Hong Kong officially allows third party funding

On June 4, 2017 Hong Kong amended its Law on Arbitration and Mediation 2016 legalizing third party funding. Third party funding is where a third party (without any connection to the dispute) finances all or part of the arbitration costs in return for a fee payable by the funded party after the dispute is decided.

According to the leading specialists, such amendment would contribute to the development of Hong Kong as a place of international arbitration. 

The provisions allowing third party funding will come into force later this year. Meanwhile the Code of Practice is being developed so as to guarantee that third party funding is used in good faith without any abuses.

Previously the legality of the third party funding was questioned due to the doctrine of “maintenance and champerty”. After the amendment comes to force, third party funding will be unambiguously allowed in Hong Kong like in Singapore.