TRW & Co · Disputes and arbitration
Third-Party Litigation and Arbitration Funding in Singapore
Third-party funding in Singapore is permitted for international and domestic arbitration, connected court proceedings, SICC proceedings and related mediation, provided the funder qualifies. Lawyers must disclose the funding and the funder's identity. This guide explains the framework, the disclosure duties, and why a 2026 SICC decision means winners should not expect to recover funding costs.
Key pointFunding changes who pays during the case, not who pays at the end: in DTH v DTF [2026] SGHC(I) 5 the SICC upheld a refusal to make the losing party pay a successful claimant's funding costs, so deals should be modelled on net recovery.
At a glance
Permitted proceedings
International arbitration since 2017; from 28 June 2021 also domestic arbitration, SICC proceedings, connected court proceedings, appeals and related mediation.
Qualifying funder test
The funder's principal business must be funding disputes, with at least S$5 million paid-up share capital or S$5 million in managed assets.
Disclosure duty
Rule 49A requires lawyers to disclose the funding contract and the funder's identity and address to the court or tribunal and every other party.
Funding costs
In DTH v DTF [2026] SGHC(I) 5 the SICC upheld a tribunal's refusal to award a successful claimant its third-party funding costs.
Conditional fees
Since 4 May 2022, conditional fee agreements have been permitted for arbitration, certain SICC proceedings and related matters, as an alternative or complement.
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The short answer: where third-party funding in Singapore is allowed
Third-party funding in Singapore is lawful only for prescribed categories of proceedings and only with a qualifying funder. Since 2017 it has been permitted for international arbitration and related court and mediation proceedings. From 28 June 2021 the framework was extended to domestic arbitration, related court proceedings, proceedings commenced in the Singapore International Commercial Court (SICC) while they remain there, appeals from them and related mediation.
Outside those categories, ordinary litigation in the Singapore courts is not covered by the statutory framework, and a funding agreement risks being unenforceable as contrary to public policy. The safe rule for a claimant is to confirm, before signing, that both the proceedings and the funder fall within the regime.
Funding also does not mean the losing side pays the funder. In a 2026 decision the SICC upheld an arbitral tribunal's refusal to award a successful claimant its funding costs. A funder's return normally comes out of the winnings.
The legal framework: Civil Law Act and the 2017 Regulations
The Civil Law Act 1909 abolished the common law torts of maintenance and champerty in section 5A. Section 5B then provides that a contract under which a qualifying third-party funder funds a party's costs of prescribed dispute resolution proceedings is not illegal or contrary to public policy. The prescribed proceedings and the funder criteria are set out in the Civil Law (Third-Party Funding) Regulations 2017, as amended in 2021.
Under the 2017 Regulations, a qualifying funder must carry on the principal business of funding dispute resolution proceedings and must have either paid-up share capital of not less than S$5 million (or its foreign-currency equivalent) or not less than S$5 million in managed assets. The Law Society's guidance note on third-party funding sets out these criteria alongside the professional conduct rules.
The Ministry of Law announcement of the 2021 extension also referred to supporting changes: amendments to the professional conduct rules to prevent conflicts between practitioners and funders, disclosure obligations for registered foreign lawyers in SICC proceedings, and changes to court rules on adverse costs and security for costs where funding is used in the SICC.
| Proceedings | Covered? | Since |
|---|---|---|
| International arbitration | Yes | 2017 |
| Court and mediation proceedings connected with international arbitration (e.g. setting aside, enforcement) | Yes | 2017 |
| Domestic arbitration and connected court proceedings | Yes | 28 June 2021 |
| Proceedings commenced in the SICC, while they remain there, and appeals from them | Yes | 28 June 2021 |
| Mediation relating to the above | Yes | 28 June 2021 |
| Ordinary General Division or State Courts litigation | No (outside the statutory protection) | Not prescribed |
Disclosure duties and conflict rules for lawyers
Funding is not confidential from the tribunal or court. Rule 49A of the Legal Profession (Professional Conduct) Rules 2015 requires the lawyer to disclose to the court or tribunal, and to every other party, the existence of any third-party funding contract and the identity and address of the funder. If the contract predates the proceedings, disclosure is made at commencement; if it is entered into later, as soon as practicable afterwards.
Rule 49B adds prohibitions. A lawyer or law practice must not hold shares or any ownership interest in a funder it has referred to a client or that has a funding contract with its client, and must not receive any commission, fee or share of proceeds from such a funder. Normal fees paid by the client for legal services are not affected.
Arbitral rules add their own layer. The SIAC Rules 2025 contain express provisions on disclosure of funding arrangements; our guide to the SIAC Rules 2025 covers them. Early disclosure also helps arbitrators check for conflicts with the funder.
Disclosure also has tactical consequences. Once the respondent knows a funder is involved, it may argue that the claimant cannot meet an adverse costs order and seek security for costs, or probe whether the funder controls the case. A claimant that has thought through its answers to those points before disclosure, including evidence of its own resources or the funder's adverse costs cover, is in a stronger position when the issue is raised.
