Singapore may soon see third-party funding for international arbitration, after its law ministry recently proposed enacting a framework regulating the same. 

The Civil Law (Third-Party Funding) Regulations 2016 is set to be a watershed piece of legislation for the city-state’s legal sector, as Singapore law currently restricts the funding of proceedings to the parties involved 

The regulations would allow professional litigation funding providers to financially assist a party to a dispute in return for monetary gain, for instance, a share of the damages awarded or a share of the settlement sum received by the party. Usually, these providers tend to fund the claimant.

Exceptions to the regulations are proceedings that not deemed illegal or considered contrary to public policy. Conditions will be imposed through subsidiary legislations to ensure funding is only provided by an entity which meets the criteria for a qualifying third-party funder. 

Lawyers may be allowed to recommend third-party funders to their clients or advise their clients on third-party funding contracts as long as they do not receive any direct financial benefit from the recommendation or facilitation.

The law ministry has currently sought the views of various stakeholders within Singapore’s legal community on the draft legislation.