Momentum in the Arbitration World: Recent Global Developments Regarding Litigation Funding

Across the globe over the last few weeks, there have been legislative, judicial and treaty developments with respect to litigation funding of arbitration.    
 
Earlier this month, Hong Kong’s Law Reform Commission recommended that the common law principles of maintenance and champerty, which have held force in Hong Kong far longer than other jurisdictions, should no longer apply to arbitration and associated proceedings.  This development comes hot on the heels of the promulgation of Singapore’s Civil Law (Amendment) Bill, anticipated to become law by the end of the year, abolishing maintenance and champerty in arbitration and certain other proceedings.
 
These developments are expected to make Hong Kong and Singapore more competitive as arbitration centres.  They recognise the important role that litigation finding plays in major arbitration matters, and these legislative developments allow Hong Kong and Singapore to attract the quality of cases that are often heard in London, Paris and Geneva.
 
On the judicial front, the September decision of the England and Wales High Court, Essar Oilfields v Norscot Rig Management, decided a novel issue regarding litigation funding.  Waksman J upheld an award of an ICC Arbitrator, which allowed a party to recover the costs for obtaining funding as part of its cost recovery from the unsuccessful party.  The case is interesting as there appears to be no prior authority on the issue of recovering funding costs in the U.K., and such costs would not have been recoverable under the U.K. Civil Procedure Rules.
 
Closer to home, the last-minute hurdles for the Comprehensive Economic and Trade Agreement (CETA) have dominated the news.  A little-reported provision of CETA is Article 8.26, entitled “Third Party Funding”.  This article requires parties to advise the arbitral tribunal if a party has litigation funding, and provide the name and address of the funder at the time the claim is submitted.  This article of CETA is further recognition of the growing role of litigation funding in arbitration.
 
Each of these developments reflects the increasing recognition, acceptance and benefits of litigation funding as a valuable tool in the resolution of commercial disputes.
 

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