In 2017, Boston College Law School Professor Frank Garcia, an international law expert, began building a team of students to research and work on various aspects of investment law reform. Their focus was on the risks posed by litigation finance, or third-party funding as it is also called (TPF), to the integrity of the already-troubled investor-state dispute settlement (ISDS) system and to the developing countries targeted by these funders for investment arbitration claims.
Team members included then-students Tara Santosuosso ’19, Randall Scarlett ’19, Leo Gargne ’18, and Hyun Ju “Monica” Cho ’18, with help from JD alum Kirrin Hough ’15 and LLM alum Camille Martini ’16.
Their effort was in preparation for an UNCITRAL WGIII meeting in New York in April 2018. UNCITRAL, the UN body that oversees investment matters, is also the home of an influential set of investment arbitration rules and it began a broad reform effort in 2017 to address a number of matters, including TPF.
For the April session, Garcia took to the open part of the meeting numerous copies of several white papers prepared by the students, and presented their work. By the end of the meeting, all 150 copies of the papers were gone.
Reports by observers to the closed session the following day noted a number of states intervening against TPF, sometimes with specific mention of the BC Law white papers. The UNCITRAL Secretariat was tasked with developing a range of options based on state comments, and asked to include the Law School white papers in the secretariat’s document pool.
“I think it is fair to say that thanks to the work of the BC Law team,” Garcia said, “TPF went from a footnote to an important agenda item for UNCITRAL arbitration rules reform, with a major focus on TPF at the August 2019 meeting, and an ongoing work program that continues to the present.”
Garcia and numerous members of the team stayed active in TPF and in the investment law reform space. The research guide, “Researching Third-Party Funding in Investor-State Dispute Settlement,” drafted by Hough and former BC Law librarian Xin “Sherry” Chen, continues to be a key research tool for journalists, policy experts, scholars, and others interested in investment law reform.
Garcia remained in touch with the secretariat as it prepared options for state consideration. In November 2020, he consulted with the secretariat on draft policy options for states to consider at subsequent WGIII meetings.
Santosuosso and Scarlett’s paper on the misappropriation of access-to-justice rhetoric by TPF in investor-state dispute resolution went on to become the leading article on this issue, with over twenty-five citations to date in books, book chapters, articles, reports, etc.
“I think it is fair to say that thanks to the work of the BC Law team, TPF went from a footnote to an important agenda item for UNCITRAL arbitration rules reform, with a major focus on TPF at the August 2019 meeting, and an ongoing work program that continues to the present.”
Professor Frank Garcia
Investment law reform continues to be an important theme for several members of the team. Gargne went on to work as a lawyer on investment arbitration matters. He is now pursuing a PhD at Tilburg University in the Netherlands in the intersection of investment law and the environment, as is Martini at Laval University in Canada. Hough continued working on these issues with Garcia as a graduate fellow of the Law & Justice Program, before joining the US Commerce Department in the Office of Trade Enforcement.
Meanwhile, media interest in TPF issues both domestically and in international investment arbitration continues to build. In 2023 Garcia was interviewed for a piece in The Jacobin on the risks posed by TPF to targeted developing countries. He was recently interviewed for a piece in the new online finance journal Sherwood, and is currently being interviewed at length for a forthcoming piece in a major international periodical. The New York Times also recently ran a story on an investment arbitration against Nigeria that illustrated all the defects in the BIT/ISDS system, including some discussion of the role of TPF.
Garcia has also been in communication with members of the Massachusetts Congressional delegation on TPF issues, in connection with ISDS reform efforts and with recent legislation introduced in both houses aimed at some of the risks posed by TPF to the integrity of US litigation. In 2023 Senator Elizabeth Warren and Nobel Prize economist Joseph Stiglitz jointly launched a campaign to rid all trade and investment treaties in the Americas of ISDS, which would likely mean the exclusion of TPF, or at a minimum a vastly diminished role, should the campaign succeed.
The genesis of the campaign was the decision by the US and Canada in the renegotiated NAFTA to drop ISDS for investment disputes between the two states, meaning that at least with respect to investment claims between US and Canadian investors, TPF will have a dramatically reduced role, if any.
TPF work is also coming to a head in the UNCITRAL reform process. TPF continued as an agenda item when meetings resumed post-COVID, with the secretariat developing draft language regulating TPF in a July 2023 report that incorporated a number of suggestions made by the BC Law team and others. States began considering these draft provisions at the January 2024 meeting, with deliberations expected to continue until the conclusion of the UNCITRAL reform process in 2026.
Given renewed public interest and these regulatory developments, Garcia has decided to reconstitute so-called “Team TPF.”
“I am particularly pleased that new BC Law faculty will be involved,” he said. “Professor Sergio Campos brings extensive expertise in complex civil litigation and federal courts to the team. He will be advising on the role of TPF in domestic complex litigation, and recently chaired a panel on TPF in domestic complex litigation at a research conference at Northwestern Law School. Professor Felipe Cole will be working on a number of aspects of the issue, given his extensive knowledge of investment law, particularly in the Latin American context.
Others who will be on the team include LLM alum Alex Bado ’23, Donald Fagan ’24, Nathaniel DeMelis ’25, Ruchita Jain ’25, Isabelle Ng ’25, Ana Maria Rojas Gutierrez, LLM ’24, and Chih-Han “Vivian” Yu ’25. They will be conducting research into various legal aspects of TPF and in particular strategies and issues arising in the effort to block TPF at state, federal, and international levels.