Litigation Funding Makes Inroads in Asia

November 09, 2016

Inroads in Asia

Litigation funding is rising in Asia, giving law firms and their clients new opportunities to pursue strong claims in a wide variety of cases.

In an interview with Corporate Disputes magazine, Bentham IMF’s Clive Bowman said officials in the region are becoming more familiar with funding as a way for litigants to bring meritorious claims. They’ve seen that it can level the playing field for parties, ensuring legitimate claims are well-funded and have a fair chance at success.

“A claimant, properly advised, with a legitimate claim and who wants financial assistance with its case and the involvement of a funder, should be able to obtain it,” Bowman said in the interview. “If not, there is a risk that ancient rules of maintenance and champerty, once devised to protect the poor … achieve the opposite effect.”

Bowman, who is Bentham’s chief executive for Asia and Australia, said third-party funders in Asia have primarily focused on Singapore and Hong Kong. Both have “robust and transparent legal systems, which are based on English common law, transact in English, have a well-qualified legal bar and a volume of insolvency and arbitration proceedings.”

Both jurisdictions have also had maintenance and champerty related restrictions against third-party funding. However, Singapore recently proposed legislation that would allow funding in arbitration and a committee of Hong Kong’s law reform commission recommended to essentially do the same. The Singapore International Arbitration Centre (SIAC) also drafted rules that guide disclosure and cost issues in arbitrations.

“These potential developments are bringing awareness to the availability of litigation funding in Asia,” Bowman said. In addition to regulatory changes, an emerging line of case law is developing “in which the courts have sanctioned litigation funding agreements for insolvency practitioners.” Bowman cited Re Vanguard Energy Pte Ltd., a Singapore decision that supported funding in insolvency cases. In that case, Bowman observes that “the court held that the doctrines of maintenance and champerty had no application to the exercise of the liquidator’s power to sell causes of action, as well as any proceeds from that action, to a funder.”

Hong Kong courts are also opening the door to funding. In Siegfried Adalbert Unruh vs. Hans-Jeorg Seeberger, Hong Kong’s Court of Final Appeals recognized exceptions to maintenance and champerty rules in insolvencies and in cases where access to justices should be considered. Cases that have followed, including Re Cyberworks Audio Video Technology Ltd., have been even more explicit about the exceptions in insolvency cases.

“Proposals for regulatory change signal a partial relaxation in Singapore and Hong Kong of attitudes toward third-party litigation and are a positive portent,” Bowman told Corporate Disputes magazine. “If litigation funding for insolvency and arbitration cases in these jurisdictions operate without significant incident…then it seems likely that there will be further inroads made into the reach of maintenance and champerty not just in Singapore and Hong Kong, but across Asia.”

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