Litigation Funding and Arbitration in 2026

Global and MENA Perspectives

Overview

Litigation funding—where a third party finances legal proceedings in exchange for a share of any recovery—has moved from the periphery of dispute resolution to a mainstream financing tool. In 2026, the combination of large infrastructure projects, regulatory reform and macro‑economic stress made the Middle East and North Africa (MENA) one of the most active regions for both litigation finance and arbitration. Elsewhere, geopolitical tensions, energy‑transition disputes and technology continue to shape the global arbitration landscape. This report summarises major trends and regulatory developments affecting litigation funding and arbitration in 2026.

1. Global arbitration themes in 2026

International arbitration remained a vital tool for resolving trans‑border disputes and protecting investments. Major themes driving disputes and arbitral practice in 2026 include:

• Energy‑transition disputes. Clients and lawyers expect the shift to renewable energy and new technologies to continue generating claims. Ashurst’s 2025 survey predicted that disagreements over renewable investments, pace of decarbonisation and regulatory delays would lead to more litigation and arbitration. The firm notes that divergent views on decarbonisation and government policy are likely to create sovereign disputes in 2026.
• Geopolitics and resource nationalism. Resource nationalism and competition for critical minerals increased in 2025 and continued to intensify. Ashurst’s arbitration team anticipates that in 2026 mining arbitrations will be driven by governments seeking greater control over mineral extraction and infrastructure.
• Innovation in arbitration rules and the role of artificial intelligence (AI). Arbitration institutions will continue revising their rules to remain competitive; Ashurst predicts that 2026 will see further rule revisions and that AI will remain a hot topic as counsel deploy technology to gain procedural advantages. Beyond technology, transparency initiatives (e.g., expanded access to court documents in the UK) suggest growing public interest in dispute resolution processes.
• Macro‑economic uncertainty and litigation finance. In the UK, litigation funding remains under scrutiny: the Civil Justice Council’s 2025 report urged “light touch” regulation and a statutory reversal of the PACCAR decision, which rendered damages‑based funding agreements unenforceable. The government intends to legislate in 2026, and the outcome could affect global perceptions of litigation funding.

2. The Middle East and North Africa in 2026

2.1 Drivers of growth

The MENA region’s legal finance boom is grounded in several structural factors:

• Large infrastructure projects and construction claims. The Gulf states are delivering giga‑projects (NEOM, Qiddiya, energy infrastructure and data centres) and upgraded transport networks. Contractors facing delayed payments or variations increasingly use funding to manage cash flow and hire experts; arbitrations in the Gulf often involve claims worth hundreds of millions of dollars.
• Regulatory reform and new institutions. Over the last decade, Saudi Arabia, the United Arab Emirates (UAE), Qatar, Bahrain and Egypt have enacted modern arbitration laws and empowered specialised arbitration centres. Updated rules often explicitly recognise third‑party funding and introduce expedited procedures.
• Emergence of funders and secondary markets. Major global funders (Burford Capital, Omni Bridgeway) and regional players now maintain offices in Dubai or Abu Dhabi. Competition among funders has improved pricing and introduced Sharia‑compliant products that align profit‑sharing with Islamic finance principles.
• Investor‑state disputes and distressed assets. Lebanon’s financial crisis, cross‑border investment in Egypt and political risk across the region have led to a wave of investor‑state arbitrations. In many cases claimants need external finance to pursue remedies.

2.2 Regulatory landscape by jurisdiction

The legal treatment of third‑party funding (TPF) varies across MENA. A summary of key jurisdictions appears below.

