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    Latest > Commentary

    Third-party Funding in International Arbitration

    Speech by Mr. Louis Ng Kok Kwang, MP for Nee Soon GRC at the Second Reading of the Civil Law (Amendment) Bill [Bill No. 38/2016]

    Introduction

    Madam, I commend this Bill for its recognition of third party funding and the benefit it will generate for Singapore.

    Recently, persuasive arguments have been raised in support of third party funding, especially given the high costs of international commercial arbitration. It has been used in arbitration centres such as London, Paris and Geneva.

    I support this Bill on two main points:

    Benefitting the vulnerable

    Firstly, third party funding would benefit the vulnerable, providing them with access to justice. With this new option, parties to a dispute can now consider their commercial choices: how they might allocate risk, collateralise the claim or apply capital profitably, which may not otherwise have been available.

    Keeping the momentum as an arbitration hub

    Secondly, recently Singapore has become a preferred venue for international arbitration. It is therefore necessary to be alive to the need to retain the momentum as an arbitration hub – a status that Singapore has worked tirelessly to achieve.

    Madam, while I support the Bill’s main purpose in legitimising third party funding contracts, I would like to raise a few points.

    Regulating the funders

    Firstly, it seems that the Ministry is not proposing a blank cheque for third party funding. There are a number of safeguards which will affect the funders, such as the Civil Law (Third Party Funding) Regulations 2016, as well as the lawyers engaged by funders.

    It would be useful to consider if these current regulations sufficiently protect all stakeholders, and if they serve the intended purpose of permitting third party funding.

    Adequately clear processes

    Secondly, lawyers will be duty-bound to disclose a few matters to the court, including the existence of a third party funding agreement, the identity of the third party funder to a court or arbitral tribunal, as well as all other parties to the proceedings. I would suggest for the Ministry to take steps to ensure that the process and mechanisms to all these are adequately clear?

    Ensuring sufficient knowledge

    Thirdly, given the complexities of the third party funding market, it is critical that parties fully understand the details involved. For example, what are the various products available to them? What are the terms on which they are being offered? What is the impact on their control of the proceedings, and what are the consequences on the recovery if there is a successful outcome? In this regard, I would also suggest taking steps to ensure that in practical terms, lawyers and parties are equipped with knowledge of funded actions.

    Safeguarding legal privilege and confidentiality

    Lastly, parties will also need to take appropriate measures to maintain legal privilege and confidentiality. This area of law is always subject to dispute. As such, I would like to clarify if there is sufficient guidance on the effect of third party funding on legal privilege and confidentiality.

    Conclusion

    Madam, these comments aside, I recognise that this Bill enacts a framework for third party funding for international arbitration proceedings, and stand in support of it.

    READ MORE Commentary , Latest


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