes out ATE insurance to protect against adverse cost orders.

This combination allows the claimant to press its case firmly, put pressure on the respondent and eventually secure a favourable settlement. It shows how well-planned financing can affect outcomes.

How Respondents Can Respond

Respondents must anticipate the implications of third-party funding and prepare thorough counter-strategies, such as:

Challenging the enforceability of funding agreements on procedural or public policy grounds
Scrutinising disclosure compliance closely
Using their own financial advisers to analyse funding arrangements
Increasing settlement offers to take advantage of the funder's interest in early resolution

Engaging experienced counsel in international arbitration in Dubai can help put these responses into effect.

Compliance Checklist for Third-Party Funding in UAE Arbitration

To use third-party funding while staying compliant and protecting your position, parties should work through the following checklist:

Checklist Item	Action Required
Legal Review of Funding Agreement	Ensure terms comply with UAE Arbitration Law No. 6 of 2018 and local laws.
Disclosure Protocol	Plan the timing and scope of disclosure to the arbitral tribunal and the opposing party.
Confidentiality Management	Set up redactions and information-sharing procedures to protect sensitive information.
Integration with ATE Insurance	Align funding and insurance terms to avoid conflicting obligations.
Risk Analysis	Plan for adverse outcomes and the possible termination of funding.
Tribunal Impartiality Safeguards	Prepare to address potential tribunal concerns about conflicts of interest.
Procedural Timing	Coordinate funding disbursements with arbitration milestones.
Communication with Funder	Establish reporting and case update arrangements.
Enforcement Planning	Structure the funding to support enforcement actions in several jurisdictions.
Contingency Planning	Prepare fallback arrangements in case funding is withdrawn or the arbitration is delayed.

Following this checklist will help parties build a compliant and effective funding strategy.

Conclusion

Third-party funding in UAE arbitration marks a significant change in how disputes are financed, and it can strongly influence arbitration outcomes. It allows claimants to overcome financial imbalances and commit the resources needed to present a strong case. The UAE's regulatory framework, with its emphasis on disclosure and enforceability, provides a balanced environment that protects procedural fairness while supporting access to justice.

To manage these issues, parties must plan their funding, disclosure and insurance arrangements carefully. Doing so puts them in a stronger position to overcome financial barriers and pursue arbitration with confidence.

For dispute resolution services involving third-party funding and arbitration strategy, contact Nour Attorneys.

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Please consult with a qualified attorney for specific guidance on your situation.

Nour Attorneys Team

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