Third Party Funding for Arbitration in Hong Kong
By Sacha Cheong and Dominic Lau, K&L Gates, Hong Kong
Given the highly technical and complex nature of the activities in the construction industry, to provide familiarity and certainty, and to save time and (legal and administrative) costs, standard form contracts are widely in use. Arbitration agreements are contained in most standard form contracts for similar reasons.
Traditionally, parties to construction disputes rely on their own financial resources to pay for legal representation in arbitration. This may soon undergo substantial changes as third party funders become much more active in this area.
Many jurisdictions such as the United Kingdom, and more recently Singapore, already permit third party funding for arbitration.
The Hong Kong Government is in the process of introducing similar legislation in Hong Kong, along with various safeguards to ensure ethical standards are maintained and to prevent abuse. The law relating to maintenance and champerty, which is still punishable as a criminal offence, will no longer be applicable to Hong Kong arbitration.