Litigation Funding 2025 Comparisons

Legal finance is currently permitted in Singapore for international arbitration, insolvency-related proceedings, certain proceedings in the Singapore International Commercial Court (SICC) and related mediation proceedings.

Historically, using external capital to finance litigation on a non-recourse basis (in other words, where the financier does not have recourse to the assets of the litigant other than to recoveries from the legal proceedings) was rare. This was in large part due to the blanket prohibition on litigation funding under the English common law doctrines of champerty and maintenance. Whereas the relevance of these medieval legal doctrines has diminished in many common law jurisdictions, the often-strict application of these principles by the courts and the lack of intervention by the legislature had for many years all but stifled the emergence of the legal finance industry in Singapore.

In 2017, Singapore passed amendments to the Civil Law Act to permit third-party funding of international arbitration and related court and mediation proceedings, and this was later extended to domestic arbitration as well as certain proceedings in the SICC. Separately, the funding of insolvency practitioners to bring claims on behalf of an estate has long been accepted under the courts’ supervisory powers, beginning with the decision of the Singapore High Court in Re Vanguard in 2015, and has since been broadened continually.

Third-party funding in Singapore is governed primarily by the following.

The Civil Law Act

Amendments to the Civil Law Act (CLA) introduced in 2017 marked the first of a number of legislative developments in Asia to limit the application of maintenance and champerty to the modern legal framework and to provide expressly for the use of legal finance in arbitration proceedings.

Section 5A of the revised CLA abolishes the torts of maintenance and champerty but preserves the possibility of litigation funding agreements being unenforceable for being contrary to public policy or illegal.

The CLA introduces the concept of a “qualifying third-party funder” that is permitted to provide funding for a party’s costs and sets out the criteria that need to be fulfilled by the funder in relation to its business and capital adequacy.

Of more practical importance, the CLA validates third-party funding in “prescribed dispute resolution proceedings”. The flexibility in the legislation introduced by this concept of prescribed dispute resolution proceedings paves the way for other types of legal proceedings to be included in the third-party funding legislative framework.

The Civil Law (Third-Party Funding) Regulations 2017

These regulations set out more details on some of the provisions in the CLA. For example, they specify the qualifying criteria for funders (as having not less than SGD5 million in paid-up capital or managed assets) and define the scope of proceedings for which third-party funding is permitted, which currently includes international and domestic arbitration, SICC proceedings, related mediation and enforcement actions.

The Insolvency, Restructuring and Dissolution Act 2018 (IRDA)

This codifies in part the application of legal finance in company liquidation and judicial management. The legislation establishes a liquidator’s ability to enter into third-party funding agreements (upon obtaining court approval or the authorisation of the committee of inspection) for claims relating to certain transactions that have taken place prior to insolvency.

Case Law

Most of the case law in Singapore relating to the doctrines of champerty and maintenance and third-party litigation funding has been in the context of insolvency litigation.

Re Vanguard is the first known case in which the Singapore court examined the application of maintenance and champerty to insolvency funding. Subsequent cases provided further clarification on the circumstances in which funding of insolvency practitioners is allowed – for example, Trikomsel (liquidators’ investigations into the affairs of the insolvency company), Re Fan know Hin (assignment of monies recovered in insolvency claw-back claims), Re Castlewood Group (liquidation proceedings under the Companies Act), Lavrentiadis, Lavrentios v Dextra Partners (liquidators’ causes of action under the IRDA) and Hyflux (a funder’s undertaking constituting valid security for costs).

Besides providing guidance on the use of funding in company liquidation and judicial management, case law relating to insolvency proceedings could be seen as an important source of jurisprudence on legal finance generally.

In addition, the courts continue to play a part in shaping the development of legal finance in certain insolvency proceedings that do not fall within the scope of the IRDA – for example, claims for breach of contract or against the company’s former auditors for professional negligence.

In addition to the CLA and related regulations, many important practical aspects of the arbitration funding framework in Singapore are set out in various institutional rules and guidance notes. Although failure to comply with these rules and guidance notes would not affect the funding agreement’s validity under the CLA, these provisions reflect market practice; compliance with them, especially for legal practitioners, is expected.

Key Rules Relevant to Third-Party Funding

Here are some of the key rules governing the conduct of legal practitioners that are relevant to third-party funding.

Legal Profession (Professional Conduct) Rules 2015

These require legal practitioners to disclose to the court (or tribunal) and all parties the existence of third-party funding and the identity of funders.

Guidance Note 10.1.1 of the Law Society of Singapore

This sets out best practices for lawyers who refer, advise or act for clients who obtain third-party funding.

Guidelines of the Singapore Institute of Arbitrators (SIArb) of 18 May 2017

These recommend best practices for funders in Singapore-seated arbitrations, including recommendations relating to the content of funding agreements, obligations of the funders, issues relating to confidentiality and legal privilege, conflicts of interest and control of proceedings, withdrawal of funding and disclosure obligations.

Arbitration institutions rules and guidelines

These guide parties to arbitrations and arbitrators in relation to funded arbitration proceedings. Examples include:

• the Singapore International Arbitration Centre (SIAC) Arbitration Rules (7th edition, 2025, Rules 38); and
• the Practice Note of the SIAC of 31 March 2017.

The third-party funding framework in Singapore applies to dispute resolution proceedings involving primarily commercial parties (arbitration, insolvency, and SICC proceedings). Other than the IRDA, which provides for the funding of insolvency practitioners, there are currently no other sets of rules that apply to specific types of counterparties.

