Singapore: Litigation Funding Comparative Guide

1 Commercial legal finance basics

1.1 How is commercial legal finance defined in your jurisdiction?

The use of legal finance was first permitted in insolvency matters in Singapore following the seminal decisions in Re Vanguard Energy Pte Ltd, Trikomsel Pte Ltd (unreported) and Solvadis Commodity Chemical Gmbh v Affert Resources Pte Ltd, with the principles derived from those cases later being enshrined in the Insolvency, Restructuring and Dissolution Act 2018.

The Civil Law (Amendment) Act 2017 paved the way for the use of third-party funding for other types of cases. Section 5B(10) defines a ‘third‑party funding contract' as a "contract or agreement by a party or potential party to dispute resolution proceedings with a Third‑Party Funder for the funding of all or part of the costs of the proceedings in return for a share or other interest in the proceeds or potential proceeds of the proceedings to which the party or potential party may become entitled".

1.2 How does commercial legal finance differ from consumer litigation finance and contingency agreements?

Contingency fees are not permitted in Singapore. However, since May 2022, lawyers have been permitted to enter into conditional fee agreements with their clients for selected proceedings, such as:

• international and domestic arbitration proceedings;
• some proceedings at the Singapore International Commercial Court (SICC); and
• related court and mediation proceedings.

Typical CFAs may adopt the ‘win, more fee', ‘no win, no fee' and ‘no win, less fee' models.

There is no recognised provision of consumer litigation finance in Singapore. In order to provide litigation finance in Singapore, market participants must be regarded as a ‘qualifying third‑party funder' by meeting criteria enshrined in the Civil Law (Third-Party Funding) Regulations 2017. These include the requirements that the funder:

• carries on the principal business of the funding of the costs of dispute resolution proceedings to which it is not a party; and
• has a paid‑up share capital of:
• • not less than S$5 million or the equivalent amount in foreign currency; or
  • not less than S$5 million or the equivalent amount in foreign currency in managed assets.

1.3 What are the major legal finance products/solutions in your jurisdiction? (a) Single case fees and expenses; (b) Portfolio fees and expenses; (c) Monetisation of claims; (d) Monetisation of judgments and awards and (e) Other

Arguably the most common litigation funding product used in Singapore is the provision of capital by way of single-case funding, where financing is provided for a specific case in a single proceeding. Capital provided is repayable to the funder only out of any claim proceeds which are received by the claimant. As such the product is ‘non-recourse' and the financier has no recourse to the assets of the claimant in order to be repaid its investment.

In Singapore, and as further discussed in question 2.1, financing in the form of single-case funding can be used in:

• arbitrations;
• arbitration-related court proceedings;
• proceedings before the SICC; and
• cases in the insolvency context.

Funders active in Singapore also offer portfolio funding whereby numerous cases with which a single client is involved may benefit from the financial support of the funder, with such finance being cross-collateralised across all cases in the portfolio. The effect of this is that the finance may be repaid from any one case in the portfolio even if other cases in the portfolio are unsuccessful. This makes this a less risky product for the financier than single case funding and as such, the premium charged by the financier is lower than for single-case funding.

1.4 In what areas of law is litigation finance most prevalent in your jurisdiction (eg, competition, insolvency, patents, contracts)?

In line with Singapore's efforts to promote itself as an international arbitration hub and the amendments to its laws allowing the use of funding in arbitrations, litigation funding in Singapore is most prevalent in commercial and contractual disputes which are to be resolved by way of arbitration.

Because of efforts by the government to allow the use of litigation funding in the insolvency context, there are an increasing number of potential funding opportunities in insolvency matters. As it did for arbitration, the government is also embarking on a campaign to promote Singapore as an insolvency and restructuring hub, meaning that further increases in the use and promotion of litigation finance in insolvencies are anticipated.

1.5 Who are the major players in the industry (eg, pure players, multi-strategy firms, start-ups)?

In Singapore, the major players in the litigation finance industry are of course the litigation funders themselves, which are amply represented in Singapore by established and globally operating funders. As explained in question 1.2, only companies which meet the criteria of a ‘qualifying third‑party funder' are permitted to operate in Singapore.

These funders in turn receive many funding applications and enquiries from both Singaporean law firms and international law firms. In addition, because Singapore serves as a hub for the region, funders in Singapore also receive applications pertaining to disputes from all over Asia.

2 Legal framework

2.1 How mature is the market for legal finance in your jurisdiction? What types of commercial litigations and/or arbitrations may be funded by a third party?

Singapore has arguably become the leading disputes hub in Southeast Asia and the wider Asian region. In line with the government's efforts to establish an attractive disputes ecosystem, it has also taken the lead in promoting the use of litigation funding in the region (together with Hong Kong).

In 2017, the government abolished the common law torts of maintenance and champerty to allow the use of funding, initially only for international arbitration and related court proceedings. In 2021, the government expanded the permissible use of litigation funding to cover domestic arbitration (and related court proceedings) and proceedings before the Singapore International Commercial Court (and related appeals), plus mediations related to any of these categories.

Singapore's Insolvency, Resolution and Dissolution Act 2018 entered into force on 30 July 2020 and confirms that the use of funding in the insolvency context is also permissible.

2.2 Is there a dedicated legal finance regime in your jurisdiction? What other laws and regulations have relevance to legal finance in your jurisdiction?

The Civil Law (Third-Party) Funding Regulations 2017 govern the use of litigation funding in Singapore, where much of the finer detail in the applicable regime is within the scope of the Ministry of Law.

The Legal Profession (Professional Conduct) (Amendment) Rules 2017 are also relevant in the use of litigation funding in Singapore. These rules require legal practitioners to notify all parties of the existence of the funding arrangement and the identity of the funder.

In May 2017, the Singapore Institute of Arbitrators (SIArb) issued its Guidelines for Third Party Funders, which aim to promote best practices among funders that intend to provide funding to parties in Singapore-seated international arbitrations. These guidelines:

• set expectations of transparency and accountability between the funder and the funded party; and
• encourage funders to behave with high ethical standards towards their funded clients so as to uphold the integrity of international arbitration practice in Singapore.

