Hong Kong

It is hoped that further consideration will be given to legalising the use of funding in domestic litigation beyond arbitration, mediation and the current exceptions.

Funding court litigation is still considered to infringe the common law doctrines of champerty and maintenance, except in cases which fall within one of the three, limited, exceptions laid down by the Hong Kong Court of Final Appeal in Siegfried Adalbert Unruh v Hans- Joerg Seeberger [2007] related to:

  • ‘common interest’ cases, where third parties have a legitimate interest in the outcome of the litigation
  • cases where ‘access to justice considerations’ apply
  • a miscellaneous category, including insolvency litigation.

As a result, litigation funding in Hong Kong is currently used most commonly in insolvency cases.

On 14th June 2017, Hong Kong passed the Arbitration and Mediation Legislation (Third Party Funding) (Amendment) Bill 2016. The Act amends the Arbitration and Mediation Ordinances to make it clear that third party funding of arbitration, mediation and related proceedings is permitted under Hong Kong law. Funded parties are obliged to disclose to the other party/ies and to the tribunal or to the court the making and ending of a third party funding agreement and the identity of the funder.

The provisions apply not only to arbitrations seated in Hong Kong but also to funding of Hong Kong services provided in relation to an arbitration for which the place of arbitration is outside Hong Kong or if there is no place of arbitration, as if the place of arbitration were in Hong Kong.

The Third Party Funding Code of Practice is awaiting finalisation and issue by an authorised body appointed under the legislation. The Code will set out the standards and practices with which third party funders shall be expected to comply. The introduction of clear, ethical and financial standards in the form of a Code of Practice, will provide a progressive framework for the use of third party funding in arbitration and mediation in Hong Kong, including robust safeguards to protect against potential abuse.