30 Asian Legal Business | November 2024 seen an uptick in China related cases being funded by third party funders. This was initially in respect of arbitrations seated in Hong Kong and Singapore, but has also extended to disputes seated in mainland PRC,” says Chee Chong Lau, OBL’s Singapore-based investment manager. Fu notes that Houzhu quickly began to focus on cross-border dispute resolution, a reflection of growing demand among Chinese clients. With China’s emphasis on outbound economic engagement, many Chinese companies are deeply involved in international markets and face increasing needs for comprehensive cross-border compliance and risk management. Yet for many firms, cross-border litigation remains daunting and costly, with companies often lacking crucial information on foreign legal processes, choosing legal representation, or understanding the expenses involved. “These are precisely the issues that third-party funding can help address,” says Fu. Therefore, since its founding two years ago, Houzhu has served numerous major state-owned and central enterprises, financial institutions, and investment firms. “Leveraging our experienced founding team and extensive expert network, we provide clients with tailored, comprehensive solutions that align with their needs and budgets.” Lau has observed similar trends. He notes that OBL has worked with clients across various industries in China, including state-owned enterprises, with many cases involving overseas proceedings. “Chinese companies have invested significant capital outside the PRC and are now encountering issues when investments turn sour.” “The substantive litigation/arbitrations tend to be conducted outside the PRC and can be very costly. Furthermore, the ability of the counterparty to pay is often a big concern of the PRC clients, particularly if the counterparty is in a developing country in the Middle East, Africa, South America, or other parts of Asia. We have recently seen a lot of interest from Chinese clients seeking to enforce judgments/awards outside mainland China,” says Lau. End-to-end capabilities Chinese third-party funding providers like DS and Houzhu are positioning themselves to meet these needs with end-to-end services. DS Legal Capital offers a range of support from initial case evaluation and litigation strategy to case management and post-judgment enforcement. “Third-party funding is a modern, integrated service,” Zhang says, adding that funders also provide valuable neutrality. Fu echoes this, noting that as a general counsel, she had often needed objective, expert insights for high-stakes decisions, underscoring her interest in the field. Houzhu currently provides tailored support for Chinese clients, particularly in areas where demand has grown sharply - cross-border case support, for instance, includes helping clients find suitable legal counsel overseas, understanding foreign legal processes, and coordinating domestic and international proceedings. Houzhu also emphasizes preemptive risk mitigation, recognizing that complex cross-border cases often stem from early issues with due diligence or contract compliance. Fu describes the service as “setting up protective measures before problems arise.” Additionally, Houzhu has established a network of investigative partners to assist clients in execution strategy planning, asset tracing, and coordinating enforcement across different jurisdictions. Currently, Houzhu can provide funding specifically for the execution stage. In a past case, for example, a large state-owned financial institution held billions of RMB in claims against the actual controller of an invested company, who had transferred assets overseas. “We covered the initial costs, conducted a global investigation into the debtor’s asset distribution, and initiated targeted recovery actions, ultimately identifying executable assets in North America and proceeding with asset freezing, judgment recognition, and enforcement processes,” says Fu. Dispute Resolution THIRD-PARTY FUNDING IN FIGURES 第三方资助数据 Funding ratio: 5~10% of evaluated cases 投资比例：评估案件的5~10% Investment per case: 10~15% of the claim 平均案件投资额：标的额的10~15% Return on investment: 20~30% of the recovery, can be up to 50% depending on the level of risk 投资回报率：诉讼回款的20~30%，根据风险程度，有时可 高达50%
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