The Singapore International Arbitration Centre (SIAC) has also issued related guidelines on third-party funding in Singapore directed at arbitrators; while the Law Society of Singapore has issued guidelines aimed at legal practitioners coming into contact with litigation funding.

2.3 Which public sector bodies and authorities are responsible for enforcing the applicable laws and regulations? What powers do they have?

There is no specific regulator with respect to litigation finance in Singapore. The Ministry of Law and the courts are responsible for policing the regulatory environment.

The regime is still in its infancy in Singapore and as such, so far as we are aware, there have been no publicly known instances requiring enforcement, such as funders or lawyers falling foul of the regulations; nor any funding arrangements being declared unenforceable by the courts.

2.4 Do the rules and codes of any self-regulatory organisations or professional associations have relevance to legal finance in your jurisdiction? What powers do such organisations and associations have?

As a disputes hub, Singapore has active organisations and institutions that aid in the regulation of, and have relevance to, litigation funding.

In line with Singapore permitting the use of litigation funding in 2017, the SIAC released a practice note for administered cases "on arbitrator conduct in cases involving external funding", which provides for the power of SIAC tribunals to order disclosure relating to third-party funding arrangements.

More recently, the SIAC explicitly included in its Investment Arbitration Rules the tribunal's power to order disclosure of the existence of third-party funding and/or the identity of the funder, and – going beyond the scope of disclosure otherwise required for litigation funding in Singapore – "where appropriate, details of the third-party funder's interest in the outcome of the proceedings, and/or whether or not the third-party funder has committed to undertake adverse costs liability".

Like the SIAC in 2017, the SIArb released the SIArb Guidelines for Third Party Funders (with accompanying notes), which aim to promote best practices among funders and address issues such as transparency, accountability and ethical standards.

To that end, the Law Society of Singapore also released in 2018 a Guidance Note on Third-Party Funding, setting out "best practices for lawyers who refer, advise or act for clients who obtain third-party funding".

2.5 What is the general attitude towards legal finance in your jurisdiction among the courts and other relevant bodies?

Courts, arbitral institutions, and other relevant bodies such as the SIAC, SIArb and the Law Society are generally supportive of litigation funding. This is arguably a result of the government taking the lead and proactively amending Singapore's laws to permit the use of third-party funding, in line with its efforts to promote the country as a dispute resolution hub.

2.6 Is legal finance considered consumer credit and is it captured by the relevant protective regulations in your jurisdiction?

Legal finance is not considered as a type of consumer credit in Singapore.

As discussed in question 2.2, there is a standalone set of regulations that addresses the use of litigation funding. To the extent that the users of litigation funding are ‘consumers', the protective regulations in the context of litigation funding focus on the integrity of the arbitral process. In turn, the disclosure obligations imposed on legal practitioners in respect of litigation funding and the power of a tribunal to order such type of disclosure aim to provide sufficient information to avoid any conflicts of interest that might otherwise infect the dispute resolution process.

3 Other risk-sharing models available to litigants and law firms

3.1 Are conditional (contingent or success) fee agreements permitted in your jurisdiction? In what circumstances are they typically used? What are the advantages and disadvantages for clients and for law firms?

In Singapore, the government has enacted the Legal Profession (Amendment) Act 2022 which allows lawyers and their clients to enter into agreements where all or part of the lawyers' fees and disbursements/costs together with an uplift fee will be payable only upon the occurrence of a specified set of circumstances (eg, that the client should prevail in the dispute). The amendment came into force in May 2022.

Parties may enter into conditional fee arrangements for:

• international and domestic arbitration proceedings;
• some proceedings in the Singapore International Commercial Court; and
• related court and mediation proceedings.

The rules permitting the use of conditional fee arrangements have only been recently enacted and it appears that uptake has been slow thus far.

There are a number of advantages to using conditional fee arrangements.

First, the regime adds more options for clients that are exploring alternative ways to finance a dispute. Indeed, combined with the availability of litigation funding in Singapore, clients now have even more choice and flexibility in selecting the most appropriate alternative fee or financing product arrangement for them. Second, using conditional fee arrangements together with litigation funding potentially makes financing available for cases where the funds that a client does have available or that it is practicable to deploy are insufficient to finance the entire proceeding. Conditional fee arrangements can thus be a stopgap measure to address either or both of the client's own cash-flow problems and the insufficiency of a litigation finance facility that it may have in place. Third, the use of conditional fee arrangements aligns even more the interests of the lawyers with those of the client, since the lawyers now have ‘skin in the game'.

The use of contingency agreements, whereby a lawyer is entitled to a percentage of the client's recovery of damages upon a successful outcome to a dispute, remains prohibited in Singapore. This prohibition restricts client choice in terms of alternative fee arrangements with their legal representatives and sets Singapore apart from other modern jurisdictions (eg, England and Wales), where contingency arrangements are permitted. Since conditional fee arrangements are not permitted in litigation in Singapore, a similar lack of choice and flexibility for clients in terms of alternative fee arrangements also exists with respect to Singapore High Court litigation.

Lawyers will be prepared to act under a conditional fee arrangement only where a client's case has good prospects of success. As such, the lawyers will need to consider the strengths and weaknesses of the case before they agree to act under a conditional fee arrangement. Although these costs will be incurred in any event, the front-loading of costs required may not be attractive to a client. By combining a conditional fee arrangement with litigation funding, it may be possible to overcome this obstacle.

A further advantage is that conditional fee arrangements can be used in circumstances where the client is the respondent to proceedings. The availability of litigation funding to parties in such a position is more challenging and has historically been limited.

3.2 What is the maximum contingency that is permitted (ie, up to 100% of hourly fees or something less)? Is there a cap on the amount of success fees lawyers can receive under such arrangements?

Contingency arrangements are prohibited in Singapore.

In the context of conditional fee arrangements:

• there is no applicable cap for the proportion of fees that may be held back and become payable only upon pre-defined ‘success' of the claim (this could be 100% of the hourly fees); and
• there is no cap on the uplift that lawyers may collect. That said, an uplift structure that is out of proportion to the work done may invite scrutiny and the agreement will remain subject to Singapore professional conduct rules that prohibit lawyers from overcharging their clients.

