Is third-party funding of commercial disputes permissible in Singapore and Japan?
Asia is the fastest-growing economic region in the world. Increasing regional cross-border investment leads to a rise in the number of international commercial disputes. The dispute resolution finance industry in Asia is still developing. However, growth of the industry is expected to be swift and IMF Bentham’s Asia-based team are experiencing exponential growth in demand for funding. The team have recently co-authored two articles on third-party dispute resolution finance in Singapore and Japan, respectively.
In 2017, Singapore passed legislation that expressly endorsed third-party funding of international arbitration seated in Singapore. The legislation also abolished the ancient torts of maintenance and champerty which had previously acted as a barrier to the funding of commercial disputes. In recent years, the Singapore courts have also confirmed the validity of third-party funding in the insolvency context and clarified the effect of the legislative amendments. Despite these developments, there has been some uncertainty about the residual impact of the prohibitions against maintenance and champerty and the extent to which they still apply in Singapore as matters of public policy.
IMF Bentham’s Singapore based Associate Investment Manager, Arvindran Manoosegaran, has co-authored an article on third-party funding for the Singapore Law Gazette. Arvin and Singapore lawyer, Alexander Lee, consider that a close reading of Singapore case law suggests that public policy allows funding of commercial litigation as well. It is consistent with similar case law in Australia and England where the funding of commercial litigation is generally accepted.
As a civil law jurisdiction, there are no laws or regulations which prohibit third-party funding of disputes in Japan and there have been no judgments by the Japanese courts on its lawfulness. Consequently, in contrast to the common law jurisdiction of Singapore, there has been no requirement for a process to “legalise” or expressly permit funding. Given there is no apparent restriction against dispute resolution finance, the industry is expected to grow in Japan, in particular in relation to international arbitration.
IMF Bentham’s Tom Glasgow, Cheng-Yee Khong and Kate Hurford have co-authored an article with Japanese lawyer Masaru Suzuki for the Japan Business Law Journal. The article is a practical guide to dispute resolution finance in Japan, including a summary of what it is, the funding process and funder’s criteria for cases, as well as a discussion of the advantages for parties in using third party funding.
For more information on dispute resolution finance in Singapore, Japan or other Asian jurisdictions, please contact Tom Glasgow, Cheng-Yee Khong or Arvindran Manoosegaran.