10th of January 2017, Singapore’s Parliament passed the Civil Law (Amendment) Bill 2016, allowing third-party litigation funding.
The passing of the Civil Law (Amendment) Bill 2016 is a clear push by Singapore’s to become a centre for dispute resolution. These changes in the law will ensure that Singapore becomes an attractive forum for parties to have their disputes heard, especially now that they can mitigate risk with third-party funding. Additionally they can use third party funding as a tool to manage cash flow when involved in meritorious claims.
Civil Law (Amendment) Bill 2016
The key features of the Civil Law (Amendment) Bill 2016 are:
- Abolishes the common law tort of champerty and maintenance in Singapore.
- Allows third-party funding in certain categories of dispute resolution proceedings. This is set out in the Civil Law (Third Party Funding) Regulations.
- Allows conditions to be imposed on third-party funders. Funders who do not comply with these conditions will not be able to enforce their rights under their third-party funding contracts.
- Allows lawyers to recommend third-party funders to their clients, provided the lawyers do not receive any direct financial benefit from such recommendation. Lawyers are allowed to advise on, negotiate and draft third-party funding contracts for their clients, as well as to act for their clients in any dispute arising out of the third-party funding contract.
Civil Law (Third-Party Funding) Regulations 2016
The Civil Law (Third-Party Funding) Regulations 2016, which will set out the parameters for the third-party funding allowed in Singapore, are likely to be similar to those on which the Ministry of Law invited feedback on 30 June 2016.
The key points of that draft regulation are:
- It prescribes that the categories of dispute resolution in which third-party funding is allowed are international arbitration proceedings, and court and mediation proceedings related to an international arbitration.
- It sets out the qualifications for qualifying third-party funders, which are:
(a) The third-party funder’s principal business is third party funding.
(b) The third-party funder must have access to funds immediately within its control, including within a parent corporation or a subsidiary to fund dispute resolution proceedings in Singapore.
(c) The funds referred to in (b) must be invested pursuant to a third-party funding contract to enable the funded party to meet the costs of the dispute resolution proceedings.
Great to see the continued adoption of this tool for meritorious claims.