Funding in Singapore - the freeze begins to thaw

Four days in Singapore: busy but very rewarding, and an interesting moment in the local disputes market.  

From the practitioners we spoke to, there is generally a very strong interest in opening up the market to litigation finance, but the issue is that current regulations prohibit third party funding (along with any form of contingency fees).  However, at Friday's SIAC Congress 2016 the Minister for Law, Mr K Shanmugam, announced that a rule change to permit funding for international arbitrations seated in Singapore can be expected soon - perhaps as early as the end of this year.  If so, Singapore may end up leap frogging Hong Kong, where consultations about appropriate regulation for arbitration funding remain ongoing.

Another welcome piece of news is that the new draft SIAC Rules on Investment Arbitration include, for the first time in a set of institutional arbitration rules, provisions dealing with third party funding. Of most note are:

- article 23.1 which provides Tribunals with the power to order disclosure of TPF arrangements, including the identity of the funder and its "interest in the outcome".

- article 34 which contains a wide ranging Tribunal power to award costs including against a funder who has submitted to the tribunal's jurisdiction.

Both these are points that IMF has long advocated for, in order to protect the integrity of process and avoid unnecessary satellite disputes around disclosure and security for costs.

The signs of change are very encouraging and can only help to increase Singapore's attractiveness as a destination of choice for resolving international disputes.

However, some anomalies persist.  It is odd that SIAC's commercial arbitration rules contain no equivalent provisions to the above - it feels like a missed opportunity for SIAC not to have amended both sets of rules at the same time. And, there is no indication (yet) that funding will be permitted for litigation in the Singapore High Court or the new international commercial court (SICC). Why aren't the public policy considerations the same for each dispute resolution process?  Access to justice for a claimant that is impecunious, or simply engaging in risk management, is equally a concern whether the dispute is to be resolved by a Tribunal or by a Court.  Perhaps the authorities prefer a staged approach; or perhaps the main concern is to prevent arbitration work, where parties are free to choose their seat of arbitration, from flowing to other rival jurisdictions. 

Whatever the underlying reasons, keep an eye out for developments over the next 6 months.