Singapore Set To Become Top Choice For Arbitration
SINGAPORE: On January 10, this year, Parliament passed amendments to the Civil Law Act which paves the way for businesses involved in international commercial arbitration cases here to get third party funding (TPF).
TPF basically refers to proceedings funded by an entity unconnected to a dispute. This development opens a significant new market for funders worldwide and further asserts Singapore's eminence as an arbitral centre and paves the way for further reform.
Among others, the Act:
- abolishes the common law torts of champerty and maintenance (which restricted the use of third party funding)
- allows lawyers to recommend third-party funders to their clients provided the lawyers do not receive any direct financial benefit from such recommendations.
- Allows conditions to be imposed on third-party funders. Funders who do not comply with these conditions will not be able to enforce their rights under their third-party funding contracts.
According to reports, the passing of the amendments will likely encourage more investments into international arbitration proceedings in Singapore, which would make the nation a more attractive forum to conduct international arbitration.
The recent development is also in line with the position taken in other major seats of international commercial arbitration such as the United Kingdom, the United States and Hong Kong where third-party funding is already permitted or being considered.
Over the years, the number of disputes and value of claims resolved by arbitration in Singapore have increased and recent treaties, such as the Trans-Pacific Partnership Agreement (TPPA) indicate a further shift towards resolving more disputes in Singapore.
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