Introduction

Since its introduction in 2017, third-party funding has become a well-established concept in Singapore’s dispute resolution ecosystem. Once viewed primarily as a means of improving access to justice, it is now widely recognised as a strategic tool for managing legal risk, preserving capital, generating liquidity and enhancing business outcomes. Commercial parties in Singapore, much like those in other jurisdictions where this form of financing has had longer to develop, are turning to third-party funding to pursue meritorious claims without tying up significant resources.

Singapore has responded to this demand with progressive legal and regulatory reforms that have positioned it as a leader in Asia’s evolving litigation funding market. For clients operating in or through Singapore, keeping pace with these developments is increasingly important, to ensure cost-effective and strategic dispute management.

Establishing the Framework

With its roots tracing back to the English common law system, Singapore’s laws on third-party funding have largely followed the position under English law, although the abolition of certain aspects of maintenance and champerty in England has not been fully mirrored in Singapore. Historically, Singapore law regarded maintenance and champerty as torts at common law and third-party funding agreements were generally treated as contrary to public policy or illegal, and therefore unenforceable.

One manifestation of these doctrines is found in the professional conduct regulations governing the Singapore legal profession. Until recently, lawyers were prohibited from receiving contingency fees, due to concerns that linking a lawyer’s compensation directly to case outcomes could misalign their interests with those of the client and potentially incentivise unethical conduct. For example, in Law Society of Singapore v Kurubalan, an agreement where a solicitor sought a share of recovery in a personal injury claim was held to be champertous.

The establishment of a legal funding legislative framework in Singapore began with the Civil Law (Amendment) Act of 2017. This landmark legislation abolished the torts of maintenance and champerty and expressly permitted third-party funding in “prescribed dispute resolution proceedings”, initially limited to international arbitration and related court applications. In recent years, this has expanded to include domestic arbitration and proceedings before the Singapore International Commercial Court (SICC).

The initial policy objective behind these reforms was to promote access to justice. Lawmakers recognised that financial constraints should not prevent a party that had been harmed from pursuing legal recourse. As affirmed in Re Vanguard, the principle of equal access to the courts supports the use of external legal funding and justifies exceptions to common law restrictions. However, whether third-party funding is permitted outside arbitration and insolvency (see Codification of Insolvency Funding, below), such as in general commercial litigation, is still a developing matter of law. In Re Fan Kow Hin, the Singapore High Court left this question open, suggesting that the courts will continue to shape the law in this area.

Expansion of Permissible Funding: the Role of the SICC

One of the most significant developments in Singapore’s litigation finance space has been the expansion of permissible third-party funding to proceedings in the SICC. The SICC was established to handle complex cross-border commercial disputes with international parties and allows appearances by foreign-qualified lawyers in appropriate cases.

Extending funding eligibility to SICC proceedings has opened a new frontier for funded litigation in Singapore. By allowing third-party funding in this context, Singapore has enabled foreign parties and multinational companies to access third-party funding options in a sophisticated court environment, thereby levelling the playing field for claimants facing well-resourced opponents.

Moreover, SICC proceedings allow the Singapore judiciary to develop jurisprudence on litigation-specific risks such as adverse costs, security for costs and cost shifting. These issues are typically less pronounced in arbitration, so funded SICC proceedings offer an opportunity for the courts to shape the contours of funding-related law and practice. The SICC’s growing caseload reinforces the importance of funding options that mitigate financial exposure and align legal strategy with commercial objectives.

Regulatory Clarity and Funders’ Qualification Requirements

Singapore’s third-party funding regime offers a blend of predictability and flexibility, allowing for a responsive regulatory approach. In particular, the definition of “prescribed dispute resolution proceedings” under the Civil Law (Third-Party Funding) Regulations can be updated through secondary legislation to broaden the scope of proceedings that can be funded.

Qualifying funders must meet minimum capital or asset thresholds (SGD5 million) and carry litigation funding as a principal business activity. While this threshold ensures that funders have sufficient financial capacity, there are growing calls for higher standards to better reflect the multimillion-dollar costs often associated with complex arbitrations and litigations. Pursuing a single arbitration matter can entail costs of SGD3 million to SGD10 million or more and the 18–36 month duration often exceeds the capital coverage of funders, particularly where this merely meets minimum requirements.

Thus, the due diligence of potential third-party funding partners remains essential. Clients and counsel should look beyond regulatory compliance to assess a funder’s capital adequacy, funding model, dispute experience and long-term business prospects. Transparency, reliability and a demonstrated ability to deploy capital throughout the life of a matter are critical factors in selecting a suitable finance partner – particularly for claims involving complex jurisdiction, multi-party enforcement or cross-border risks.

