Third-Party Funding in Singapore: The Quest for an Ethics Code in International Arbitration

I.              INTRODUCTION

Singapore’s Parliament recently passed the Civil Law Bill (Bill No. 38/2016) legalizing third-party funding in international arbitration and related proceedings.[1] In a bid to strengthen Singapore’s position as “a premier international commercial dispute resolution hub and a key arbitration seat in the world”,[2] the move is a positive one for Singapore’s burgeoning arbitration scene with the first third-party funded arbitration already underway.[3] A year on, the ethical issues raised by the potential involvement of third-party funders have not gone unnoticed,[4] and professional bodies and institutions were quick to issue guidance in the aftermath of the legislative changes. It was in this context that the former Attorney-General of Singapore on 1 November 2017 urged Singapore to assume “thought leadership” in forging an ethics code in international arbitration.[5] The contemporary ethical issues of third-party funding have led to increased calls for regulation within the international arbitration community,[6] though at the same time a cautious approach has been advocated to ensure that overzealous regulation does not stymie the benefits of third-party funding altogether.[7] The effectiveness of Singapore’s approach to ethical regulation – specifically the need for disclosure in third-party funding agreements – is worth examining, and leaves insights for the international arbitration community at large.

The relationship between the funded party, the funder, and the funded party’s counsel raises certain ethical problems unique to third-party funding. As a preliminary point, there is the perception that ethical issues are best dealt with by competent bar associations rather than by the arbitrators themselves.[8] Accordingly, while many regulatory bodies already require lawyers to respect the conduct rules at the seat of arbitration,[9] there is a dearth of regulation concerning third-party funders.[10] While the United Kingdom has a Code of Conduct for litigation funders, this has been criticized for its “voluntary and self-regulatory” nature, as well as being silent on the need for disclosure regarding any third-party arrangement.[11] More significantly, not only are these rules inapplicable to arbitration, it is unclear even if they did apply whether it is desirable to transplant litigation-regulating rules to begin with.[12]

Singapore’s approach to the need for regulation has been multi-faceted. The Law Society of Singapore (“Law Society”) and the Singapore Institute of Arbitrators (“SIArb”) make reference to each other as well as the Singapore International Arbitration Centre (“SIAC”) in their respective practice notes, directing parties to “review all of these guidelines together to obtain a comprehensive overview of current issues pertaining to third party funding”.[13] Specific issues dealt with include the ethical issues of confidentiality, exercise of control by the funder, conflicts of interest, as well as more practical considerations such as the funder’s liability for adverse cost orders and the termination of the funding agreement by the funder.[14]

On one hand, one questions whether it would have been more effective for a single institution or body to have enacted a comprehensive set of rules which apply to all funding arrangements. On the other hand, it is undeniable that each entity has its own interests and target audience, and to this end requires its own set of rules. The effect of this tapestry of rules is that it behooves all relevant stakeholders to be aware of the relevant rules which apply to their own funding arrangement.



The panacea to the ethical complications surrounding third-party funding – and indeed much ink has been spilled on the topic – appears to be disclosure of the funding arrangement.[15] Arguments against disclosure, which include the prolonging of proceedings and giving the opposing party a tactical advantage,[16] while not without merit, have to be weighed against the potential negative effects of non-disclosure.[17] Disclosure is generally favored given its salutary effects on resolving conflicts of interest at the outset,[18] and the loss of confidentiality is deemed to be outweighed by the potentially “catastrophic” effects that belated disclosure can otherwise have – not only on the proceedings, but at the enforcement stage as well.[19] That said, an empirical study on funders’ perspectives has revealed that the aversion to disclosure stems from funders not being parties to the arbitration agreement and the fear that the case will be treated differently simply because a funder is involved.[20] Critics of disclosure also argue that raising the issue sua sponte is “unnecessary and counter-productive”.[21] Accordingly, in crafting ethical rules for disclosure, a reasonable balance should be struck between the default position that the funding agreement is a private matter between the funder and the funded party, and the need for sufficient reasons to justify disclosure.[22] An attendant issue is the scope of disclosure – to whom and to what extent disclosure must be made. It is generally accepted that disclosure of the existence of the funding arrangement, as opposed of the terms of the agreement, [23] is sufficient.[24]