Diarise disclosure the moment a term sheet becomes a signed funding agreement. Late disclosure can prompt a challenge, a request for security for costs or an arbitrator conflict issue, and it can undermine the tribunal's confidence in the funded party.
Can a winning party recover funding costs?
Generally, a successful party should not expect the losing party to pay the funder's return. In DTH v DTF [2026] SGHC(I) 5, the claimants won a joint-venture arbitration and sought a large sum in funding costs, alongside legal costs. The majority of the tribunal refused, holding that the 2017 changes to the Civil Law Act did not allow funding costs to be passed to the losing party and that the arbitral rules' costs provisions did not cover them.
The SICC dismissed the claimants' application to set aside the costs award. It rejected the argument that public policy required funding costs to be recoverable, observing that access to justice is compatible with less than full cost recovery and that the opposing party's interests also count. It treated the tribunal's view of its costs powers as going to the merits, not procedure, so it was not reviewable on the procedural ground. Rajah & Tann's case note summarises the decision.
The tribunal majority had also found that the funding agreement looked more like a commercial investment than a contract to fund costs, which placed it outside the statutory regime, and the SICC noted that this was an independent reason the claim for funding costs failed. The structure of the agreement therefore matters, not just its label.
Anyone using third-party funding in Singapore should therefore model returns on the basis that the funder's share will come out of the recovery. Adverse costs and security for costs remain live issues: a respondent facing a funded claimant may seek security, and funders often provide or insure against adverse costs. For budgeting, see our guide to dispute costs and timing.
Funding options compared
Third-party funding in Singapore is only one of several ways to share the cost and risk of a dispute. Conditional fee agreements, under which lawyers may agree to be paid only, or paid more, on success, have been permitted since 4 May 2022 for arbitration, certain SICC proceedings and related matters. Insolvency office-holders also have their own routes to fund or assign claims.
| Option | How it works | Main trade-off |
|---|---|---|
| Third-party funding | A qualifying funder pays legal costs in exchange for a return from any recovery | Funder's return reduces net recovery; disclosure required |
| Conditional fee agreement | Lawyers' fees depend partly or wholly on success, within the permitted proceedings | Limited to permitted proceedings; needs careful drafting |
| After-the-event insurance | Insurer covers adverse costs and sometimes own costs if the claim fails | Premium cost; may be required by funders |
| Portfolio or corporate funding | Funding across several claims or for a company's disputes budget | Complex terms; suits repeat claimants |
| Self-funding | The party pays its own costs | Full risk retained; full recovery kept |
How to obtain funding, step by step
- Confirm eligibility. Check that the proceedings are prescribed (arbitration, connected court proceedings, SICC or related mediation) and that the funder meets the qualifying criteria.
- Prepare a case summary. Funders assess merits, quantum, enforceability and the respondent's ability to pay. A concise memorandum with key documents speeds this up.
- Sign a non-disclosure agreement. Protect privilege and confidentiality before sharing detailed material with funders.
- Negotiate the term sheet. Focus on the funder's return (multiple, percentage or both), the waterfall, the budget, adverse costs cover and termination rights.
- Settle control and settlement rights. Make sure the client keeps control of the case and settlement decisions, subject to agreed consultation.
- Disclose and manage. Disclose the funding to the tribunal or court and other parties as required, and report to the funder as agreed.
What funders assess
Funders are selective. Most look for a claim with strong merits on liability, a quantum that comfortably exceeds the likely costs several times over, and a respondent with reachable assets in a jurisdiction where an award or judgment can be enforced. They also assess the legal team, the likely duration and the risk of the respondent becoming insolvent.
A well-prepared application for third-party funding in Singapore therefore includes a merits memorandum, a realistic budget broken down by phase, a quantum analysis, and an enforcement map showing where the respondent's assets are. Funders will usually carry out their own due diligence before issuing a term sheet, and may ask for an independent opinion.
Key terms in a funding agreement
- Funder's return. Usually a multiple of the funds deployed, a percentage of the recovery, or the greater of the two, often increasing with time.
- Waterfall. The order in which proceeds are paid out: typically the funder's outlay first, then its return, then the client, sometimes with a client minimum.
- Budget and variations. What happens if costs exceed budget, and whether the funder must fund overruns.
- Adverse costs and security. Whether the funder covers adverse costs orders and provides security for costs, directly or through insurance.
- Termination. The circumstances in which the funder can withdraw, and what the client owes if it does.
- Control and settlement. How settlement offers are handled and how disagreements between client and funder are resolved.
Illustrative scenario: a funded construction arbitration
Illustrative only; generic parties. This example shows how third-party funding in Singapore works in a typical arbitration. A regional contractor has a substantial claim against a project owner under a contract with a Singapore-seated arbitration clause. The contractor is solvent but does not want the claim to drain working capital. It approaches several funders.