Institutional and Professional Conduct Rules

Third-party funding in Singapore is underpinned by a robust framework of professional obligations and institutional best practices that promote transparency, reduce risk and elevate market standards. The Legal Profession (Professional Conduct) Rules 2015 require legal practitioners (not clients) to disclose to the court (or tribunal) and all parties both the existence of a third-party funding agreement and the identity and address of the funder at the outset of proceedings or as soon as practicable thereafter. This practitioner-focused duty reflects the central role of counsel in upholding the integrity of proceedings and managing conflicts of interest.

In parallel, institutional rules issued by the Singapore International Arbitration Centre (SIAC) and the Singapore Institute of Arbitrators further enhance guidance for arbitrators and funders, respectively. These include provisions on cost allocation, security for costs, disclosure of conflicts involving funders, and the treatment of confidential and privileged information. The SIAC Practice Note, for example, clarifies that the mere presence of a funder should not be interpreted as an indicator of a party’s financial position. It also grants tribunals discretion to consider funder involvement when allocating costs.

Collectively, these rules reduce legal uncertainty, encourage responsible conduct among funders and help make Singapore a trusted and well-regulated jurisdiction for third-party funding.

Codification of Insolvency Funding

While Singapore’s case law on champerty, maintenance and third-party litigation funding remains relatively limited, much of the existing jurisprudence has emerged in the context of insolvency proceedings. These decisions not only provide practical guidance on the use of third-party finance in liquidation and judicial management, but also serve as a foundational source of legal authority on the broader application of funding in Singapore.

Even before third-party funding was formally made possible for arbitration, Singapore’s courts had permitted third-party funding in insolvency matters under common law. In landmark decisions such as Re Vanguard Energy and Re Fan Kow Hin, the High Court sanctioned funding arrangements and held that the contemplated assignments of the liquidators’ rights to third-party funders did not contravene the doctrines of maintenance and champerty. A key factor in these decisions was the fact that liquidators retained full control over the legal proceedings. The court further clarified that funders are entitled to make a profit from providing litigation finance, emphasising that the overriding policy consideration is “protecting the purity of justice and the interests of vulnerable litigants”, highlighting the importance of third-party funding in insolvency contexts.

Legislative reform followed suit with the enactment of the Insolvency, Restructuring and Dissolution Act (IRDA) in 2018, which consolidated and modernised Singapore’s corporate insolvency regime. Crucially, the IRDA codified the use of third-party funding within the insolvency framework, aligning statutory provisions with emerging market practices. Under Section 144(1)(g), liquidators are empowered by court approval or the consent of the committee of inspection to assign the proceeds of certain claims arising from pre-insolvency transactions. These include claims relating to undervalue transfers, unfair preferences, extortionate credit transactions, fraudulent and wrongful trading, and actions against delinquent officers.

Although the IRDA does not explicitly reference “third-party funding”, its provisions effectively enable funding arrangements in a defined subset of insolvency-related claims. Notably, other types of claims, such as those arising from breach of contract or auditor negligence, remain outside the scope of this statutory regime. As a result, the courts will continue to play a critical role in shaping the contours of permissible funding, particularly as creditors and funders seek to monetise legal claims and maximise recoveries from distressed estates.

Conditional Fee Agreements: a New Layer of Flexibility

Singapore took another step forward in 2022 by introducing conditional fee agreements for domestic and international arbitration, SICC proceedings and related matters. A key feature of the framework was the introduction of flexibility in legal fee structures through the use of an “uplift fee”, allowing lawyers to assume a measured level of risk linked to case outcomes. Section 115A(1) of the Legal Profession (Professional Conduct) Rules defines “conditional fee agreement” and “uplift fee”, permitting fee arrangements such as “win, more fee”, “no win, no fee” and “no win, less fee”.

Unlike the approach taken in Hong Kong, where risk-based legal fee arrangements are also being introduced at around the same time in the form of outcome-related fee structures, Singapore maintains a conservative stance on contingency fees, where fees that are directly tied to damages awarded remain prohibited. Regardless, the reforms address growing client demand for alternative fee arrangements. Commercial clients increasingly challenge traditional hourly billing, seeking risk-sharing solutions that allow for cost-effective pursuit of meritorious arbitration claims without incurring prohibitive legal expenses.

Moreover, by enabling Singapore law firms to tailor fee structures, the Ministry of Law is aligning domestic practices with those of international competitors, levelling the playing field for lawyers based in Singapore.

