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Hong Kong’s New Law on Third Party Funding for Arbitration: Opportunities and Risks
20 February 2019
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On 1 February 2019, Hong Kong’s new law permitting third party funding (“TPF”) for arbitration came into force. Broadly, TPF transfers the risk of a dispute from a claimant to the funder. Generally, the funder bears an unsuccessful claimant’s legal costs, but receives a portion of the proceeds of a successful claimant’s award. Hong Kong law does not permit TPF for court proceedings.
This change in law creates opportunities for parties previously unable to fund claims, or seeking to minimize expenditure in pursuing claims.
TPF is a highly sophisticated multi-billion dollar industry and it will bring benefits to arbitration in Hong Kong. Any party considering TPF for its arbitration should carefully consider the terms of any funding agreement. Equally, a defending party should be prepared to adjust its litigation strategy to cater for the nuances of a funded claim.
Lord Goldsmith KC
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