Research on the Third-party Funding System and China's Response

The third-party funding system is an investment-oriented legal service that provides the funded party with an opportunity to access justice while also offering potential winning benefits to third-party funding institutions. Currently, the legality of the third-party funding system has been generally recognized in both Chinese arbitration practice and judicial practice. However, due to the lack of clear legal status for the third-party funding system in China, issues such as conflicts of interest between funders and arbitrators and the intervention of third-party funders in the arbitration process may hinder the development of the third-party funding system in China if not effectively addressed. This article analyzes the development challenges of the third-party funding system, taking into account China's actual conditions and drawing on legislative and practical experiences from other jurisdictions that regulate third-party funding, to explore ways to overcome the development challenges of the third-party funding system in China.