3.3 Are damages-based agreements permitted in your jurisdiction? In what circumstances are they typically used? What are the advantages and disadvantages for clients and for law firms?

Damages-based agreements, where the uplift of the lawyer is calculated as a percentage or proportion of the amount of damages awarded in the case, still are not permitted in Singapore.

3.4 What other funding and/or risk-sharing options are available to litigants in your jurisdiction? In what circumstances are they typically used? What are the advantages and disadvantages for clients and for law firms?

In addition to litigation funding and conditional fee arrangements (limited to the circumstances explained in questions 3.1 to 3.3), another risk-sharing option available to litigants in Singapore is ‘after-the-event' (ATE) insurance. This is an insurance product which may be taken out to cover a claimant for the risk of an adverse costs order which may be made against it if the claim is unsuccessful.

ATE insurance is permitted in Singapore. However, the market is relatively underdeveloped and largely serviced by providers overseas.

3.5 Are law firms in your jurisdiction allowed to have non-lawyer owners or non-lawyer shareholders?

No.

3.6 How do the available funding and risk-sharing options impact on the attitudes of corporate litigants about affirmative recovery programmes or the pursuit of high-value commercial claims more generally?

Our experience in Singapore – in line with that in more developed jurisdictions where litigation funding has been available for a longer period – is that there is a range of attitudes among corporate clients that are involved in disputes in terms of how they view third-party funding. Attitudes often change depending on the mindset of the decision makers employed in such businesses, as well as their increasing exposure to, and understanding of, litigation funding. It is clear, however, that where a corporate litigant is well educated on the advantages of litigation finance, it will be more inclined to seek to pursue claims which it might otherwise not have prioritised due to the likely expense involved. Our conversations with Singapore corporate litigants about affirmative recovery programmes or the pursuit of high-value commercial claims have always been positive.

It is too early to say what the impact of conditional fee arrangements has been or will be on the attitudes of corporate litigants in respect of affirmative recovery programmes or the pursuit of high-value commercial claims, since they were only first permitted for arbitration in May 2022, having previously been prohibited.

3.7 How do the range of funding and risk-sharing options available impact on the attitudes of law firms about their own business?

There are a variety of law firms in Singapore, ranging from big international firms through large and medium-sized Singapore firms to specialist boutiques and ‘high-street' firms. The impact of conditional fee arrangements, which were only been introduced for arbitration in May 2022 (and were previously completely prohibited), remains to be seen. However, we are aware that some law firms are actively considering their deployment (although there is no discernible trend among the types of firms adopting this approach).

Most larger firms (both local and international), as well as specialist litigation boutiques, are aware of the availability of litigation funding and actively seek to recommend the product to their clients where appropriate.

4 Collective actions

4.1 Is it possible to bring collective actions in your jurisdiction? If so, can they be funded by third parties? In those circumstances, how is the amount of the funder's return determined? Are there caps or other restrictions? Do such agreements require court approval?

‘Representative actions' in the courts in Singapore (the closest analogue to, but different from, US-style class actions) are not one of the types of cases where litigation funding is currently expressly permitted in Singapore.

There is no concept of ‘collective' or ‘class' action in the arbitral context.

4.2 How significant is the funding of collective actions in your jurisdiction relative to the use of legal finance by individual commercial litigants?

As mentioned in question 4.1, representative actions do not fall within the types of disputes where litigation funding is expressly permitted in Singapore; and in any case, representative actions are extremely rare in Singapore.

5 Securing financing

5.1 What factors will a funder generally consider when evaluating whether to fund a case?

There are a range of factors that a funder will consider when evaluating whether to fund a case. The key factors generally include the following:

• Recoverability: As litigation funding is non-recourse, funders require that there be a clear line to recovery for the claim from the defendant or respondent. Ordinarily, a funder will require evidence that:
• • the respondent(s) has the capacity to meet a judgment or award of the size which will be sought; and
  • the jurisdictions where potential enforcement might occur have transparent and effective enforcement regimes.
• Proportionality: This refers to proportionality between the size of the realistic damages in the case and the amount of the funding commitment sought. Again, as funding is non-recourse, the size of the claim must be large enough for the funder to be repaid its investment and a funding commission. Funding is a commercial enterprise and commerciality is key to the decisions that litigation funders make.
• Clear legal principles: Although some funders may be willing to consider test cases, ordinarily, the claim for which funding is sought needs to be based on clear legal principles and not on any novel points of law.
• Written evidence: The claim should be supported by a factual and legal analysis based on documentary evidence rather than based solely on oral testimony of witnesses and experts. The rationale for this is that oral testimony is inherently more uncertain and consequently carries more risk.
• Experienced legal team: Although this may go without saying, a highly competent and experienced legal team is very important – in particular, a legal team with the relevant expertise to pursue the claim.

5.2 What should a litigant or litigant's counsel look for in a legal finance partner?

Litigation funding is a competitive market. When selecting a litigation funder, a prospective client should conduct appropriate due diligence to ensure it partners with the best legal finance partner for its claim. Some funders specialise in particular types of claims – for example, arbitration, insolvency or class actions. More experienced and larger funders may have expertise across a broad range of areas.

It is also important to ensure that the funder has a strong balance sheet and an excellent track record, backed up by a strong reputation in the market and the depth of experience that will support the legal team and client through the life of the claim.

Although not all of this information will be readily available in the public domain (aside from in respect of the few global litigation funders which are publicly listed), the right funder will be comfortable talking to you about these things; and its broader reputation in the marketplace will usually provide appropriate insights also.

5.3 What is the typical process for concluding the legal finance agreement?

Litigation funding is a commercial arrangement and is typically subject to negotiation between the funder and client to ensure that the funding arrangement suits the needs of the parties to the agreement.

At an early stage, before an application for litigation finance is made, confidentiality arrangements (by way of a non-disclosure agreement) will be entered into between the litigant or the litigant's counsel and the litigation funder.

Ordinarily, once an application for litigation funding is made, the application will be subject to review by the funder. This may include multiple levels of review and approval within the litigation finance business.

If the application is successful, commercial terms will be offered and a commercial negotiation may occur prior to a litigation financing arrangement being entered into.

