• Singapore Explores Third-Party Funding
  • August 17, 2016
  • Law Firm: Duane Morris LLP - Philadelphia Office
  • Singapore recently introduced new proposed legislation, the Public Consultation on the Draft Civil Law (Amendment) Bill 2016 and Civil Law (Third Party Funding) Regulations 2016, which would allow third-party funding in disputes. If enacted, Singapore would join popular international arbitration jurisdictions such as England and Australia and benefit from increased arbitration activity and investment. The Singapore Ministry of Law’s feedback period on the proposed legislation began on 30 June 2016 and closes 29 July 2016.

    Key Features of the Civil Law (Amendment) Bill 2016

    The Civil Law (Amendment) Bill 2016:
    1. Abolishes the common law tort of champerty and maintenance in Singapore.
    2. Allows third-party funding in certain categories of dispute resolution. These are listed in the Civil Law (Third Party Funding) Regulations.
    3. Allows conditions to be imposed on third-party funders. Funders who do not comply with these conditions will not be able to enforce their rights under their third-party funding contracts.
    4. Allows lawyers to recommend third-party funders to their clients provided the lawyers do not receive any direct financial benefit from such recommendations.
    Key Features of the Civil Law (Third Party Funding) Regulations 2016

    The Civil Law (Third Party Funding) Regulations 2016:

    1. Prescribes that the categories of dispute resolution in which third-party funding is allowed are international arbitration proceedings, and court and mediation proceedings related to an international arbitration.
    2. Sets out the qualifications for qualifying third-party funders. These are:
    1. The third-party funder’s principal business is third party funding.
    2. The third-party funder must have access to funds immediately within its control, including within a parent corporation or a subsidiary to fund dispute resolution proceedings in Singapore.
    3. The funds referred to in part 2 above must be invested pursuant to a third-party funding contract to enable funded party to meet the costs of the dispute resolution proceedings.

    Importance of Allowing Third-Party Funding in Singapore

    This exercise marks the next step in Singapore moving toward third-party funding in disputes following the decision by the Singapore High Court last year in Re Vanguard Energy Pte Ltd [2015] SGHC 156, where the Singapore High Court approved an arrangement where the proceeds from the claims of a company in liquidation were assigned to certain funders in exchange for funding.

    Should the Civil Law (Amendment) Bill 2016 and Civil Law (Third Party Funding) Regulations 2016 be made law, this will likely encourage more investment into international arbitration proceedings in Singapore, and make Singapore a more attractive forum in which to conduct international arbitration.