A.      Singapore’s approach

In Singapore, this has been resolutely addressed by amendments to the Legal Profession (Professional Conduct) Rules (“Professional Conduct Rules”), which now require practitioners to disclose any third-party funding relationship to the court or tribunal. Practitioners are obliged to disclose not only the existence of any funding contract, but also the identity and address of the funder.[25] Such disclosure must be made either at the date of commencement of dispute resolution proceedings or as soon as practicable after the funding contract is entered into. Disclosure of the termination of the funding is also stated as a “good practice”.[26] Additionally, the SIAC became the first major arbitration center to address the issue of third-party funding directly.[27] Under the 2017 SIAC International Arbitration Rules, the tribunal has the power to order disclosure of funding arrangements.[28]

B.      Unresolved issues

For one, the applicability of national ethical rules is attenuated in international arbitration settings, a fortiori if the advocate is not regulated by local law.[29] It is therefore unclear how this requirement will apply where no local or foreign regulated counsel is acting in the arbitration.[30] Second, while it appears that legislation compels counsel to disclose the existence of the funding agreement as the baseline, it does not go further in prescribing further disclosure. It thus suggests that lawyers are allowed to withhold information on the terms of the agreement, when disclosure of the terms may well be necessary to consider whether there are any conflicts of interest which impinge upon arbitrators’ impartiality and independence.[31] In order to deal with this, it has been argued that the role of considering these conflicts falls on institutions, which will conduct an “automatic conflicts check”.[32] To this end, institutions like the SIAC have additional powers to order disclosure of a funding arrangement and details “where appropriate”.[33] It appears then that disclosure, while possible, would require reasonable grounds before it is deemed “appropriate”.[34] This standard has naturally hitherto not been tested.

Further, ethical issues remain unresolved when arbitrations are conducted without institutional support, and the issue of extent of disclosure is further complicated by the question of to whom this disclosure is to be made. As Trusz concedes, the “automatic conflicts check” is not possible without institutional support, and her proposal of disclosure only to the arbitral institution (as opposed to the tribunal or the opposing parties) would have to be modified to making disclosure to the appointing authority.[35] Since arbitrators do not typically disclose information to the appointing authority prior to their appointment, the request for additional information by the appointing authority invariably leads to the tribunal finding out about the funding arrangement.[36] This then obviates the purported benefit of such limited disclosure – to avoid prejudicing the tribunal by making them aware of the funding arrangement – to being with. Of course, the premise that knowledge of a funding arrangement ipso facto means that arbitrators treat cases differently can be challenged.[37] Trusz’s proposal also ostensibly encourages funders seeking to avoid disclosure to opt for ad-hoc arbitrations where the disclosure requirements are less robust.

Admittedly, the SIArb’s Guidelines provide that a funder shall cooperate in disclosing to an arbitral tribunal or court “any information concerning the funding if any applicable rules or order of arbitral tribunal or court so require[s]”.[38] However, since the SIArb Guidelines are non-binding, it follows that sua sponte disclosure is not mandatory for funders under current legislation, and is only necessary at the request of the arbitral tribunal under the auspices of certain institutional regimes, like that of the SIAC. The only requirements imposed on funders are ab initio qualifying criteria.[39] As such, it appears that disclosure is far more likely to occur with rather than without institutional support.

C.       Where does this leave us?

Nonetheless, the fact that there is soft law for funders and legislation mandating legal practitioners – both local and foreign-regulated lawyers – to disclose funding arrangements, is promising. It is generally accepted that regulation has to come from national policymakers by way of legislation rather than from the creation of more “soft law”.[40] To this end, Singapore has chosen an approach which imposes the primary obligations of disclosure on legal practitioners. Comparatively, the recent amendments to the Hong Kong Arbitration Ordinance[41] place the obligation of disclosure on the funded party rather than on counsel.[42] It remains to be seen whether this difference will have any effect on incentivizing disclosure. One significant difference is that non-compliance with disclosure requirements in Hong Kong does not “render any person liable to any judicial or other proceedings”,[43] whereas failure to comply with the Professional Conduct Rules in Singapore obviously subjects the practitioner to disciplinary action.[44] This comports with the “light touch approach” recommended by the Hong Kong Law Reform Commission,[45] which was based on the approaches adopted in Australia (statutory regulation of financial and conflicts issues) and the United Kingdom (self-regulation).[46] One questions whether this is necessarily the best approach, especially since ethical considerations vary from jurisdiction to jurisdiction. Other differences with Hong Kong include the fact that its third-party funding regulations (1) apply equally to domestic and international arbitrations;[47] (2) are not limited to professional funders;[48] and (3) propose a non-obligatory code of practice to monitor funders’ compliance.[49]