Trends in the Arbitration Funding Landscape

The first Singapore-seated arbitration – which was also, to the best of our knowledge, the first international arbitration to be funded under the Singapore framework – was financed by this firm in July 2017. Both the demand for and the market’s sophistication in the use of third-party funding has since grown substantially. This firm now receives regular funding requests for arbitrations seated in Singapore, as well as funding requests from Singapore-based legal practitioners and end-users for legal proceedings in other jurisdictions.

Given the confidential nature of arbitration proceedings, and the fact that statistics related to funded cases are not released by arbitration institutions operating in Singapore, it is difficult to get an accurate picture of how prevalent the use of third-party funding is. However, the number of queries this firm receives from Singapore-based parties, and the number of cases that have undergone the firm’s formal investment process, appears to be comparable to the figures in other jurisdictions where litigation funding is permitted, after taking into account the size of the respective legal markets and the scope of matters for which funding is permissible (in other words, looking only at the arbitration and insolvency markets in Singapore).

Funding queries comprise a diverse range of subject matters, from simple contractual disputes to high-value investor-state arbitrations. Investment or shareholder disputes and simple contractual claims for failure to pay or perform are the most frequently encountered. Notably, there appears to be growing interest in arbitral award monetisation, whereby award creditors look to transfer (either legally or economically) their entitlement under the awards to funders, in return for discounted upfront payments. This application of legal finance could be seen as a sign of the increasing sophistication of the market, as companies look to monetise legal assets like arbitral awards as a way of enhancing their balance sheets and optimising the use of capital, in effect treating legal finance as a corporate finance tool.

Other Trends in the Arbitration Landscape

Singapore’s arbitration environment is evolving amid ongoing concerns over the length, cost and legitimacy of international commercial and investor-state arbitration. To address these issues, there is a growing push for procedural innovations, such as early dismissal tools, which aim to expedite cases. However, hesitation remains because dismissals typically lack a right of appeal, unlike court rulings. One possible development is the introduction of limited review mechanisms to provide tribunals with more confidence in exercising early dismissal powers while ensuring parties can seek a form of oversight without significantly extending arbitration timelines.

Geopolitical tensions and sanctions are also increasingly influencing arbitration strategies. Parties tend to choose arbitration seats and governing laws that offer greater neutrality and enforceability amid global uncertainties. This “flight to safety” reflects concerns about conducting proceedings and enforcing awards in jurisdictions affected by sanctions. As a result, contract drafting is becoming more meticulous, with particular attention to force majeure and hardship clauses to address disruptions caused by sanctions or political instability. Singapore’s reputation for neutrality and its robust legal framework make it a preferred venue to handle disputes involving such complexities.

Third-party funding remains a significant feature in Singapore arbitration, especially as claims become larger and more complex. Third-party funding provides claimants with essential financial support and access to strategic insights from funders experienced in high-profile cases. This, combined with Singapore’s clear regulatory stance on third-party funding, enhances its attractiveness for sophisticated dispute resolution.

Conclusion: Singapore’s Continued Ascent as a Global Dispute Resolution Hub

Singapore has skilfully balanced legal tradition with innovation. From early reforms on maintenance and champerty to the adoption of conditional fee agreements, it has positioned itself as a forward-looking legal and dispute resolution centre.

Third-party funding is a key part of that evolution. Once seen primarily as a tool for under-resourced claimants, it is now used by sophisticated businesses to manage risk, pursue high-value claims without upfront cost and monetise legal assets. Its use is expanding beyond arbitration and insolvency to include commercial litigation at the SICC, a much-welcomed development that plays well into the global trend of companies increasingly integrating funding into broader capital and risk-management strategies.

More broadly, third-party finance is gaining traction among corporates worldwide. According to Burford’s 2024 Litigation Economics Survey, 73% of chief financial officers and general counsels have used or would consider using it. Through strategies like monetisation – advancing some of the expected settlement of a pending claim, judgment or award – businesses are increasingly unlocking immediate capital rather than waiting years for claims to be settled or resolved at trial, or for judgments to be paid. While not yet widespread in Singapore, nearly half of global respondents expect to use monetisation in the next 15 years, highlighting a trend worth watching.

Across Asia, Singapore’s prominence as a seat for international arbitration means that parties – particularly from markets like India – gain exposure to funding through Singapore-based proceedings and institutions. That exposure is helping to drive awareness and adoption across the region.

As legal risk and cost pressures grow, Singapore provides a well-regulated environment where businesses can confidently access third-party funding as part of a broader business strategy to re-allocate risk and maximise value.