Third-party funding in Singapore

Third-party funding (TPF) has become an important feature of how commercial disputes are funded and resolved, and Singapore remains at the vanguard when it comes to creating the necessary ecosystem for TPF to thrive.

TPF involves an external funder paying some or all of a party’s legal costs in a dispute. In return, the funder typically receives a share of any recovery. This allows funders to invest in legal claims, while giving parties a way to manage the cost, risk and cashflow pressures that often come with litigation or arbitration.

For businesses in particular, TPF can allow parties to pursue claims that might otherwise be too costly, without having to commit significant capital upfront.

Legal framework: Evolution and development of TPF in Singapore

Before 2017, TPF was not permitted in Singapore because it was seen as inconsistent with the common law doctrines of maintenance and champerty, which restricted third parties from supporting litigation in which they had no direct interest.

That position changed with the introduction of the Civil Law (Third Party Funding) Regulations 2017 (the Regulations), which set out a statutory framework allowing TPF in both court litigation and arbitration. The Regulations specify the types of proceedings in which funding is permitted, which includes most international arbitrations and related enforcement proceedings, and set out who may act as a third-party funder. Importantly, the framework is designed to strike a balance. It allows parties to access funding, while also putting safeguards in place. These safeguards include eligibility requirements for funders and disclosure obligations for funded parties.

Since the promulgation of the Regulations in 2017, Singapore’s approach to TPF has evolved in stages, reflecting a deliberate move towards a more modern and flexible dispute financing framework.

In 2021, the scope of permitted TPF was expanded. The regime was extended to cover domestic arbitration, court proceedings arising out of or connected with domestic arbitration, proceedings before the Singapore International Commercial Court (SICC), as well as related mediation and appeal proceedings. This was an important step, as it took TPF beyond its original focus on international arbitration and into the domestic arbitration space, putting Singapore at the forefront of the global rise of TPF.

Another key development followed with the introduction of conditional fee arrangements (CFA). In 2022, amendments to the Legal Profession Act and the introduction of the Legal Profession (Conditional Fee Agreement) Regulations 2022 allowed lawyers and clients to enter into CFAs in prescribed proceedings. Since then, CFAs have been permitted in international and domestic arbitration, certain SICC proceedings, and related court and mediation proceedings. Under this framework, lawyers may agree to receive part or all of their fees only if specified outcomes are achieved, subject to statutory safeguards. Traditional contingency fee arrangements based on a percentage of recoveries, however, remain prohibited.

Together, these reforms reflect a broader policy of improving access to justice, increasing cost flexibility for parties, and reinforcing Singapore’s position as a leading global hub for international arbitration and complex commercial disputes.

Treatment of TPF by arbitral institutions

Major arbitral institutions now expressly address TPF in their rules, typically through disclosure obligations aimed at avoiding conflicts of interest.

For instance, the Singapore International Arbitration Centre (SIAC) Rules 2025 require parties to disclose the existence of any TPF arrangement and the identity of the funder. Similarly, the International Chamber of Commerce (ICC) Arbitration Rules 2021 expressly address TPF as part of their transparency framework. In particular, Article 11(7) requires parties to disclose the existence and identity of any non-party with an economic interest in the arbitration.

Comparable provisions exist across other arbitral institutions. The common theme is mandatory disclosure rather than regulation of funding terms. The focus is on transparency and the management of conflicts of interest, rather than restricting access to funding.

Practical implications for parties

Singapore’s approach to TPF contrasts with the position in the United Kingdom following the Supreme Court’s decision in PACCAR Inc v Competition Appeal Tribunal [2023] UKSC 28. In that case, the court held that certain litigation funding agreements amounted to damages-based agreements and were therefore subject to a restrictive statutory regime. The decision created significant uncertainty in the UK funding market and left many existing arrangements unenforceable unless restructured. By comparison, Singapore addresses TPF directly through legislation and regulation, providing greater certainty around what is permitted.

But, what does this mean in practice?

For parties involved in litigation or arbitration, TPF can offer real practical benefits. It can reduce the financial burden of proceedings, help spread risk, and allow parties to pursue claims without tying up significant capital. In some cases, it can also make the difference between bringing a claim and walking away from it.

That said, parties should be aware of the implications of entering into funding arrangements. These include disclosure obligations, questions around control and confidentiality, and the potential impact funding may have on settlement discussions and overall case strategy.