Regulating issues like the disclosure of third-party funding ensure that international arbitration no longer remains an “ethical no-man’s land”.[50] In doing so, recognizing that “[d]omestic standards for ethical conduct cannot be imported wholesale” is integral to upholding the integrity of international arbitration.[51] If Singapore is truly to adopt “thought leadership” in this area, it should not shy away from laying down a jurisdiction-specific approach to ethical regulation, confident in the strength and neutrality of its institutions to attract adherents. The current regulations on third-party funding represent a step in the right direction.


Ian Choo

Ian Choo is an LL.M. candidate in the International Business Regulation, Litigation & Arbitration program at the NYU School of Law. He is also a concurrent LL.B. (Honors) candidate at the National University of Singapore, under the NYU-NUS LLB/LLM Dual Degree Program.

[1] The Civil Law Act (Amendment) Act 2017 entered into force on 1 March 2017, introducing new sections 5A and 5B to the Civil Law Act (Cap. 43, Rev. Ed. 1999) which abolished the torts of maintenance and champerty and allowed third-party funding.

[2] Singapore Parliamentary Debates, Official Report vol 94 (Ms Indranee Rajah, Senior Minister of State for Law) (10 January 2017).

[3] K. C. Vijayan, “First third-party funding for Singapore arbitration case”, The Straits Times (1 July 2017).

[4] V. Frignati, Ethical Implications of Third-Party Funding in International Arbitration, 32 Arbitration International 505 (2016).

[5] K. C. Vijayan, “S’pore urged to take lead in Ethics Code for Arbitration”, The Straits Times (14 November 2017).

[6] See, e.g., J. A. Trusz., Full Disclosure? Conflicts of Interest Arising from Third-Party Funding in International Commercial Arbitration, 101 Georgetown Law Journal 1649 (2013), arguing for changes to institutional arbitration rules to facilitate disclosure of third-party funding.

[7] S. Khouri, K. Hurford & C. Bowman, Third party funding in international commercial and treaty arbitration – a panacea or a plague?, 8:4 Transnational Dispute Management 1, 11 (2011); J. Clanchy, Third Party Funding in Arbitration: Breaking down Barriers and Building Bridges, 23 Croatian Arbitration Yearbook 53, 56 (2016).

[8] S. Perry, Third-party Funding: An Arbitrator’s Perspective, Global Arbitration Review (23 November 2011), available at

[9] See, e.g., Article 8.5(a) of the American Bar Association Model Rules of Professional Conduct (2000), Articles 4(1) and 6(1) of the European Commission Directive 98/5/EC of 16 February 1998.

[10] B. Osmanoglu, Third-Party Funding in International Commercial Arbitration and Arbitrator Conflict of Interest 32:3 Journal of International Arbitration 325, 337 (2015).

[11] J. E. Kalicki, A. Endicott & N. Giraldo-Carrillo, Third Party Funding in Arbitration: Innovation and Limits in Self-Regulation, Kluwer Arbitration Blog (14 March 2012), available at

[12] See, e.g., M. C. Scherer, A. Goldsmith & C. Fléchet, Third-Party Funding in International Arbitration In Europe: Part 1 – Funders’ Perspectives, 2 International Business Law Journal 207, 218 (2012), where a funder sought to draw “a clear distinction between arbitration and litigation cases” as “the parties’ agreement governs the issue of disclosure and should only be disregarded in cases of possible conflicts of interest”.

[13] SIArb Guidelines for Third Party Funders, para. 1.4 (18 May 2017); Law Society Guidance Note 10.1.1, para. 3 (25 April 2017).

[14] Law Society Guidance Note, id, para. 23.

[15] Trusz, supra note 6, 1672; cf Clanchy, supra note 7, 56, querying “whether it is fair or constructive to single out the new providers for regulation while long established funders are left alone”.

[16] G. J. Shaw, Third-party funding in investment arbitration: how non-disclosure can cause harm for the sake of profit, 33 Arbitration International 109, 115 (2017).

[17] Frignati, supra note 4, 516.

[18] Ibid.

