Third-Party Funding to be Permitted for More Categories of Legal Proceedings in Singapore

21 JUN 2021

21 Jun 2021 Posted in Press releases

  1. From 28 June 2021, the Ministry of Law (MinLaw) will extend the third-party funding1 (TPF) framework to cover domestic arbitration proceedings, certain proceedings in the Singapore International Commercial Court (SICC), and related mediation proceedings. This offers businesses an alternative avenue to fund meritorious claims and further strengthens Singapore’s position as an international commercial dispute resolution hub, which will benefit the legal community here.
  1. Singapore first introduced a framework for TPF in 2017, for international arbitration proceedings and related court and mediation proceedings.2 Funders and the business, legal and arbitration communities have responded positively. More funders now have a presence here, and businesses have shown increasing interest in additional options for financing litigation. Respondents to MinLaw’s public consultation in 2018 on the TPF framework also supported the extension of the framework to more categories of proceedings. The latest changes arise from their feedback.

Extended Categories of Proceedings

  1. With effect from 28 June 2021, the categories of proceedings for which TPF is permitted will be extended to include3:

    a. Domestic arbitration proceedings;

    b. Court proceedings arising from or connected with domestic arbitration proceedings;

    c. Proceedings commenced in the SICC, for as long as those proceedings remain in the SICC;

    d. Appeal proceedings arising from any decision made in the proceedings in paragraph 3c; and

    e. Mediation proceedings relating to any of the proceedings above.

  1. Against the backdrop of the COVID-19 pandemic, there may be a rise in disputes and companies facing the risk of insolvency. As financial constraints may cause litigants to forgo pursuing their legal rights, additional funding options such as TPF will offer another solution for these litigants, to enable them to pursue meritorious claims in permitted proceedings.

Amendments to Professional Conduct Rules

  1. Today, local lawyers and certain foreign lawyers4 involved in proceedings funded through TPF must abide by professional conduct rules set out in the Legal Profession (Professional Conduct) Rules 2015, which serve to prevent conflicts of interest amongst practitioners and funders. These rules will continue to apply for such lawyers under the extended TPF framework.
  1. Registered foreign lawyers involved in SICC proceedings are governed by a separate set of rules, the Legal Profession (Representation in Singapore International Commercial Court) Rules 2014 (“Representation in SICC Rules”). With TPF now permitted in certain SICC proceedings, the Representation in SICC Rules will be amended to provide professional conduct rules for these registered foreign lawyers, aligned with those for local and certain foreign lawyers. These rules set out the disclosure obligations in relation to the use of TPF in SICC proceedings, and regulate a registered foreign lawyer’s financial interests in relevant third-party funders.
  1. Related amendments will also be made to the Rules of Court with regard to orders for adverse costs and security for costs where TPF is involved in proceedings before the SICC.
  1. The amendments to the TPF framework and full set of Representation in SICC Rules may be viewed on the Singapore Statutes Online website, https://sso.agc.gov.sg.

MINISTRY OF LAW
21 June 2021

1. TPF refers to the funding of legal proceedings by an entity unconnected to a dispute in return for financial gain, such as a share of the damages awarded or a share of the settlement sum. In Singapore, only entities which meet criteria set out in the Civil Law (Third-Party Funding) Regulations 2017 may provide TPF. For instance, they must be professional funders whose principal business is funding the costs of dispute resolution proceedings, and they must have a minimum paid-up share capital.↩

2. The full scope of these proceedings is currently set out in Regulation 3 of the Civil Law (Third-Party Funding) Regulations 2017, which will be amended after the commencement of the Civil Law (Third-Party Funding) (Amendment) Regulations 2021.↩

3. The full scope of these proceedings is set out in the Civil Law (Third-Party Funding) (Amendment) Regulations 2021.↩

4. Local lawyers refer to persons admitted to practise as an advocate and solicitor of the Supreme Court in Singapore, while certain foreign lawyers refer to regulated foreign lawyers under the Legal Profession Act, defined as lawyers registered under sections 36B, 36C, 36D, or granted approval under section 176 of the Act.↩

Last updated on 21 June 2021