Hong Kong and Paris Bar Council Adopt Rules on Third Party Funding - international litigation blog
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Hong Kong and Paris Bar Council Adopt Rules on Third Party Funding

Hong Kong and Paris Bar Council Adopt Rules on Third Party Funding

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On 14 June 2017, Hong Kong passed key legislation allowing third party funding in arbitral proceedings and mediation seated in Hong Kong, as well as for work carried out in Hong Kong in arbitral proceedings seated elsewhere.

Hong Kong therefore joins Singapore, which also passed a similar legislation earlier this year. However, contrary to the newly enacted law in Singapore, Hong Kong embraces a wider definition of “third party funder“. Indeed, Hong Kong extends the category of a potential third party funder to any “person who is a party to a funding agreement […] and who does not have an interest recognized by the law in arbitration other than under the funding agreement“. Hong Kong therefore does not only limit the notion of third party funder to professional funders. Based on this definition, it is clear, however, that lawyers who provide legal services to a party to an arbitration case remain prevented from funding this case. Hence, contingency or conditional fee agreements to the effect that no fees will be charged if the client’s case is unsuccessful remain prohibited under Hong Kong law. The newly adopted law also encourages the issuance of a code of conduct setting out ethical and financial standards for third party funders.

In the meantime, the Paris Bar Council also passed a resolution indicating support for third party funding and confirming that such a financial arrangement was a positive element for access to justice in international arbitration, as it restores equality of arms between the parties insofar as it allows a party to initiate a claim even if this party does not have the financial means to finance those costly proceedings. The resolution adopted by the Paris Bar Council also emphasises that the current state of French Law does not prohibit third party funding for international arbitration and details the ethics obligations owed by counsel representing a funded party.

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