Where a third party is providing funds to liquidators or judicial managers, there is a risk that terms that would give the funder control over the way the proceedings are being conducted could be deemed unlawful or unenforceable. Singapore courts have consistently emphasised that funding is not champertous as long as the funder does not control the proceedings (see Re Vanguard, Re Fan Kow Hin and Majestica Enterprises v Kams Singapore).

Disclosure by the legal practitioner in relation to the use of third-party funding in any dispute resolution proceedings is mandatory under Rule 49A of the Legal Profession (Professional Conduct) Rules 2015.

Legal practitioners must disclose to the court or tribunal, and to every other party to those proceedings:

• the existence of any third-party funding contract related to the cost of those proceedings; and
• the identity and address of the third-party funder

Disclosure must occur at the commencement of proceedings, or as soon as practicable after the funding agreement is signed. Importantly, the obligation falls on the legal practitioner, not on the party to the proceedings.

For arbitration proceedings subject to SIAC Rules, in addition to the disclosure of the existence of any third-party funding agreement and the identity of the third-party funder, Rule 38 empowers tribunals to order such disclosures in apportioning costs (taking into account any third-party funding agreement). This potential scope of the disclosure obligation is wider than that seen in other jurisdictions or institutional arbitration rules. 

In general, the liability for adverse costs is a matter to be agreed in the funding agreement between the funder and the funded party. Typically, funding agreements require the claimant to take out an after-the-event (ATE) insurance policy that indemnifies the claimant from having to pay a costs award against it in respect of the other side’s costs should the claim fail. 

In arbitration, it is uncommon for a tribunal to order costs against a litigation funder. This is primarily due to a key jurisdictional limitation: the tribunal lacks authority over a funder, who remains a third party rather than a participant in the proceedings.

By contrast, the position under Singapore court proceedings is different. Courts may, in certain circumstances, order costs against a third party if doing so is deemed just – particularly where that party has funded and effectively controlled the litigation and has caused the relevant costs to be incurred.

It is worth noting that the legal position regarding a funder’s liability for adverse costs in legal proceedings continues to develop in other common law jurisdictions (eg, in cases such as Arkin v Borchard Lines and Chapelgate v Money in England). The jurisprudence on this topic in these jurisdictions would have referential value in Singapore court proceedings.

In Singapore court proceedings, a security for costs order can be made with an interlocutory application to the court under Order 9, Rule 12 of the Rules of Court 2021 (ROC 2021) and also section 388 of the Companies Act (CA) if the party making the application is a company.

Under the ROC 2021, the order can be made at the court’s discretion if the claimant:

• resides outside Singapore;
• is suing on behalf of, or is being funded by, a party that is not involved in the legal proceedings and there is reason to believe that the claimant will not be able to pay the defendant’s costs if ordered; or
• has changed its address during the course of proceedings, or its address is not stated.

A court has discretion whether to order security for costs, but will consider all circumstances and assess whether there is a substantial risk that the defendant will suffer the injustice of defending a case with no real prospect of recovering the costs if the defendant prevails.

For proceedings in the SICC, the scope of the security for costs order may extend to a third-party funder. Order 6, Rule 2 of the SICC Rules 2021 provides that the SICC may order the claimant, a non-party or a third-party funder with whom the claimant has a third-party funding contract for the relevant proceedings to give security for the defendant’s costs of the action or other proceedings.

ATE insurance is allowed in Singapore and has obvious appeal both in arbitration and litigation given the significant cost of disputes. However, the ATE market in Singapore is relatively under-developed.

In May 2022, Singapore introduced a new fee framework under which Singapore and certain registered foreign lawyers can enter into conditional fee agreements (CFAs) for international and domestic arbitration proceedings, some SICC proceedings, and related court and mediation proceedings.

Under the Legal Profession (Conditional Fee Agreement) Regulations, lawyers and their clients may agree to a fee arrangement where the lawyer would receive payment of the whole or part of their legal fees only in specified circumstances. The CFA framework is intended to provide flexibility and enable lawyers using an uplift fee to take on a limited level of risk that correlates with the outcome of the case. Under the framework, it is possible for lawyers and their clients to enter into “win, more fee”, “no win, no fee” and “no win, less fee” agreements. However, contingency fee arrangements, where chargeable fees are to be calculated on the basis of damages awarded in the case, remain prohibited in Singapore.

Under the Singapore Legal Profession Act (LPA), a non-practitioner can be a director, partner or shareholder in a law firm provided that the person is registered under Section 36G of the LPA. In general, a non-practitioner may apply for registration under section 36G of the Act (subject to the approval of the director of legal services) if the individual is an employee of the law firm and is a director, partner or shareholder in the firm, with an interest of not more than 25% of the total voting rights exercisable in respect of the management of the practice or of the total value of equity interests in the practice.

Given that qualifying third-party funders under the Civil Law Act are required to carry on the principal business of funding the costs of dispute resolution proceedings, it is unlikely that a third-party funder would be registered as a regulated non-practitioner under the LPA, thereby allowing it to share fees with lawyers.

See 3.2 Fee Sharing.

GST is generally chargeable on legal fees, although a zero-rate arrangement may apply to international services (provided by a person outside Singapore, wholly in their business capacity, that directly benefit a person outside Singapore, wholly in their business capacity, and/or a GST-registered person belonging in Singapore) under the GST Act.

Returns from legal finance investments payable to companies organised outside Singapore do not fall within a category of payments to which Singapore withholding tax applies under the Income Tax Act.