Jurisdiction	TPF status	Disclosure requirements	Institutional framework
UAE – Onshore	TPF is permitted but unregulated; it must not violate public policy or professional ethics. There are no statutory limits on funding amounts.	No mandatory disclosure regime; practice is still developing.	Onshore courts apply civil law; there is no specific legislative framework for TPF. Arbitrations seated onshore often rely on institutional rules (e.g., DIAC) that require disclosure.
UAE – DIFC	The Dubai International Financial Centre (DIFC) is a common‑law jurisdiction. Practice Direction No. 2 of 2017 requires funded parties to notify all parties and file a notice with the court. The notice must disclose the funder’s identity but not the agreement. Funders may be liable for adverse costs orders.	Mandatory notice under PD 2/2017; the court considers the existence of funding when deciding security for costs.	The DIFC courts and DIFC‑LCIA arbitration rules accept TPF and have issued practitioner guidelines.
UAE – ADGM	The Abu Dhabi Global Market (ADGM) regulates TPF through Article 225 of its Civil Evidence and Judicial Appointments Regulations and the Litigation Funding Rules 2019. Funding agreements must be in writing and parties must notify both the court and other parties of any funding arrangement. Funders must meet liquidity requirements and ensure the litigant receives independent advice.	Mandatory disclosure to the ADGM court and other parties.	ADGM rules provide detailed requirements for funding agreements (scope, funding amounts, liability for adverse costs) and confidentiality obligations.
Saudi Arabia	Third‑party funding is permitted. The Chambers guide notes there are no restrictions on the types of lawsuits that a third party may finance, and funding can be arranged for either plaintiff or defendant. There is no statutory limit on funding amounts.	Institutional rules drive disclosure. The Saudi Centre for Commercial Arbitration’s 2023 rules require a party to disclose the existence of funding and the funder’s identity to the institution, other parties and the tribunal.	Saudi Arabia has modernised its legal framework through the 2023 Civil Transactions Regulation, which codified core Sharia principles and confirms that agreements charging interest are void while allowing damages for lost income. A draft arbitration law (2025) aligns with global best practices and emphasises the law of the seat.
Qatar	The Qatar International Center for Conciliation and Arbitration (QICCA) introduced new rules effective 1 January 2025, expanding from 38 to 78 articles and allowing consolidation, joinder, bifurcation and expedited procedures. While Qatari law does not yet regulate TPF, the new rules encourage electronic submissions and greater transparency in arbitrator appointments and award publication.	Institutional rules (QICCA 2025) require disclosure of TPF arrangements; this mirrors global practice.	Qatar does not have a statutory TPF regime. Practice depends on institutional rules and evolving jurisprudence.
Bahrain	The Bahrain Chamber for Dispute Resolution (BCDR) 2022 rules require funded parties to notify the institution of any funding arrangement and the funder’s identity. The rules allow the tribunal to assess whether any relationship between funder and arbitrator threatens independence.	Mandatory disclosure under BCDR rules.	Bahrain has not enacted specific TPF legislation; reliance is on BCDR rules and court practice.
Lebanon	Lebanese law does not address third‑party litigation funding. The Chambers authors are unaware of any lawsuits in Lebanon involving TPF. Contingency fees are permitted, and lawyers may agree a fee supplemented by a success bonus.	Not applicable, since TPF is unregulated and unused.	Lebanon’s arbitration framework is undergoing modernisation; the Lebanese Arbitration and Mediation Center adopted new rules in July 2024 emphasising consolidation and emergency arbitrations.

2.3 Institutional reforms and disclosure

MENA arbitral institutions increasingly mirror global rules requiring disclosure of funding. The Dubai International Arbitration Centre (DIAC) 2022 rules, Saudi SCCA 2023 rules and Bahrain BCDR 2022 rules all require parties to promptly inform other parties and the tribunal of any funding arrangement. DIAC even restricts parties from entering funding agreements after the tribunal is constituted if the agreement would create a conflict. These reforms aim to avoid conflicts of interest and enhance transparency, bringing GCC practice in line with institutions like the ICC and HKIAC.

2.4 Onshore vs. offshore in the UAE

Onshore UAE remains a civil‑law jurisdiction with no explicit TPF regime. Local experts agree that TPF conforms to Sharia principles and is allowed, but parties must craft agreements carefully to avoid elements of excessive uncertainty or speculation. In contrast, the offshore jurisdictions (DIFC and ADGM) operate under common law and have adopted comprehensive TPF rules. The DIFC’s PD 2/2017 requires notice and confers discretion to order costs against funders, whereas ADGM’s rules prescribe liquidity standards for funders and ensure that litigants receive independent legal advice. This bifurcated system allows claimants to choose an arbitration seat with clearer funding rules and enforceability.

