After publication of the Law Reform Commission’s October 2016 report which recommended amending the law to permit third party funding of arbitration in Hong Kong, the Government has announced that it will introduce legislative amendments to the Arbitration Ordinance so as to permit such funding.
Third party funding of arbitration is a practice where third party firms provide financial assistance to a party who would otherwise lack the financial resources to pursue arbitration. As such, it is thought that the making of third party funding permissible in Hong Kong will promote access to justice.
Third party funding of litigation remains unlawful in Hong Kong, however the position of third party funding of arbitration is unclear as the Court of Final Appeal expressly left the question unanswered in the case of Unruh v Seeberger (2007) 10 HKCFAR 31. Although the common law doctrines of maintenance and champerty still remain a tort and a crime in Hong Kong, the amendments clarify that they do not apply to the funding of arbitration. Furthermore, the amendments seek to propose an addition of a code of practice to the Arbitration Ordinance, with the aim of regulating and preserving the integrity of the justice system.