JV Q&A: Arbitration finance moves into the mainstream, says Burford Capital  

As governments tighten oversight of critical minerals projects and geopolitical tensions reshape resource policy, mining companies are increasingly facing disputes with host states and commercial partners.  

Investor-state arbitration and cross-border commercial claims have become a defining feature of the modern mining landscape, often carrying multi-million-dollar legal costs and lasting years beyond an initial ruling. 

Against that backdrop, legal finance – sometimes called arbitration or litigation funding – has moved from a niche concept to a strategic tool. Companies are using it not only to fund claims, but to manage balance-sheet risk and even unlock value from arbitration awards. 

In this The Northern Miner interview, host Devan Murugan, talks to Burford Capital Director Jeffery Commission as he explains how third-party funding works in practice, why mining has long been one of its most active sectors and what funders look for when assessing investor-state disputes in an era of rising regulatory scrutiny and enforcement challenges. 

Devan Murugan: Jeffery thanks for talking to us. 

Jeffery Commission: It’s a pleasure. 

DM: Critical minerals have certainly dominated headlines recently, but are we also seeing a rise in mining disputes linked to those projects? 

JC: Yes, I believe we are and in two respects. First, we’re seeing disputes between mining companies – both majors and juniors – and governments in the jurisdictions where they operate. These are typically referred to as investor-state disputes, where you have an investor on one side and a sovereign state on the other. 

Second, we’re seeing international commercial arbitrations between companies, often between two mining firms. In many cases, those commercial arbitrations follow some form of government action or inaction that has affected the project. 

DM: For viewers unfamiliar with it, what exactly is third-party funding – often called litigation or arbitration finance – and how does it work in simple terms? 

JC: Third-party funding, or arbitration finance as I prefer to call it, is where a funder pays the legal fees and expenses of an international arbitration in exchange for a share of the award proceeds if the case is successful. 

These arbitrations are increasingly expensive. The average spend can be at least $5 million and they often last three to five years. Even after a favourable award, you may face annulment or set-aside proceedings, followed by collection efforts. 

Because of these cost and duration concerns, funders can add value by providing capital – particularly to junior mining companies – so they can pursue what are often valid and substantial claims. 

DM: Historically, have many mining companies used arbitration finance and how widespread is it in the sector today? 

JC: It’s difficult to tell the story of litigation funding without referencing the mining sector. Some of the earliest funded cases were mining disputes. Before joining Burford Capital, I worked as counsel at an international law firm, where several of the cases I handled involved Canadian junior mining companies pursuing claims against Latin American sovereigns and those cases were funded. Many were successful. 

To this day, third-party funding remains closely linked with mining. If you look at data from arbitral institutions, an increasing proportion of disputes fall under what the World Bank classifies as oil, gas and mining. We’ve seen consistent year-on-year increases in cases administered by ICSID and the International Chamber of Commerce. 

DM: What makes a mining dispute financeable? When you assess a claim, what are the key factors that determine whether you invest – and when do you walk away? 

JC: We turn down about 95% of the claims we review, so we are highly selective. Our capital is non-recourse, meaning if we lose, we lose that capital. 

We conduct due diligence on several fronts. First, we assess the claimant: What kind of company is it? Have they been successful in other mining projects? How advanced was the project – did it reach feasibility, such as a 43-101 study? How far did it progress in permitting or in building social licence with local communities? 

Second, we evaluate the respondent state. Does the country have a history of honouring awards or settling disputes? 

Third, we look at the stage of development and the level of investment made. In some cases, if a tribunal is not prepared to award damages based on discounted cash flow, it may award the amount invested. So understanding how much capital was committed and how long the investor operated in the country is critical. 

DM: What is driving mining companies to turn to arbitration finance now? Is it mainly cost pressures, risk management, or something else? 

JC: It’s a mix. Ten years ago, most claimants were thinly capitalized junior mining companies – often Canadian or Australian – who had invested years in a project before facing expropriation or government action. Without funding, they simply could not pursue a claim. 

Today, we also see large, well-capitalized companies using arbitration finance. For them, claims or awards are assets. Some companies have awards they are trying to enforce globally and are looking to monetize those assets. We can purchase those at a discount, providing immediate capital that the company can deploy into its core operations – running mines and advancing projects. 

DM: Winning an award is one thing, enforcing it is another. In cross-border mining disputes, what are the real challenges around recovery and how do you assess enforcement risk from the outset? 

JC: Enforcement is one of the most challenging aspects. An investor-state arbitration may last four or five years and collection can take another three to five years. Successful awards are frequently challenged, which can add 18 months to two years before courts or annulment committees resolve those proceedings. 

After that, enforcement typically involves co-ordinated, multi-jurisdictional efforts to identify and attach sovereign assets. It can be capital-intensive and time-consuming. 

There are exceptions – some sovereigns do settle – but more often than not, claimants must be prepared for a prolonged enforcement campaign. 

DM: Very insightful, Jeffery. Thanks very much for your time. Jeffery Commission, Director at Burford Capital. Thank you again. 

JC: Thank you very much. 

Watch the full interview below (Video link TKTKTK) 

The preceding Joint Venture Article and video are PROMOTED CONTENT sponsored by Burford Capital and produced in co-operation with The Northern Miner. Visit: https://www.burfordcapital.com for more information.