Hong Kong’s New Law on Third Party Funding for Arbitration: Opportunities and Risks

20 February 2019
View Debevoise Update
Key takeaways:
  • 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.