I was recently in Singapore where I was invited to speak at the Litigation Conference 2015 presented by the Civil Practice Committee of The Law Society of Singapore. The two-day conference brought together practitioners from various jurisdictions to provide fresh insight on the latest developments in litigation generally and International Commercial Litigation in particular.
One of the highlights of the conference was the discussion surrounding third party funding during which both local and international practitioners showed great interest and enthusiasm throughout the session.
In the region, in Hong Kong in particular, case law suggests an increasing recognition of the legitimacy of third party funding and developments forthcoming towards the end of the reign of champerty and maintenance. Mainland China on the other hand contains no specific prohibition and interest from Chinese claimants is growing quickly. Although third party funding is yet to be authorised in Singapore, the Ministry of Law has been actively looking into the promulgation of regulation to allow third party funding.
The Ministry recently issued a White Paper soliciting public comment on proposed amendments to the Arbitration Act to allow third-party funding in international arbitration. The White Paper is seeking comment on a proposal that third party funding be approved subject to the following restrictions. Such restrictions clearly drawing from the experiences of other jurisdictions that have a more mature third party funding market:
“(a) Restricting third party funding by category, value of claim and eligibility of sponsor – These restrictions intend a policy to limit third party funding to high value commercial arbitrations:
(b) Allowing adverse costs/security for costs orders against funders – This will ensure that defendants are not prejudiced by a lack of recourse in claims brought by funded parties. This may also be coupled with a requirement that third party funders maintain a minimum capital requirement, so that they are able to pay costs awarded against them.
(c) Requiring parties to disclose funding agreements – This will enable transparency and ensure that the court is aware of any potential policy issues which may arise from the circumstances of each individual case. It will also enable the court to make the appropriate orders against funders where necessary.”
The policy considerations are clearly highlighted in the text of the White Paper and explain the care with which Singapore is approaching the topic. Striking the right balance between the desire not to hinder a thriving and necessary tool for the litigation and arbitration market whilst putting in place checks and balances to ensure that the financing tool is not abused or that lawyers do not put themselves in perceived situations of conflicts of interest is clearly the aim that Singapore has set for itself.
The rumour on the ground was that regulation was expected to be implemented towards the end of this year.
During the conference, I was asked many questions about the control that funders exercise evidencing lawyers’ fears of losing control over their cases. My Australian co-panellist was very keen on a strong notion of control true to existing Australian practice. The position elsewhere is quite different and especially at Vannin Capital, our objective is to be informed and consulted at all times, but the decision remains with the client and its representatives.
True to its innovative and entrepreneurial reputation, Singapore will be the first Common Law jurisdiction to abolish champerty and maintenance and to allow Third Party Funding through regulation. In other countries, including Australia, the forefather of Third Party Funding, and England, approval of funding has evolved through jurisprudential decisions.
Given the considered approach being undertaken all watch with great interest the developments in Singapore as a clear sign of the strong development of Third Party Funding in Asia.
For more information on Vannin Capital, please contact: Meika Aysal, Marketing at Vannin Capital, T: +44 207 099 5180, E: firstname.lastname@example.org