Editor's Note: December 2016

On 12 October 2016, the Law Reform Commission (“LRC”) issued a lengthy report, including a set of recommendations calling for the Hong Kong Government to reform the law to make it clear that third party funding of arbitration and associated proceedings under the Arbitration Ordinance is permitted under Hong Kong law. In this report, the LRC recognised that third party funding has become increasingly common around the world and that the proposed reforms to abolish the doctrines of champerty and maintenance is necessary to enhance Hong Kong’s competitive position as an international arbitration centre and to avoid being taken over its competitors. The Disputes article in this issue discusses the recommendations in the LRC’s report and how they might be implemented.

On the heels of the LRC issuing their final report, on 7 November, Singapore’s Ministry of Law submitted the Civil Law (Amendment) Bill 2016 to Parliament to permit third party funding in arbitration and to lay the groundwork for further expansions. It indicated that this decision was part of its on-going efforts to ensure Singapore maintains its competitive edge as an international commercial dispute resolution hub. This has prompted some to claim that the arbitration hub has now “leapfrogged” ahead of Hong Kong.

In response to these developments, Christopher Bogart, Chief Executive Officer of Burford Capital, wrote a letter to Hong Kong Lawyer. In his letter, he essentially urges Hong Kong to follow Singapore’s lead, advocating for the Government to not only follow the LRC’s recommendations to remove any ambiguity and explicitly allow for the use of litigation finance in arbitration, but also to go further and expand the sanctioned use of litigation finance generally, including in commercial litigation. He also expresses his support for the adoption of the LRC’s “light touch” approach to the regulation of third party funding of arbitration in Hong Kong, noting that an unduly regulatory environment would discourage capital flows and disadvantage Hong Kong relative to other centres.

Both the letter and the Disputes article touch on a variety of important issues currently being weighed by the Hong Kong Government as it considers how best to move forward with the reform proposals. How will the Hong Kong Government respond in light of Singapore’s step forward? Hopefully, in a way that will further bolster its position as a premier seat of arbitration in Asia. We will continue to follow and report on developments in this space. Please write in if you would like to add to this interesting, on-going discussion.

Editor, Hong Kong Lawyer
Legal Media Group
Thomson Reuters