In the recent case of Tomorrow Sales Agency Ltd v SBS Holdings Inc, a Division Bench of the Delhi High Court ruled that those who provide third-party funding are not liable to pay adverse awards in arbitration claims. This is a landmark ruling which will change the landscape of arbitration in India, and is indicative of a shift in the Indian legal system to become more conducive to arbitration and mediation.
Arbitration is now a preferred method for resolving commercial disputes in India due to its flexibility, efficiency and confidentiality. However, the cost of arbitration proceedings and the potential for prolonged legal battles can bring significant challenges for the parties involved. In response, the concept of third-party funding has gained traction as a means to mitigate financial risks and enhance access to justice.