Sometimes a conditional finance agreement will be entered into to facilitate a due diligence process on the claim. Subject to the successful completion of due diligence (financed by the funder) and further internal review and approval within the litigation funder, the funding commitment will become unconditional.

5.4 What terms does the legal finance agreement typically include?

The litigation funding agreement will contain boilerplate clauses that commercial parties would commonly expect to see in any commercial agreement and which govern the relationship between the funder and the funded party.

In addition, there will be clauses which are bespoke to reflect the contractual arrangements underpinning the litigation finance relationship. Some of these clauses might include:

• the rights and obligations of each party in relation to the quantum of legal fees and disbursements which will be funded for pursuit of the claim;
• the circumstances in which the arrangement may be terminated;
• the selection of legal counsel for the funded claim; and
• the amount to which the funder will be entitled upon the successful conclusion of a claim. This ‘funder's fee' is often staged, so that if the claim can be resolved at an early stage, the fee due to the funder is lower.

5.5 Do any caps apply to the funder's fees?

Although not always present, a cap on the fees that a litigation funder will pay for legal and other fees (eg, counsel, expert witnesses and other disbursements) may form part of the bargain struck in documenting a litigation funding agreement.

This reflects the commercial reality that a litigation financing relationship is a commercial arrangement and litigation funding is a commercial enterprise, where the risks being taken on – and the fees being paid – by the funder must be proportionate to the claim being prosecuted.

There are no prescribed caps in Singapore in terms of the maximum return which may be payable to a funder in the event of a successful outcome in a funded dispute. However, commercial conditions dictate that clients will not readily part with an unreasonable portion of their damages in a case; and the reality is that professional third-party funders will generally finance projects only where the lion's share of any recovery will flow back to the claimant after the funder's share has been deducted.

5.6 Can the funder terminate the legal finance agreement before the litigation has ended? If so, under what circumstances and what are the implications?

Whether a funder can terminate a litigation finance agreement before the dispute has ended will depend on each litigation funder's agreement and may even depend on the particular claim being prosecuted.

In many cases, a conditional funding agreement will initially be entered into in order to facilitate further due diligence on a potential claim and determine whether funding for the claim should become unconditional.

If due diligence is not successfully completed on the claim, the funding agreement will come to an end and the claim will not proceed to unconditional funding. Any sums incurred by the funder at this stage will usually be borne by it, although this will be subject to the specific litigation funding agreement which may vary across claims and or litigation funders.

If due diligence is successfully completed on the claim, the funding will ordinarily become unconditional, which will see the claim funded to its conclusion (which may not include any appeals on the outcome of the funded claim).

The circumstances in which either a conditional or unconditional funding agreement may be terminated will be governed by the terms of the funding agreement, but both parties usually have rights to terminate subject to certain consequences. One example that is typically included in funding agreements is the funder's right to terminate if the prospects of the claim being successful are negatively impacted – for example, if there is a deterioration in respect of the merits or recoverability of any award. The funder will generally be repaid its investment only if the funded claim concludes successfully, so it will be motivated to continue to fund the claim to the end, assuming that the prospects of a successful outcome have not deteriorated.

5.7 Under what circumstances (if any) must funding be approved by the court in advance?

Ordinarily, a litigation financing agreement is confidential as between the parties to the agreement. A litigation funding agreement need not be approved in advance by an arbitral tribunal in Singapore. In some circumstances, it may be considered prudent to obtain court approval for litigation finance agreements in the insolvency context, although this is not strictly necessary under Singapore's Insolvency, Resolution and Dissolution Act or otherwise.

5.8 Have there been notable disputes arising from legal finance agreements, and if so, what can a litigant or counsel do to avoid such disputes?

We are not aware of any such disputes in Singapore.

5.9 Is the funder bound to fund any counterclaims arising from the funded litigation?

Whether a funder is bound to fund any counterclaims arising from the funded dispute will depend on the particular terms of the funding agreement, including the definition of the claim under the agreement. There are certainly instances where counterclaims arising from the funded dispute will fall within the bounds of the funded claim; and equally, there will be instances where a counterclaim may not fall within the funded claim.

If a counterclaim is anticipated in response to a claim for which a litigant is seeking funding, it is important for the client or client's counsel to raise this early in negotiations with a funder, so that it can be accounted for, and if deemed appropriate, incorporated in any litigation finance agreement.

6 Purchasing a litigation claim, judgment or award

6.1 Can the funder purchase legal claims?

In Singapore, a funder is permitted to purchase arbitral awards.

Assignments are the normal method for funders to participate in pursuing other claims with the assignment agreement operating to assign the proceeds of the claim rather than the claim itself, although liquidators have statutory rights to assign whole causes of action to a litigation funder.

6.2 How does a funder purchase a claim out of an insolvency?

Usually, an assignment structure is adopted in order for a funder to acquire a claim arising from insolvency. The primary concern in Singapore – other than where liquidators exercise statutory rights to assign whole causes of action – is to ensure that the assignees are not in a position to influence the outcome of the litigation. Case law has also stated that the principles of access to justice are to be considered, as well ensuring that the administration of justice and the interests of vulnerable litigants are protected.

Re Vanguard Energy Pte Ltd made clear that the proceeds received by a company from pending or potential claims could be sold by a liquidator to the assignees by way of assignment in consideration for their funding. The judge held that the doctrine of maintenance and champerty did not apply to the liquidator's statutory power of sale; nor did the assignment agreement itself offend the doctrine.

It was further noted that:

• the claimant should retain ultimate control of the proceedings (although it was noted that the funder may influence the choice of lawyers, settlement or abandonment of a claim);
• the prospects of succeeding must not be illusory; and
• the funder's involvement in the case should provide a genuine benefit to the claimant and should not amount to wanton intermeddling or trafficking in litigation.

In Solvadis Commodity Chemical Gmbh v Affert Resources Pte Ltd 13, the court reviewed and approved the validity of a liquidator's exercise of its statutory right to assign whole causes of action to a litigation funder. The court held that neither the interests of vulnerable litigants nor the purity of justice was affected. This was because:

• the liquidator had acted in good faith;
• the insolvent estate stood to obtain 40% to 50% of the recoveries; and
• the insolvent estate would not incur the costs of recovery which the funder would cover.

