The Civil Law (Amendment) Act 2017 establishes a legislative framework for third party funding in Singapore.
The Act abolished the common law torts of maintenance and champerty but maintained the rule that contracts for the provision of third party funding are against public policy, save for those with qualifying third party funders in enumerated categories of dispute resolution proceedings. At this stage such categories include funding international arbitration proceedings and related court or mediation proceedings. The Singapore Ministry of Law is empowered to prescribe the categories of proceedings in which funding is permitted.
Professional conduct rules
This Act came into force along with amendments to the professional conduct rules for lawyers in Singapore. To prevent conflicts of interest, these rules require lawyers to disclose the existence of any funding arrangement and the identity and address of the funder to the relevant court or tribunal, and to every other party to the proceedings.
Legal practitioners or law practices are prohibited from holding financial or other interests in, or receiving commissions, fees or shares of proceeds from, third party funders that they have introduced or referred to their clients or that have third party funding contracts with their clients.
Only professional funders are permitted to enter into third party funding arrangements in Singapore. The Regulations provide that a qualifying third party funder must meet certain provisions and criteria, including that its ‘principal business’ is the funding dispute resolution proceedings and that it has paid up share capital or managed assets of not less than S$5 million (or the foreign currency equivalent).