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A Third-Party Funded Just Transition? - The Protection of Indigenous Rights and Third-Party Funding in Investor-State Arbitration

Jonsson, Mirjam LU (2025) JURM02 20251
Department of Law
Faculty of Law
Abstract
Foreign investors’ property is protected under international investment law, under which the system of investor-state arbitration has developed. Based on investment treaties between states, or national legislation, investors are granted the right to arbitrate if they believe that the state has failed to fulfill its obligations towards them. Under the current legal framework, investors are allowed to have third-party funders, non-parties to the dispute, finance their costs for the proceedings in exchange for monetary gains. Third-party funding (TPF) is a relatively new concept, and although it has become a popular tool within international investment arbitration, it remains a highly debated topic.

As climate change and the green... (More)
Foreign investors’ property is protected under international investment law, under which the system of investor-state arbitration has developed. Based on investment treaties between states, or national legislation, investors are granted the right to arbitrate if they believe that the state has failed to fulfill its obligations towards them. Under the current legal framework, investors are allowed to have third-party funders, non-parties to the dispute, finance their costs for the proceedings in exchange for monetary gains. Third-party funding (TPF) is a relatively new concept, and although it has become a popular tool within international investment arbitration, it remains a highly debated topic.

As climate change and the green transition become increasingly compelling, the global need for critical minerals continues to rise. The minerals are often located in lands of Indigenous peoples, meaning that mineral extraction in many ways can affect Indigenous communities and their rights under international human rights law. This global resource rush is also expected to lead to an increased number of investor-state arbitrations concerning mineral extraction. Consequently, there is a tension between the rights of investors and the protection of Indigenous rights; an issue that this thesis aims to examine, focusing on the balance between investors’ access to TPF and the protection of Indigenous rights in investor-state arbitration.

The research was conducted using the legal doctrinal method; however, this method was complemented by an external and critical perspective, emphasizing that law is influenced by social, economic, and political factors. To illustrate this and to highlight the relevance of this thesis, an ongoing investor-state arbitration case involving Greenland as a respondent state has been used as the starting point.

The thesis concludes that TPF benefits access to justice for impecunious investors. Furthermore, TPF can be advantageous to investors’ asset management, as it allows an investor to focus its resources on continuing business as usual, while still being able to pursue its arbitration claims. However, concerning Indigenous rights, it can be concluded that TPF contributes to arbitration proceedings, which in turn neglect to protect these. TPF enables investors to pursue more claims against states, which may thereby be subject to economic pressure to ignore their obligations under international Indigenous rights law. Thus, the phenomenon of TPF can significantly threaten the up-holding of Indigenous rights. (Less)
Abstract (Swedish)
Utländska investerares egendom skyddas av internationell investeringsrätt, inom vilken systemet för internationella skiljeförfaranden mellan investerare och stater (internationella investeringstvister) har utvecklats. Baserat på investeringsavtal mellan stater, eller nationell lagstiftning, har investerare rätt att väcka talan om de anser att staten har underlåtit att fullgöra sina skyldigheter gentemot dem. Enligt gällande rätt får investerare låta tredjepartsfinansiärer, vilka inte är parter i tvisten, finansiera deras kostnader i utbyte mot monetära vinster. Tredjepartsfinansiering (TPF) är ett relativt nytt koncept, och trots att det har blivit ett populärt verktyg inom internationella investeringstvister förblir det ett mycket... (More)
Utländska investerares egendom skyddas av internationell investeringsrätt, inom vilken systemet för internationella skiljeförfaranden mellan investerare och stater (internationella investeringstvister) har utvecklats. Baserat på investeringsavtal mellan stater, eller nationell lagstiftning, har investerare rätt att väcka talan om de anser att staten har underlåtit att fullgöra sina skyldigheter gentemot dem. Enligt gällande rätt får investerare låta tredjepartsfinansiärer, vilka inte är parter i tvisten, finansiera deras kostnader i utbyte mot monetära vinster. Tredjepartsfinansiering (TPF) är ett relativt nytt koncept, och trots att det har blivit ett populärt verktyg inom internationella investeringstvister förblir det ett mycket omdiskuterat ämne.