While the liquidator relinquished control over the recovery actions to the funder, the funder:

• was still required to provide regular updates to the liquidator;
• could not assign the claims again; and
• had to transfer the assigned causes of actions/receivables back to the estate for nominal value if it did not commence recovery actions within an agreed timeframe.

In Re Fan Kow Hin, the court upheld an assignment agreement where the proceeds of the litigation were assigned by the bankrupt's trustees in bankruptcy to a third-party funder.

6.3 Are final judgments and/or mere causes of action assignable in your jurisdiction and is there a regulatory framework governing this?

There is no market or regulatory framework for this type of activity (except in the insolvency context with respect to causes of action).

7 Role of the funder

7.1 Can the funder influence the litigant's choice of counsel?

A litigation funder can ordinarily influence the litigant's choice of counsel where the client approach is made directly, prior to the selection of the legal team.

Where a claimant already has counsel in place, the lawyer or law firm selected will be a factor which a funder will consider. Our approach to applications in Singapore is not to require a client to change its counsel; and the counsel instructed will be one of the various factors influencing the decision as to whether to provide financial support. This because one of the key factors a funder will consider in deciding whether to fund a claim is the competency and expertise of the legal team. To prosecute a claim to a successful outcome, excellent counsel is key.

Further, as in England and Wales, funders have a relatively light touch in funded cases in Singapore. The claimant retains ownership and control of the claim and the responsibility for instructing counsel. Counsel are responsible for driving the claim to a successful outcome. The funder is not permitted to interfere or substitute its own views or decisions for those of the client and its legal team. Thus, having confidence in the lawyers prosecuting the case is extremely important for funded matters in Singapore.

7.2 Can the funder attend and/or participate in the court proceedings?

A representative of a funder can attend hearings in arbitral proceedings with the permission of the tribunal and the opposing party.

Court proceedings in Singapore are open to the public in the ordinary course and are thus available for a funder that may want to attend those proceedings.

7.3 Can the funder influence the acceptance or terms of a proposed settlement agreement?

Litigation funders are highly experienced in disputes and possess a breadth of experience in prosecuting complex claims. This means they can add significant strategic value to client-counsel discussions in respect of funded projects, including in relation to the settlement of claims.

Additionally, because the settlement of a claim can determine the amount of recovery that a litigation funder will receive, litigation financing agreements will usually include provisions governing the extent of involvement to which a litigation funder is entitled in settlement negotiations. This includes the extent of a funder's involvement in decision making associated with the acceptance or rejection of terms of a proposed settlement.

7.4 In what other ways can the funder participate in, and exert influence on, the litigation?

Litigation funders are highly experienced litigators with a breadth of experience in prosecuting complex claims, usually across fields with a wide range of expertise. Consequently, litigation funders can contribute significantly to decisions on strategy and more broadly in the prosecution of a claim.

The day-to-day involvement of a litigation funder will vary depending on the type of funded claim and the preferences of the client. In some claims the funder's role will be more limited, but will ordinarily still include involvement at strategic junctures in a funded claim; whereas in other projects, client requirements may lead to a more hands-on approach from its litigation finance partner.

8 Ethical considerations

8.1 In what circumstances (if any) is it necessary to disclose a legal finance agreement to the court or to the opposition? What specific information must be disclosed?

As discussed in question 2.2, the Legal Profession (Professional Conduct) (Amendment) Rules 2017 require legal practitioners (including regulated foreign lawyers) to notify all parties of the existence of the funding arrangement and the identity of the funder.

Specifically, Rule 49A requires legal practitioners "when conducting any dispute resolution proceedings before a court or tribunal" to disclose to the court or tribunal and every other party in those proceedings the following:

• the existence of any third‑party funding contract related to the costs of those proceedings; and
• the identity and address of any third‑party funder involved in funding the costs of those proceedings.

As to the timing of disclosure, the rules require that the disclosure be made:

• at the commencement of the dispute resolution proceedings if the funding arrangement is already in place; and
• if not, then "as soon as practicable after the third‑party funding contract is entered into where the third‑party funding contract is entered into on or after the date of commencement of the dispute resolution proceedings".

As also discussed in question 2.2, the Singapore International Arbitration Centre Investment Arbitration Rules 2017 empower the tribunal to order disclosure relating to the funding agreement.

Specifically, Rule 24 of those rules empowers the tribunal to "order the disclosure of the existence of a Party's third-party funding arrangement and/or the identity of the third-party funder and, where appropriate, details of the third-party funder's interest in the outcome of the proceedings, and/or whether or not the third-party funder has committed to undertake adverse costs liability".

There is of course the question of whether the underlying funding agreement should be disclosed. However, the global trend is that this type of disclosure is not required and is considered overbroad.

8.2 Are communications between the parties to the legal finance agreement subject to privilege in your jurisdiction?

Attorney-client or legal advice privilege protects communications between an attorney and his or her client when giving or receiving legal advice. The privilege also protects documents which contain those communications or information.

As the funder has a ‘common interest' in the outcome of the claim, communications passing between the parties to a litigation funding agreement related to the claim are likely to attract ‘common interest privilege' to the extent that those communications comprise information containing confidential legal advice, such as:

• case strategy and timelines;
• insights on potential settlement; and
• the projected scope and type of work entailed by the case.

In any event, litigation funders will take all steps possible to protect client privilege during a project and litigation funding agreements usually contain comprehensive confidentiality clauses; so on that basis, these agreements could also be arguably beyond the reach of disclosure. Moreover, even before any information is exchanged, funders will usually require the execution of a non-disclosure agreement, which provides additional confidentiality protections.

8.3 Does the rule of attorney work product apply to documents generated for the purposes of securing legal finance in your jurisdiction?

Under common law in Singapore, litigation privilege protects not just communications between the attorney and the client, but also communications from third parties, and indeed applies to every communication made for the purpose of litigation.

For this privilege to apply:

• there must have been a reasonable prospect of litigation; and
• the communications must be for the dominant purpose of litigation.

Documents generated solely for the purpose of securing legal finance will be unlikely to be covered by litigation privilege. However, there are certain categories of documents provided to a funder that will also be for the dominant purpose of litigation are thus likely to be protected by litigation privilege and/or common interest privilege.