[19] S. Seidel, Third-party Investing in International Arbitration Claims: To Invest or Not to Invest? A Daunting Question in B. M. Cremades & A. Dimolitsa (eds.) Third-Party Funding in International Arbitration 16, 22 (ICC Publication, 2013).

[20] Scherer et. al,, supra note 12, 218, where funders expressed a fear of having adverse cost orders awarded against them.

[21] L. Lévy & R. Bonnan, Third-party funding: Disclosure, joinder and impact on arbitral proceedings in Third-Party Funding in International Arbitration, supra note 19, 81.

[22] J. H. Suh, Disclosure of third party funding: Hong Kong and Singapore setting the trend?, Arbitration Blog (2 October 2017), available at

[23] In Godfrey Waterhouse v Contract Bonding Limited [2013] NZSC 89 at para. 76, the New Zealand Supreme Court overturned the Court of Appeal, holding that a funder only needed to disclose its identity, location and amenability to the court’s jurisdiction; there was no need to disclose the terms of the funding agreement or the financial standing of the funder.

[24] Frignati, supra note 4, 516, arguing that disclosing the existence of the funding agreement “level[s] the playing field”.

[25] Rule 49A(1), Legal Profession (Professional Conduct) Rules 2015.

[26] Law Society Guidance Note, supra note 13, para. 52.

[27] J. Mackojc, SIAC’s 2017 Investment Arbitration Rules: An Overview and Key Changes, Kluwer Arbitration Blog (4 February 2017), available at

[28] Rule 24(l) of the SIAC Investment Arbitration Rules (2017).

[29] C. A. Rogers, Ethics in International Arbitration, 199 (Oxford University Press, 2014).

[30] Note, however, that Part 5A of the Legal Profession (Professional Conduct) Rules 2015 applies to all “regulated foreign lawyer[s]”: Rule 3(8)(iii) of the Legal Profession (Professional Conduct) Rules 2015.

[31] M. C. Scherer, Third-party Funding in International Arbitration: Towards mandatory disclosure of funding agreements? in Third-Party Funding in International Arbitration, supra note 19, 99.

[32] Trusz, supra note 6, 1676.

[33] SIAC Investment Arbitration Rules (1 January 2017); SIAC Practice Note, para. 5, (31 March 2017).

[34] Suh, supra note 22, ibid.

[35] Trusz, supra note 6, 1680.

[36] Ibid. Trusz also acknowledges that this problem is exacerbated when parties do not specify an appointing authority.

[37] Scherer et. al,, supra note 12, 218, where funders raised the concern that disclosure may lead to what the funder perceived as frivolous defences thereby raising the cost of the proceedings.

[38] SIArb Guidelines, supra note 13, para. 8.1 (emphasis added).

[39] Under section 4 of the Civil Law (Third-Party Funding) Regulations 2017 (Singapore), funders must (a) be in the “principal business” of funding dispute resolution proceedings; and (b) have a paid-up share capital or managed assets of not less than S$5 million (or foreign currency equivalent). The purpose of these criteria is so that “only professional funders whose principal business is funding claims, will be allowed” (per Senior Minister of State for Law, at note 2).

[40] W. H. van Boom, Third-party Financing in International Investment Arbitration, 52 (2011), available at

[41] Hong Kong’s Legislative Council passed the Arbitration and Mediation Legislation (Third Party Funding) (Amendment) Bill 2016 on 14 June 2017.

[42] Section 98U, Arbitration and Mediation Legislation (Third Party Funding) (Amendment) Ordinance 2017 [HK Arbitration Ordinance].

[43] Section 98W(1), id.

[44] Section 71(14) of the Legal Profession Act (Cap. 161, Rev. Ed. 2009) (Singapore).

[45] Hong Kong Law Reform Commission, Report on Third Party Funding for Arbitration, para. 2.10 (October 2016), available at

[46] Ibid, para. 4.14.

[47] Section 98N of the HK Arbitration Ordinance, supra note 41, extends the application of its regulations to arbitrations outside Hong Kong.

[48] Section 98J, id, allows any “person” who “does not have an interest recognized by law in the arbitration” to be a funder.

[49] Section 98P, 98Q, id, sets out a number of suggested practices and standards in the proposed code of practice.

[50] Rogers, supra note 29, 18.

[51] SIArb Guidelines on Party-Representative Ethics (Consultation Draft), para. 2 (16 October 2017).