The Singapore Parliament passed on Tuesday a bill to allow third party funding of international commercial arbitration proceedings seated in Singapore.

The bill, known as the Civil Law (Amendment) Bill – Third Party Funding for Arbitration and Related Proceedings, reverses a prior ban on third party funding of arbitral proceedings.

The amendment comes after the Singapore Ministry of Law’s review and public consultation on third party funding, and is part of Singapore’s push to strengthen its position as a leading dispute resolution centre. London, Paris and Geneva already permit third party funding.

The bill also regulates the nature of third party funding arrangements, requiring for example capital adequacy and the existence of third party funding contracts.

The development is welcome news for the arbitral community. As acknowledged by the Singapore Parliament, third party funding will offer businesses an additional source of financing and a way to manage the financial risk of proceedings. This enables claims which may otherwise not be brought due to financial constraints, and so facilitates access to justice.

The amendment was passed alongside the Mediation Bill which seeks to make mediation more popular and enforceable as a mode of dispute resolution.

We await with interest Hong Kong’s legislative developments following the recent Arbitration and Mediation Legislation (Third Party Funding) (Amendment) Bill 2016. The bill follows closely the Hong Kong Law Reform Commission’s recommendation that third party funding be allowed for arbitrations, and its call for clear financial and ethical guidelines which a third party funder operating in Hong Kong will be expected follow (for example in relation to capital adequacy, conflicts of interest and disclosure of third party funding).

While third party funding in arbitration is permitted in England, the High Court went a step further in in the case of Essar Oilfield Services Limited v Norscot Rig Management Pvt Limited [2016] EWHC 2361 (Comm).The Court ordered that the successful claimant in an arbitration could recover the entirety of its third party funding costs, including an uplift of fees additional to damages.

While the Court emphasised that third party funding costs would only be recoverable if reasonably incurred, it allowed for the recoverability of a 300% uplift in fees. This is a clear indication by the English Courts that they recognise: 1) the high costs of capital incurred by funders; 2) the important role funders play in promoting access to justice; and 3) that reasonable uplifts charged by third party funders can be recovered.

This post was prepared with the assistance of Magdalena Nasuto in the London office of Latham & Watkins.