For example, strategy memoranda from counsel discussing the merits of the case and the probability of success, while provided to obtain litigation funding, are also for the dominant purpose of the litigation; and in any event, they will also be covered by legal advice privilege and/or common interest privilege.

8.4 In what circumstances (if any) do rules about fee-splitting impact on the use and practice of legal finance?

As contingency fees (where a lawyer is paid a percentage of the outcome of the claim) are prohibited, fee splitting does not arise and is not regulated in Singapore.

8.5 Do the doctrines of champerty and maintenance apply in your jurisdiction?

As discussed in question 2.1, in 2017 the Singaporean government abolished the common law torts of maintenance and champerty by enacting the Civil Law (Amendment) Act 2017 to pave the way for the use of litigation funding.

8.6 Are there any types of proceedings (family, private prosecutions) for which funding is not permitted?

There are many types of proceedings for which funding is not permitted. A summary of the types of proceedings where funding is permitted is more appropriate.

Those proceedings where funding is permitted include the following:

• arbitration proceedings;
• court proceedings arising from or out of or in any way connected with any arbitration proceedings;
• applications for a stay of proceedings mentioned in Section 6 of the Arbitration Act or Section 6 of the International Arbitration Act and any other application for the enforcement of an arbitration agreement;
• proceedings for or in connection with the enforcement of an award under the Arbitration Act or an award or a foreign award under the International Arbitration Act;
• mediation proceedings arising out of or in any way connected with:
• • the proceedings mentioned in the first, second and fourth bullet above; or
  • any application mentioned in the third bullet point above;
• proceedings commenced in the Singapore International Commercial Court (SICC), for as long as those proceedings remain in the SICC;
• appeal proceedings arising from any decision made in proceedings commenced in the SICC, while those proceedings remain in the court; and
• mediation proceedings arising out of the proceedings mentioned in the sixth and seventh bullets above.

In the insolvency context, Singapore's Insolvency, Resolution and Dissolution Act allows judicial managers to enter into funding agreements for cases involving:

• the avoidance of undervalued and unfair preference transactions;
• extortionate credit transactions;
• fraudulent or wrongful trading; and
• the assessment of damages against delinquent officers.

Liquidators and judicial managers are also entitled to use litigation funding to pursue other claims of the company to which they are appointed (eg, commercial claims).

9 Proceedings

9.1 What is the typical timeframe for first-instance proceedings in your jurisdiction?

Typically, first-instance proceedings will take between 12 to 24 months to complete, although this may vary depending on the exact factual matrix and the complexity of the legal issues in question.

9.2 What are the opportunities in the litigation process for a case to be struck out prior to a trial?

At any time prior to trial, a defendant may apply to strike out the entire action. However, where an application to strike out is brought at a late stage, a proper explanation for any delay would be critical to the success of the application. Pursuant to Order 9 Rule 16(1) of the Rules of Court 2021, the Court may order a striking out of the entire action if:

• The action discloses no reasonable cause of action or defence;
• The action is an abuse of process of the Court; or
• It is in the interests of justice to do so.

9.3 How much party discovery of evidence is permitted in your jurisdiction? Are there procedures for seeking or compelling evidence from non-parties?

There are four main methods of seeking discovery of evidence in Singapore.

First, prior to the commencement of an action through an Originating Summons (OS) or Originating Application (OA), a party may seek pre-action discovery of documents and information for three purposes:

• First, to identify possible parties to any proceedings;
• Second, to enable the party to trace the party's property; and
• Third, for any other lawful purpose in the interests of justice.

Second, during the Case Conference the Court may order that all parties must, within 14 days of an order for general disclosure (see Order 11 Rule 2 of the Rules of Court 2021), exchange a list and copy of all documents in their possession which fall into the following categories:

• All documents that the party will be relying on; and
• All known adverse documents.

As a general rule, confidentiality in itself is not a basis for withholding or objecting to the production of documents (see Order 11 Rule 9 of the Rules of Court 2021). Nevertheless, documents subject to privilege or whose production would be contrary to the public interest are generally shielded from production unless the party entitled to privilege consents, or the Court approves (see Order 11 Rule 5(3), 8(1) of the Rules of Court 2021).

A party in receipt of a discovery order is under a continuing duty to produce documents within 14 days after that document comes into the party's possession or control at any time during the course of proceedings (see Order 11 Rule 6 of the Rules of Court 2021).

Third, parties may seek specific discovery of documents in the Single Application Pending Trial (SAPT) (see Order 9 Rule 9(4)(k) of the Rules of Court 2021), which is a pre-trial application to consider all issues that are necessary for a case to proceed. Under Order 11 Rule 3 of the Rules of Court 2021, the Court may order any party to produce a specific document or class of documents in that party's possession or control, if the requesting party:

• Properly identifies the requested documents, and
• Shows that the requested documents are material to the issues in the case;
• Nevertheless, the Court will not order the production of documents that merely leads to a train of inquiry to other documents (as per Order 11 Rule 5(1) of the Rules of Court 2021).

Further, parties may make an application in the SAPT to compel a non-party to produce documents (see Order 11 Rule 11 of the Rules of Court 2021).

Finally, the Court retains the general power to order the production of documents from any party or non-party at any time (see Order 11 Rule 4 of the Rules of Court 2021).

If a recipient served with the production order fails to comply, that party or non-party may be liable for contempt of court under Section 4(1), (8) of the Administration of Justice (Protection) Act 2016. Additionally, Order 11 Rule 7 of the Rules of Court 2021 where a party to proceedings fails to comply with a production order, the Court may:

• Order that the action be dismissed or that the defence be struck out and judgment be entered accordingly;
• Draw an adverse inference or make any such order as the Court deems fit;
• Punish that party for contempt of court if the order has been served on that party's solicitor, but it is open to that party to show that that party was not notified or did not know about the order; or
• Order that that party may not rely on any document that is within the scope of the order unless the Court approves.

