SINGAPORE - From next Monday (June 28), third-party funding will be extended to domestic arbitration, certain proceedings in the Singapore International Commercial Court and mediation connected with these proceedings.
In third-party funding, an entity not connected to a dispute provides funds for one party, in return for financial gain, such as a share of damages awarded. Traditionally, an involved party or related company foots the bill for expenses involved in pursuing claims.
During the Covid-19 pandemic, there may be a rise in disputes and the number of companies facing the risk of insolvency, the Ministry of Law said in a statement on Monday.
The extension of third-party funding offers businesses, especially those facing financial constraints, an alternative avenue to fund such claims.
The move also strengthens Singapore's position as an international commercial dispute resolution hub, the ministry said.
Third-party funding was introduced in 2017 for international arbitration proceedings.
Since then, there has been positive feedback on the law and businesses have shown increasing interest in additional options for funding litigation, said the ministry.
Lawyers involved in third-party funded proceedings must disclose who the involved funders are and should not have an interest in the funders or receive any commission.
With third-party funding now permitted in certain Singapore International Commercial Court proceedings, amendments will be made to provide professional conduct rules for registered foreign lawyers, the statement said.