I takt med att klimatförändringarna och den gröna omställningen blir alltmer påträngande fortsätter det globala behovet av kritiska mineraler att öka. Mineralerna finns ofta i områden som tillhör ursprungsbefolkningar, vilket innebär att mineralutvinning på många sätt kan påverka ursprungsbefolkningar och deras rättigheter enligt internationell rätt. Den globala jakten på resurser förväntas också leda till ett ökat antal internationella investeringstvister rörande mineralutvinning. Följaktligen finns det en spänning mellan investerares rättigheter och skyddet av urfolksrättigheter; en fråga som uppsatsen syftar till att undersöka.

Undersökningen görs med fokus på balansen mellan investerares tillgång till TPF och skyddet av urfolksrättigheter i internationella investeringstvister.
Uppsatsen har skrivits med hjälp av den rättsdogmatiska metoden, vilken har kompletterats med ett externt och kritiskt perspektiv för att betona hur juridik påverkas av sociala, ekonomiska och politiska faktorer. För att illustrera detta, och för att belysa uppsatsens relevans, har ett pågående skiljeförfarande med Grönland som svarande stat använts som utgångspunkt.

I uppsatsen dras slutsatsen att TPF gynnar tillgången till rättslig prövning för insolventa investerare. Vidare kan TPF vara fördelaktigt för investerares förvaltning av sina egna tillgångar, eftersom det gör det möjligt för en investerare att koncentrera sina resurser på att fortsätta bedriva verksamhet som vanligt, samtidigt som denne fortfarande kan driva sina skiljedomsanspråk. När det gäller urfolksrättigheter kan dock slutsatsen dras att TPF bidrar till internationella investeringstvister som i sin tur försummar att skydda dessa. TPF gör det möjligt för investerare att driva fler krav mot stater, som i därigenom kan utsättas för ekonomiska påtryckningar att ignorera sina skyldigheter enligt internationell urfolksrätt. På så sätt kan fenomenet TPF utgöra ett betydande hot mot upprätthållandet av urfolksrättigheter. (Less)
Please use this url to cite or link to this publication:
author
Jonsson, Mirjam LU
supervisor
organization
course
JURM02 20251
year
type
H3 - Professional qualifications (4 Years - )
subject
keywords
public international law, folkrätt, Indigenous rights, investor-state arbitration, investment arbitration, international human rights, human rights law, investment law
language
English
id
9189069
date added to LUP
2025-06-09 10:20:46
date last changed
2025-06-09 10:20:46
@misc{9189069,
  abstract     = {{Foreign investors’ property is protected under international investment law, under which the system of investor-state arbitration has developed. Based on investment treaties between states, or national legislation, investors are granted the right to arbitrate if they believe that the state has failed to fulfill its obligations towards them. Under the current legal framework, investors are allowed to have third-party funders, non-parties to the dispute, finance their costs for the proceedings in exchange for monetary gains. Third-party funding (TPF) is a relatively new concept, and although it has become a popular tool within international investment arbitration, it remains a highly debated topic. 

As climate change and the green transition become increasingly compelling, the global need for critical minerals continues to rise. The minerals are often located in lands of Indigenous peoples, meaning that mineral extraction in many ways can affect Indigenous communities and their rights under international human rights law. This global resource rush is also expected to lead to an increased number of investor-state arbitrations concerning mineral extraction. Consequently, there is a tension between the rights of investors and the protection of Indigenous rights; an issue that this thesis aims to examine, focusing on the balance between investors’ access to TPF and the protection of Indigenous rights in investor-state arbitration. 

The research was conducted using the legal doctrinal method; however, this method was complemented by an external and critical perspective, emphasizing that law is influenced by social, economic, and political factors. To illustrate this and to highlight the relevance of this thesis, an ongoing investor-state arbitration case involving Greenland as a respondent state has been used as the starting point. 

The thesis concludes that TPF benefits access to justice for impecunious investors. Furthermore, TPF can be advantageous to investors’ asset management, as it allows an investor to focus its resources on continuing business as usual, while still being able to pursue its arbitration claims. However, concerning Indigenous rights, it can be concluded that TPF contributes to arbitration proceedings, which in turn neglect to protect these. TPF enables investors to pursue more claims against states, which may thereby be subject to economic pressure to ignore their obligations under international Indigenous rights law. Thus, the phenomenon of TPF can significantly threaten the up-holding of Indigenous rights.}},
  author       = {{Jonsson, Mirjam}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{A Third-Party Funded Just Transition? - The Protection of Indigenous Rights and Third-Party Funding in Investor-State Arbitration}},
  year         = {{2025}},
}