9.4 Are interlocutory appeals (appeals of non-final judgments) permitted during proceedings in the first instance?

Generally, parties are entitled to bring interlocutory appeals. However, under Section 29 of the Supreme Court Adjudicature Act (SCJA), an appeal in respect of the following cases cannot be brought:

• Where written law expressly provides that no appeal may be brought against the decision (as per Section 29(a) SCJA); or
• Where the case is one specified in the Fourth Schedule of the SCJA. Specifically, in the context of interlocutory appeals, such cases include:
• • An order giving or refusing further and better particulars;
  • An order refusing security for costs;
  • An order giving or refusing interrogatories; and
  • An order giving permission to amend an appeal, subject to conditions

Additionally, as per Section 29A of the SCJA, permission is required before an appeal may be brought in the following cases:

• Where written law expressly provides that an appeal can only be brought with permission; and
• Where the case is one specified in the Fifth Schedule of the SCJA. Specifically, in the context of interlocutory appeals, such cases include:
• • An order giving unconditional permission to defend any proceedings, including where that order is on condition for security for the sum claimed
  • An order unconditionally setting aside a default judgment, including where that order is on condition for security for the sum claimed
  • An order refusing to strike out (i) action commenced by OC or any other originating process, or (ii) a pleading/ part of pleading
  • Where the only issue relates to costs or fees for hearing dates
  • An order refusing permission to amend a pleading, subject to conditions
  • An order for security for costs
  • An order refusing discovery or inspection of documents
  • An order refusing a stay of proceedings
  • Where the parties have agreed in writing that the decision is final
  • Where the Judge makes an order for the hearing of any interlocutory application other than an application for any of the following matters:
  • • Summary judgment
    • To set aside default judgment
    • Striking out
    • Dismissal of action commenced by OC or other originating process, pleading or part of pleading
    • Further and better particulars
    • Permission to amend pleading
    • Security for costs
    • Discovery and inspection
    • Interrogatories to be varied or withdrawn
    • Stay of proceedings

9.5 Are first-instance decisions commonly appealed in your jurisdiction? What is the typical timeframe for appeal proceedings?

It is not uncommon for first-instance decisions to be appealed. The typical timeframe for appeal proceedings ranges from 6 to 12 months. However, the exact timeline would depend on the exact factual matrix and the complexity of the legal issues in question

9.6 How are decisions typically enforced in your jurisdiction? What is the typical timeframe for enforcement proceedings?

Under Rules of Court 2021, the enforcement procedure for a decision is now consolidated under Order 22 Rule 2. An application for an enforcement order may be made under Order 22 Rule 2(2), and may authorise the Sheriff to, seize and sell property, seize, deliver items or attach a debt due to the respondent or do anything specified in the Court order (as per Order 22 Rule 2(2)).

In the event that the applicant is unclear as to the various property, shares or other assets owned by the respondent that could be subject to an enforcement order, Order 21 Rule 11(1) of the Rules of Court allows the applicant to request for an examination of the respondent in order to gather information about the respondent's assets.

The enforcement order is valid for 12 months; as such, parties should expect that they could recover via the enforcement proceedings within this timeframe.

Separately, a party may choose to enforce a monetary judgment by issuing a statutory demand (where the sum exceeds $15,000) seeking payment of the judgment sum within 3 weeks of service of the statutory demand. If the respondent has neglected to pay the sum, or secure or compound the debt to the reasonable satisfaction of the applicant within 3 weeks, the respondent is presumed to be insolvent and the applicant may seek to commence winding-up (if respondent is a company) or bankruptcy (if respondent is an individual) proceedings. Winding-up and bankruptcy proceedings are typically heard by the Court within a month of filing.

9.7 Is there an automatic stay on enforcement pending appeal or under what circumstances is one granted? Are appeals from first instance granted as of right?

There is no automatic stay of enforcement upon filing of an appeal as per Order 18 Rule 6, Order 19 Rule 6 of the Rules of Court. In order for a stay of enforcement to be granted, a party has to apply under Order 22 Rule 13 of the Rules of Court on the ground that the current case is a special case such that it is inappropriate to enforce the Court order immediately. Such circumstances may include situations where:

• The appeal would be rendered nugatory without a stay of enforcement
• There is a likelihood of the judgment creditor becoming insolvent before the disposal of the appeal
• The judgment is in favour of a person who is resident out of, or about who is about to leave, the jurisdiction.

The authors are grateful to Daniel Tan (Partner) at Shook Lin & Bok LLP for kindly providing the answers to this section 9.

10 Costs and insurance

10.1 Will the court order the losing party to pay the costs of the winning party? How else might costs be allocated between the parties and under what conditions?

In Singapore, costs of this type generally ‘follow the event', which means that the losing party must usually pay the legal costs incurred by the successful party. In some circumstances – for example, relating to conduct during the proceedings – the total amount of costs payable may be reduced by the court.

Party-and-party costs in Singapore cover not just the fees charged by the law firm for its services, but also other expenses incurred in the prosecution of a claim, such as filing fees, court fees and photocopying charges.

The court has the power to fix the costs or may order that they should be subjected to a taxation process.

In arbitration, the tribunal has the power to determine liability for the costs of the proceedings, including the fees of lawyers, expert witnesses and any other costs which a successful party has incurred in the reference.

10.2 Are some or all of the costs of funding recoverable by the winning party?

When the regulatory environment was extended in May 2022 to permit funding of cases in the Singapore International Commercial Court (SICC), the court rules were amended to make clear that third-party funding costs are not recoverable as part of the costs of SICC proceedings. However, it is possible for the costs of funding to be recovered by the winning party to an arbitration and there are instances where an arbitral tribunal has made an order that the losing party pay the winning party's funding costs.

Litigation funding of court litigation in the Singapore High Court is not expressly permitted and this issue has not been addressed by the court.

10.3 Can the court order costs against the litigation funder?

In arbitration, a tribunal will rarely order costs against the litigation funder.

This scenario is unlikely because of a fundamental issue – a tribunal does not have jurisdiction over a litigation funder. Indeed, the funder is a third-party funder; it is not a party to the case.

In the Singapore court, the position is different. For instance, the court may order costs against a third party if it is just in the circumstances, such as where the third party effectively controls and funds the proceedings and causes the costs in question to be incurred. In court proceedings, funders will often offer the claimant an indemnity for adverse costs, meaning that the litigation financier will meet the costs of a costs order against the funded party if the claim is unsuccessful.