2.5 Saudi Arabia’s funding revolution

Saudi Arabia’s legal system has undergone rapid transformation. The Civil Transactions Regulation 2023 codifies 41 Sharia principles and clarifies long‑uncertain areas of contract and damages law; it confirms that charging interest is void and permits damages for loss of anticipated income. As a result, funders can model claims with more certainty. The Chambers guide notes that there are no restrictions on third‑party funding, no limits on funding amounts, and that funding is available to both plaintiffs and defendants. The SCCA’s 2023 rules mandate disclosure of funding arrangements. Together with planned arbitration law reforms (draft law released in 2025), Saudi Arabia is positioning itself as a sophisticated arbitration hub.

2.6 Qatar and regional free‑zones

Qatar’s 2025 QICCA rules represent a leap toward modern arbitration. They more than doubled the number of articles and allow consolidation, joinder, bifurcation and expedited procedures. They embrace digital filing and encourage transparency through clear provisions on arbitrator appointments and award publication. While Qatar has no statutory TPF law, these reforms create a predictable environment where funders can participate, subject to disclosure requirements.

Other regional free‑zones—including the Abu Dhabi International Arbitration Centre (ADIAC), launched in 2024, and Lebanese Arbitration and Mediation Center—have adopted rules permitting consolidation, third‑party joinders and emergency arbitration. Such institutions are racing to provide modern services in English and create competition for seats.

2.7 Lebanon and distressed disputes

Lebanon’s prolonged financial crisis and legal uncertainty have spurred interest in litigation funding, but there is still no official TPF regime. The Chambers authors report that Lebanese law does not address third‑party funding and there have been no known lawsuits involving funders. Lawyers are free to agree on contingency‑style remuneration, and courts may reduce fees exceeding 20 % of the dispute’s value. Institutional reform is progressing—new rules were adopted by the Lebanese Arbitration and Mediation Center in July 2024 to allow consolidation, joinder and emergency arbitrations—but funding remains nascent. Investors pursuing claims arising from Lebanon’s banking collapse often file arbitrations abroad and rely on funders to finance asset tracing and enforcement.

3. Market dynamics and emerging models

3.1 Funding structures and economics

Funders in the region typically finance legal fees, court fees and expert costs. The Chambers UAE guide notes that funders may pay court fees, expert deposits, translation costs and advocates’ fees, recovering a percentage of the proceeds or a multiple of the capital advanced. Many agreements prohibit pure contingency arrangements for lawyers but allow fixed or hourly fees supplemented by a discretionary success bonus. In Saudi Arabia, contingency fees and third‑party funding are legally allowed.

3.2 Sharia‑compliant funding

Because some GCC jurisdictions derive laws from Islamic principles, funders are developing Sharia‑compliant products. The Legal Funding Journal notes that emerging models structure the funder’s return as profit‑sharing or an award‑based fee rather than interest, avoiding excessive uncertainty and speculation. These “Mudarabah‑style” structures could expand funding in markets like Saudi Arabia and Kuwait.

3.3 Growing presence of international funders

The GCC has become a growth market for litigation finance. The Legal Funding Journal observes that leading funders (e.g., Burford Capital, Omni Bridgeway) and regional boutiques have established offices in Dubai and Abu Dhabi, encouraging competitive pricing. Funders are increasingly active in large construction arbitrations, investor‑state claims and insolvency‑driven litigation. The rise of funder presence is also reflected in institutional reforms (SCCA, DIAC, BCDR) that legitimise TPF.

4. Outlook

2026 marks a consolidation period for litigation funding and arbitration in MENA. Offshore jurisdictions (DIFC and ADGM) offer sophisticated, common‑law frameworks with clear disclosure rules and cost‑allocation principles, attracting global businesses. Saudi Arabia’s codification of civil law and draft arbitration law provide certainty and align the Kingdom with international norms. Qatar’s modernised QICCA rules and Bahrain’s disclosure‑oriented regime signal a regional race to attract arbitrations. Lebanon remains an outlier with no formal TPF regime, though economic pressures may eventually drive reform.

Globally, arbitration practice in 2026 is dominated by geopolitical risk, energy‑transition disputes and procedural innovation, with institutions exploring AI and rule revisions. For investors and businesses operating in the Middle East, understanding the regulatory nuances and emerging funding models is essential. While litigation finance is no longer viewed as an exotic tool, successful use requires careful structuring (especially to ensure Sharia compliance) and awareness of disclosure requirements. As rules continue to evolve and new institutions emerge, the MENA region is poised to remain at the forefront of legal finance and arbitration innovation.