Third Party Funding to Litigation

Until recent years, third party funding of all kinds of dispute resolutions was prohibited in Hong Kong due to the common law doctrines of champerty and maintenance.

To bring Hong Kong in line with other jurisdictions such as England, Singapore and New York, this prohibition has been relaxed in arbitration. The Arbitration Ordinance and the Legal Practitioners Ordinance have been amended so that outcome-related fees structures such as contingency and success fee arrangements for arbitration are now permitted.

The amended Arbitration Ordinance now permits an arbitration to be conducted under a funding agreement whereby one of the parties to the arbitration can be funded by a third-party funder who can receive financial benefit if the arbitration is successful within the meaning of the funding agreement.

Besides arbitration, insolvency cases have been regarded as an exception to the common law doctrines of champerty and maintenance. In other words, third-party funding in insolvency cases is allowed.

If you wish to know more about these matters, please feel free to contact our Mr. Albert Lam at albertlam@hwg-law.com.

August 2023

By Albert Lam