Further, the court may order that an impecunious claimant furnish security for costs. A third-party funder which stands behind such a claimant may have contractually agreed to provide funding to satisfy the order for security for costs. Even if no such agreement exists under the funding arrangement, the funder may nevertheless finance the security for costs since, if ordered security is not provided, the claim will be stayed. While such an order for security for costs is not made directly against the funder, the practical impact is the same: if the funder wants the case to proceed and not be stayed, it will have to furnish the security.

10.4 Can the court order security for costs? If so, in what circumstances will it generally do so and how is this calculated and provided?

Security for costs aims to assure that respondents or defendants that prevail in litigation can recover all or part of their costs from the claimants or plaintiffs. A court in Singapore has the power to order security for costs.

Under Order 9, Rule 12 of the Singapore Rules of Court:

The defendant may apply for security for the defendant's costs of the action if the claimant —

1. is ordinarily resident out of the jurisdiction;
2. is a nominal claimant who is suing for some other person's benefit (but not suing in a representative capacity) or is being funded by a non‑party, and there is reason to believe that the claimant will be unable to pay the defendant's costs if ordered to do so; or
3. has not stated or has incorrectly stated the claimant's address in the originating claim or originating application, or has changed the claimant's address during the course of the proceedings, so as to evade the consequences of the litigation.

A court has discretion whether to order security for costs, but will consider all circumstances and assess whether there is a substantial risk that the defendant will suffer an injustice of defending a case with no real prospect of recovering the costs if the defendant prevails.

The sum of security to be paid is normally negotiated between the parties based on the estimate of applicant's lawyers as to their likely costs of defending the proceedings. If the sum cannot be mutually agreed, the court will be asked to determine the appropriate sum.

When the regulatory environment was extended in May 2022 to permit funding of cases in the SICC, the court rules were amended to provide that the SICC may order a third-party funder to provide security for the defendant's costs and be responsible for costs orders.

In arbitration, the imposition of security for costs is rarer.

10.5 Is security for costs commonly ordered in funded litigation?

Security for costs is generally difficult to obtain, especially in international arbitration. The standards for obtaining an order for security for costs remain unchanged even when one party is being funded by a third party.

Thus, whether there is funding or not, security for costs remains the exception rather than the rule.

10.6 Is after-the-event (ATE) insurance allowed in your jurisdiction? If so, how mature is the market?

ATE insurance is permitted in Singapore. However, the market is relatively underdeveloped and largely serviced by providers overseas.

10.7 In what circumstances is ATE insurance typically used? What are the advantages and disadvantages?

ATE insurance may be used in cases where a party wants to mitigate the risk that it will not prevail in its case and then be ordered to cover the winning party's legal costs. Obviously, one big advantage of ATE insurance is that if an order for adverse costs is issued against a party, the insurance can then provide cover for those costs.

Moreover, having ATE insurance and disclosing this to the opposing party also sends the message that the ATE insurer has reviewed the case and has concluded that it is meritorious, since ATE providers assess risk in much the same way as litigation funders.

The general disadvantages of ATE insurance include:

• the additional costs entailed by obtaining cover; and
• the additional oversight and regular reporting mechanisms by the ATE insurer that may need to be satisfied.

10.8 What other types of insurance are available for litigants in your jurisdiction? In what circumstances are they typically used? What are the advantages and disadvantages?

There are limited other forms of insurance that are widely used by litigants. Defendants and respondents may have access to insurance which covers the cost of defending claims, but there is little available for claimants. Even ATE insurance is rarely used and the market for ATE cover in Singapore is underdeveloped.

11 Trends and predictions

11.1 How would you describe the current legal finance landscape and prevailing trends in your jurisdiction?

The current legal finance landscape in Singapore is full of opportunity and stands ready to help cement Singapore's status as a disputes hub not just in the region, but also globally.

First, in line with the continuing rise of Singapore as a preferred seat for international arbitrations and as a clear alternative to Hong Kong as a place for doing business and resolving disputes, more and more parties to disputes will consider accessing litigation funding – especially as the Singaporean government has put in place a regulatory regime that promotes its use.

Second, current global events may also encourage more parties to take a more serious look at litigation funding. The conflict in Ukraine, the increase in energy prices and the twin threats of inflation and recession have all intensified the pressure on companies to tighten budgets and be even more judicious in their deployment of capital. The availability of litigation funding for disputes would thus appear to be a more attractive option.

Third, as more companies and players learn about litigation funding, they will start to give greater consideration to its other less obvious benefits (as opposed to solely being a necessity for impecunious parties to pursue their rights), such as:

• mitigating risk;
• addressing the lack of liquidity; and
• freeing up capital for expenditures that are more relevant to a company's operations.

11.2 Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

Singapore's reforms permitting and expanding the use of litigation finance in certain prescribed disputes and allowing lawyers to enter into conditional fee arrangements with their clients are very recent, with the latter introduced only in May 2022. We do not anticipate further developments in the next 12 months.

12 Tips and traps

12.1 What would be your recommendations for the smooth progress of funded litigation in your jurisdiction and what potential pitfalls would you highlight?

The successful prosecution of a funded matter requires close coordination between the client, the lawyers and the third-party funder. To ensure that the team works together seamlessly, the following recommendations should be considered:

• Select a funder that is highly experienced and financially transparent, and that has a sound reputation in Singapore for the funding of disputes.
• Put in place a monthly or regular reporting structure where all relevant information regarding the progress of the case is reported to the entire team.
• Have an open line of communication among all stakeholders – the funded party, the lawyers and the third-party funder.
• Elevate to or discuss issues with all relevant stakeholders as soon as they arise, whether the issue affects the underlying litigation or the performance of the funding agreement.

The only real pitfall concerns client expectations. Globally, only a small proportion of claims considered by litigation funders successfully achieve financing. As funders operate on a non-recourse basis, and since investment in disputes is high risk, funders are generally rigorous with the application of their funding criteria. If a claim does not receive financing, it does not mean that the claim is likely to fail; only that it did not fall within the funder's funding criteria.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.