Has Singapore missed a trick in not permitting third-party funding for all cases heard by the Singapore International Commercial Court, ask Charlie Morris and Lara Hofer of Woodsford Litigation Funding?
The Singapore International Commercial Court (SICC) is a court set up to hear international commercial disputes and place Singapore in a strong position to continue serving as a leading centre for the resolution of international commercial disputes. While third-party funding is expanding rapidly across the legal world and being increasingly used globally in both litigation and arbitration, Singapore, despite its best intentions to remain competitive, is still to some extent playing catch-up in this regard. Arguably, the continued success and use by international parties of the SICC, and the Singapore Courts generally, may be adversely impacted until such time as Singapore embraces and allows third-party funding for all types of litigation and arbitration.
Singapore International Commercial Court
The SICC was established in January 2015 as a division of the Singapore High Court to be a neutral venue for international commercial disputes, for parties – with little or no connection to Singapore –seeking access to a world-class bench of judges, with extensive international experience, and high quality legal and professional services. So far, the SICC has heard a range of cases – approximately 17 in total – on diverse topics and involved parties from various jurisdictions.
In January of this year, Singapore passed the Supreme Court of Judicature (Amendment) Bill (No. 47/2017), which confirms that the SICC has jurisdiction to hear litigation related to international arbitration. It provides that: 'The Singapore International Commercial Court (being a division of the High Court) has jurisdiction to hear any proceedings relating to international commercial arbitration that the High Court may hear and that satisfy such conditions as the Rules of Court may prescribe.' These recent amendments and the addition of four new judges (Lord David Edmond Neuberger of Abbotsbury, the Hon. Sir Jeremy Lionel Cooke, Justice Robert Shenton French and the Right Honourable Beverley Marian McLachlin, P.C.) to the SICC lends weight to Singapore’s ongoing endeavour to continue to serve as a leading centre for the resolution of international commercial disputes. Singapore’s senior Minister of State for Law and Finance, Indranee Thurai Rajah, has indicated that Singapore will continue to refine and develop the SICC to meet the needs of parties to such disputes. The amendments already made to the SICC are part of this ongoing endeavour.
Third-party funding, in its simplest guise, is where a third party, who commonly has no direct interest in the proceedings, provides a litigant with the financial resources to enable costly, risky (and potentially lengthy) litigation or arbitration cases to proceed. In return, if the case results in a recovery, the funder receives a ‘success fee’. If the case is unsuccessful, the funder loses its investment and nothing is owed by the litigant.
Enforcement of arbitration awards
In January 2017, Singapore passed the Civil Law Amendment Act and the Civil Law (Third Party Funding) Regulations 2017, which together permit third-party funding of international arbitration proceedings and related court and mediation proceedings. This includes, among other things, the enforcement of arbitration awards. This significant development was an important step towards reinforcing Singapore’s position as a leading international dispute resolution hub and represents an exception from the traditional position in Singapore, under which the common law torts of maintenance (the support of litigation in which the maintainer has no legitimate interest, without just cause or excuse) and champerty (a sub-species or aggravated form of maintenance where the maintainer receives a portion of the proceeds in the relevant action) prohibited third-party funding of contentious proceedings. Outside the sphere of international arbitration and related court proceedings, there are further limited exceptions under which third-party funding may be permitted (for example, in the context of insolvency proceedings).
Recent change in the law
The more recent change in the law in Singapore – allowing litigation related to international arbitration to be heard by the SICC – effectively brings the SICC within the scope of the Civil Law (Third Party Funding) Regulations for the first time, which means that third-party funding will now be permitted in respect of some, but not all, of the proceedings before the SICC. This arguably begs the question: why has Singapore made a distinction between different kinds of cases before the same court and has it missed a trick in not simply allowing third-party funding of all cases heard by the SICC?
Significant cost solution
Few facets of the legal industry have experienced as much growth over the last ten years as third-party funding. It is now a well-established, global multimillion-dollar industry and judicially accepted in numerous jurisdictions (including the United Kingdom, the United States, Australia, New Zealand, and also many civil law jurisdictions). Third-party funding is an industry which, among other things, has been hailed as a solution to the very significant cost barriers facing claimants with meritorious claims. There is a growing acceptance that third-party funding is a force for good and a realisation that, in an increasingly global legal market-place, jurisdictions which do not support third-party funding may be competitively disadvantaged. While the progress of third-party funding in Singapore has been slower than other jurisdictions, Singapore is clearly aware of this and has started to take steps to catch up. In particular, it appears that Singapore has used international arbitration as the ‘guinea pig’ to help it assess whether or not to permit third-party funding more widely.
In time, and in line with Singapore’s stated aim to continue to refine and develop the SICC (and, more generally, Singapore’s legal market) to meet the needs of parties to such disputes, it seems inevitable that, before long, third-party funding will be permitted for all cases in the SICC and even in other divisions of the Singapore High Court. Indeed, Chief Justice Sundaresh Menon has already indicated that Singapore may consider widening third-party funding to all cases before the SICC. Should Singapore broaden the permissibility of third-party funding in this way, the SICC will no doubt become an even more attractive forum for resolving international commercial disputes.
Charlie Morris is managing director, Asia Pacific and Lara Hofer is an investment officer with Woodsford Litigation Funding.