Over the past few years, companies have begin to view Singapore as an attractive regional business hub as evident by the increase in the number of global companies who have decided to set up and/or relocate their Asia headquarters to Singapore in a bid to expand their regional presence and capabilities. Indeed, this position is consistent with the findings of Consultancy firm, PwC in a recent survey (“Cities of Opportunities 7, 2016“) which saw Singapore being placed 2nd (out of 30 global cities and after London) as the world’s best business hub.

This, coupled with the increase of economic activity within Asia (particularly Singapore) and the need to ensure that Singapore maintains its competitive edge as (rightly described by the Singapore Ministry of Law) the “key seat of arbitration in Asia“, has propelled the Singapore Ministry of Law to propose changes under the Civil Law (Amendment) Bill 2016 (“Funding Bill“).

The Funding Bill which was submitted for First Reading before the Singapore Parliament on 7 November 2016 essentially seeks to enact a framework and legalise third party funding for international arbitration and related litigation proceedings in Singapore.  The Funding Bill is expected to proceed for a second reading and if approved, to be enacted in early 2017.

Given the recent developments, here is an overview of what you need to know of the impending change:

Question Answer Did you know?


What is third party funding?


Third party funding is an alternative mode of financing a party’s legal proceedings.

It is where a third party entity, that is entirely not involved in and/or connected to a dispute, provides funds to one party (usually the Claimant) for a return of financial gains (e.g. a share of damages awarded) in the event a claim is successful.

Also commonly referred to as “litigation funding“, “specialist funding” and “legal financing“.
What is the current position in Singapore?


Third party funding is not allowed in Singapore under the common law tort of champerty and maintenance.

Similarly, third party funding agreements are not enforceable in Singapore.


Both Singapore and Hong Kong have yet to legalise third party funding in arbitration. However,

  • The Law Reform Commission (Hong Kong) has recently proposed for the legalisation of third party funding under the Arbitration Ordinance; and
  • Unlike Hong Kong, there are currently no professional third party funders based in Singapore.
What are the proposed changes?


Four (4) key changes:

(i)        Abolish the common law tort of chamberty and maintenance in Singapore;

(ii)       Third Party Funding contracts can be valid and enforceable in “certain prescribed categories of proceedings” such as international arbitration and related legal proceedings in Singapore;

(iii)     Third Party funders will be subject to certain prescribed qualification or requirements; and

(iv)     Through a related amendment under the Legal Professions Act (Cap. 161), lawyers can introduce / refer funders to clients as long as there is no direct financial benefit derived. They can also advise clients on third party funding contracts and any disputes arising out thereof.

The proposed amendments were open for public consultation between 30 June 2016 to 29 July 2016 and received feedback from the Law Society, lawyers, in-house counsel, professional funders and other agencies.

If approved, these changes will take the form of amendments to the Civil Law Act (Cap 43 of the 1999 Revised Edition).





What preparatory steps can your company take?


In anticipation of the prospects of legalised third party funding in Singapore:

(i)         Know your third party funders – are they reputable and experienced?

(ii)        Know the qualifying criteria you need to meet to be eligible for third party funding.

In the UK, there is a self regulatory body called the Association of Litigation Funders which also sets standards (in the form of a Code of Conduct) for which its funder members must abide by.

 What does this mean for Singapore?

Adopting a more “light touch” approach means it remains uncertain if Singapore will extend the legalisation of third party funding to cover domestic arbitration and court litigation in Singapore.

For the moment, the current changes (if allowed) will still be a significant development in Singapore’s positioning as the dispute resolution hub of choice for cross-border disputes in Asia. It brings Singapore more in line with other major arbitration centres, such as London, and provides commercial parties with yet another reason to choose arbitration to resolve their disputes.


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