Commodifying Justice: Third-Party Funding Exposes the Capture of Investor-State Dispute Settlement

Third-party funding is usually defended as a way to widen access to justice. In investor-State dispute settlement, it does something else. It turns the system into a market in which financiers bankroll claims against public treasuries, buy and sell those claims like any other asset, and profit from a State’s liability — while the communities in whose name the contested measures were taken are shut out.

Commodifying Justice argues that this is not a malfunction. Funding did not break a working system; it found one already built to serve capital and made the most of it. What the funding industry exposes is what ISDS already rewards.

The report traces this across three fault lines:

1. Development is not what the regime rewards. Funding follows the profitability of a claim, not the development outcomes the treaties promise. The financiers who drive and profit from claims have no stake in the host economy; the communities who bear the consequences cannot bring claims and often cannot be heard at all.
2. Non-investors capture the mechanism. Funders and post-dispute acquirers with no connection to the original investment step in, take control of claims, and trade a State’s liability as they would any other financial asset — dissolving the “investor” the treaties were meant to protect.
3. Opacity hides coordinated pressure. Because funding is rarely disclosed, a single funder can quietly coordinate multiple claims against one State, at the merits stage and through enforcement across borders, while the State has neither visibility over the pattern nor the tools to respond.

The conclusion follows from the diagnosis. A mechanism that turns State liability into private yield so well, and serves its public purpose so poorly, does not need a better disclosure rule or tighter funding regulation. It needs to be reconsidered as a whole.

Authors

Ladan Mehranvar

Senior Legal Researcher

Themes

• International Investment Law

Tags

• Human rights
• Just transition
• Trade