Tag: Third Party Funding

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Third party funding of arbitration in Hong Kong is given the green light
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Third Party Funding for Arbitration in Hong Kong

Third party funding of arbitration in Hong Kong is given the green light

By Christopher Tung, Sacha Cheong and Dominic Lau, K&L Gates, Hong Kong

On 14 June 2017, the Legislative Council of Hong Kong passed the Arbitration and Mediation Legislation (Third Party Funding) (Amendment) Bill 2016.

The Bill comes on the heels of the consultation paper issued in October 2015 by the Law Reform Commission’s Third Party Funding for Arbitration Sub-committee and closely follows the recommendations made by the Law Reform Commission in its Report dated 12 October 2016 to clarify the law concerning third party funding of arbitration and associated proceedings under the Arbitration Ordinance. (For more information about the report and the LRC’s recommendations, see our article in the May 2017 issue of Arbitration World.

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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.

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