The Civil Law (Amendment) Bill (Bill No. 38/2016) came into force on 1st March 2017 as the Civil Law (Amendment) Act 2017 (the Act), together with the Civil Law (Third Party Funding) Regulations 2017 (the Regulations) and an amendment to the professional conduct rules for lawyers in Singapore.
The Act establishes a framework for third party funding in Singapore:
- It abolishes the common law torts of maintenance and champerty.
- Third party funding contracts with qualifying third party funders need to relate to one of the enumerated categories of dispute resolution proceedings.
- Initially it is limited to international arbitration and related court or mediation proceedings.
- A third party funder must meet detailed provisions and criteria set out in the Regulations.
Only professional funders are permitted to enter into third party funding arrangements in Singapore. A qualifying third party funder must:
- carry on the “principal business” of funding dispute resolution proceedings (in Singapore or elsewhere) and
- have a paid up share capital or managed assets (as defined in the Regulations) of not less than S$5 million (or the foreign currency equivalent).
New professional conduct rules for lawyers also came in force today, requiring lawyers to disclose the existence of funding arrangements. To prevent conflicts of interest, a legal practitioner is obliged to disclose to the relevant court or tribunal, and to every other party to the proceedings:
- the existence of any third party funding contract “related to the costs of those proceedings” and
- the identity and address of the relevant third party funder.
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.
Having been pro-active in the consultations leading up to the Act, Harbour welcomes the developments in Singapore which allows businesses and lawyers alike to take advantage of funding for their arbitrations. Alive to the fast pace of change in the Asia Pacific region, we devoted the recent edition of Harbour View to TPF developments in the region with a treasure of insights from all stakeholders.
For any questions on third party funding in the Asia Pacific region, please contact the team in Hong Kong.
