The common law rules in Hong Kong before 1997 - which remain in force under Article 8 of the Basic Law - provide that "maintenance" and "champerty" are criminal offences, torts and that "tainted" contracts (involving maintenance or champerty) are voidable as a matter of public policy. Hong Kong Courts have traditionally taken a stringent approach when dealing with third parties who aid litigation in return for a share of any profits, although recent judicial decisions indicate that the Courts are now prepared to take a more liberal approach in this area.

In Siegfried Adalbert Unruh v Hans-Joerg Seeberger and Another [2007] HKEC 268, the Court of Final Appeal considered the principles of maintenance and champerty and the related public policy considerations and provided further evidence of this relaxation. Whilst confirming maintenance and champerty are still prohibited under Hong Kong law, the Court went to some lengths to point out that this had to be reviewed against changes in public policy from time to time. In particular, the Court pointed out that the scope of what constitutes maintenance and champerty is shrinking by virtue of various exceptions:

  1. Common Interest Category: This exception applies when a person has a legitimate common interest in the outcome of the litigation sufficient to justify him supporting another's litigation.
  2. Access to Justice Considerations: The Court has acknowledged that an attack on an arrangement said to constitute maintenance could well result in a perfectly good claim being stifled where a claimant was unable to pursue it due to lack of financial support. The Court considered that this was a powerful argument for such cases to be excluded from the ambit of maintenance

The Court then laid down four points of guidance regarding public policy considerations which may result in a contract being unenforceable on the grounds of maintenance and champerty.

  1. The traditional legal policies underlying maintenance and champerty will continue to apply but will be substantially qualified by other considerations. Thus, the mischief to be discouraged by the law of maintenance is still "officious intermeddling" in litigation, particularly where this results in prejudice to a defendant and possibly if it could result in the general encouragement of litigation.
  2. The fact that an arrangement may be caught by the broad definitions of maintenance and champerty is not, of itself, sufficient. The Court will examine all of facts and decide whether there is a genuine risk to the integrity of the Court's processes.
  3. Contrary public policies must be taken into account (especially policies in favour of ensuring access to justice, and of recognising legitimate common interests in a piece of litigation). The traditional public policies against "intermeddling" in litigation must be weighed against such competing values, and - if the balance is in favour of the latter - the conduct complained of should not be regarded as contrary to public policy.
  4. The operation of maintenance and champerty should not be used as a "blunt instrument" or otherwise this might result in a litigant being left with no means to pursue a good claim.

The issue of third party funders continues to be a matter of heated debate in Hong Kong and the growing concerns of access to justice are pushing the Courts to take a more flexible approach to litigation funding. Such concerns are likely to enlarge the second excluded category of "access to justice considerations" and will naturally further shrink the scope of the prohibition of maintenance and champerty.