First published on 26 July 2021.
The Ministry of Law announced on 21 June 2021 that it would extend third-party funding to newly prescribed categories of legal proceedings, including proceedings in the Singapore International Commercial Court (“SICC”) and related mediation proceedings (“New Prescribed Categories”), among others.
Third-party funding of legal proceedings was first introduced in March 2017 to allow an unconnected entity to the dispute to fund legal proceedings in return for financial gain, such as a share of damages awarded or settlement sum. It was initially only permitted for international arbitration proceedings and related court and mediation proceedings.
The addition of SICC and related proceedings to which third-party funding now applies further strengthens Singapore as an international commercial dispute resolution hub.
Extension of Third-Party Funding to SICC and related proceedings
The New Prescribed Categories were introduced through the Civil Law (Third-Party Funding) (Amendment) Regulations 2021 and include, among others, the following:
– Proceedings commenced in the SICC for so long as those proceedings remain in the SICC;
– Appeals proceedings arising from any decision made in proceedings commenced in the SICC;
– Mediations arising from or connected to proceedings commenced in the SICC or the appeals arising therefrom.
Please note however that claims transferred from the High Court of Singapore to the SICC are not eligible for third-party funding.
Why the SICC? SICC and its advantages
General
The SICC was established in 2015 as a division of the High Court of Singapore to meet the need for a neutral and well-regarded dispute resolution hub fuelled by the growing cross border investment and trade into Asia and between Asian economies.
In recent years, the SICC has seen rapid growth, issuing 30 judgments in 2020 compared to only 16 in 2019.
The jurisdiction of the SICC includes international and commercial claims.
Commencing a claim in the SICC
A matter may come before the SICC either through a written jurisdiction agreement or where the claim is transferred from the High Court of Singapore.
However, only claims commenced in the SICC (i.e. not transferred from the High Court) are eligible for third-party funding.
As a form of dispute resolution, the SICC exists as a hybrid of traditional court proceedings and arbitration.
SICC vs local courts
Compared to litigation in the local courts, the SICC provides greater regard to parties’ autonomy and wishes, for example:
– Parties may agree to exclude the application of Singapore’s law of evidence (e.g. admission of hearsay evidence);
– Parties may agree to deal with points of foreign law by way of submissions rather than by way of proving the content of the foreign law;
– Parties may additionally apply for a confidentiality order to keep the proceedings confidential; and
– The SICC comprises of both local and international judges who are best suited to hear the matter.
SICC vs arbitration
Unlike arbitration, the SICC:
– has the power to join third parties to an action;
– has the jurisdiction to hear special torts arising from contract, international intellectual property or trust disputes which are not arbitrable;
– is a court of competent jurisdiction and therefore the enforceability of its judgments depend on the principles governing the recognition of foreign judgments in the relevant enforcement jurisdiction, instead of the New York Convention; and
– provides parties with a right to appeal.
Rules against Conflict of Interests in Third-Party Funding Cases
The rules under Singapore’s Legal Profession (Professional Conduct) Rules 2015 will continue to apply to third-party funding for SICC and related proceedings.
These include, among others, the following:
– The solicitors must disclose to the court and all other parties the existence of a third-party funding contract and the identity and address of the third-party funder;
– The solicitor must not have an interest in the third-party funder; and
– The solicitor must not receive any commission, fee, or share of proceeds from the third-party funder.
Concluding words
Extending third-party funding to SICC proceedings is likely to increase the SICC’s attractiveness as a forum for international commercial disputes.
It would also be of particular interest to third-party funders and parties seeking to manage the financial risks associated with other modes of dispute resolution.
If you have any questions regarding SICC proceedings or third-party funding related issues, please do not hesitate to contact us.
Disclaimer
The information in this article is correct as of the date of this article. The article does not constitute legal advice in any way. If you require advice in relation to the contents of this article, please approach us for further assistance.
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Authors: Lim Ming Yi, Yeo Shan Hui, Jaryl Lim, Gabriel Kwek.