One funder offers to cover legal fees and adverse costs in return for a multiple of its outlay or a share of the recovery, whichever is higher. The contractor negotiates a cap on the funder's return, a clear budget and an obligation on the funder to continue unless the merits materially change. Its lawyers disclose the funding and the funder's identity at the start of the arbitration.
The respondent applies for security for costs, arguing that the funding shows the claimant cannot meet an adverse costs order. The contractor points to its financial position and the funder's adverse costs cover. If the contractor wins, it should expect to pay the funder from the award rather than recover the funder's return from the owner, following the approach in DTH v DTF.
Risks and common mistakes
Funding proceedings outside the framework
The statutory protection applies only to prescribed proceedings. A funding agreement for ordinary court litigation outside the SICC sits outside it and risks being unenforceable. If a case might move between forums, for example from arbitration into connected court proceedings, check that each stage is covered.
Assuming the funder's return is recoverable
DTH v DTF shows that tribunals and courts may refuse to shift funding costs to the losing party. Model the deal on net recovery after the funder's share and do not rely on recovering it as costs.
Late or incomplete disclosure
Rule 49A requires disclosure of the funding contract and the funder's identity and address. Failing to disclose promptly can lead to procedural challenges, arbitrator conflicts and credibility damage. Build disclosure into the case timetable.
Giving away control
Some funding terms give the funder approval rights over strategy or settlement. Clients should negotiate consultation rather than veto rights, and clear termination provisions, so that the funder cannot force or block a settlement unreasonably.
Using an unqualified funder
A funder must carry on the principal business of funding disputes and meet the capital or managed-assets threshold. Ask for evidence. An individual investor or a related company that does not meet the criteria is not a qualifying funder.
Cross-border angle: funded claims across jurisdictions
Funded arbitrations are usually international, and enforcement may take place in several countries. Funders look closely at where the respondent's assets are and whether an award can be enforced there; our pages on enforcement of arbitral awards and international arbitration explain the process.
Other jurisdictions treat funding differently. England and Wales has a mature funding market, and financial centres in the UAE such as ADGM have issued their own litigation funding rules. Where a funded claim involves parties from Bangladesh, China or elsewhere, local rules on champerty, foreign-exchange controls and enforcement may affect both the funding agreement and the recovery. TRW & Co coordinates that analysis across its offices; where Singapore court or SICC representation is required, we work alongside Singapore-qualified counsel. The SICC and SIAC publish their own procedural rules.
Checklist for third-party funding in Singapore
- Confirm the proceedings are prescribed: arbitration, connected court proceedings, SICC or related mediation.
- Verify the funder's principal business and capital or managed assets.
- Model net recovery after the funder's return; do not assume funding costs are recoverable.
- Negotiate control, settlement and termination rights carefully.
- Arrange adverse costs cover and prepare for security for costs applications.
- Diarise disclosure under rule 49A and any arbitral rules.
- Check foreign law issues where enforcement or parties are abroad.
Third-party funding in Singapore can turn a strong but expensive claim into a viable one, provided the structure fits the statutory regime. For advice on funding terms, see our SICC practice or contact our disputes team.
Frequently asked questions
01Is third-party funding legal in Singapore?
Yes, within limits. The Civil Law Act abolished the torts of maintenance and champerty and provides that funding contracts with a qualifying funder for prescribed proceedings are not illegal or contrary to public policy. Prescribed proceedings include international and domestic arbitration, connected court proceedings, SICC proceedings while they remain in the SICC, appeals from them, and related mediation. Funding for other court litigation falls outside this statutory protection, so agreements for such cases risk being unenforceable.
02Who can be a third-party funder in Singapore?
Under the Civil Law (Third-Party Funding) Regulations 2017, a qualifying funder must carry on the principal business of funding dispute resolution proceedings. It must also have either paid-up share capital of not less than S$5 million, or the foreign-currency equivalent, or at least S$5 million in managed assets. A party considering funding should ask for evidence that the funder meets these criteria, because funding from an unqualified source does not have the statutory protection.
03Do I have to disclose that my case is funded?
Yes. Rule 49A of the Legal Profession (Professional Conduct) Rules 2015 requires your lawyer to disclose to the court or tribunal, and to every other party, the existence of the funding contract and the funder's identity and address. Disclosure is made when proceedings start if the contract already exists, or as soon as practicable after it is signed. Arbitral rules such as the SIAC Rules 2025 also contain their own disclosure provisions. The funding agreement's commercial terms are not usually disclosed unless ordered.
04Can I recover my funder's fee from the losing party?
You should not assume so. In DTH v DTF [2026] SGHC(I) 5, an arbitral tribunal refused to award a successful claimant its funding costs, and the SICC declined to set that decision aside. The court rejected the argument that public policy required those costs to be recoverable. In practice, the funder's return is paid out of the damages or award. Legal costs themselves may still be recoverable under the usual costs rules.
05Can third-party funding be used for High Court litigation in Singapore?
Only for prescribed proceedings. Court proceedings connected with international or domestic arbitration, such as applications to set aside or enforce an award, are covered, as are proceedings commenced in the SICC while they remain there. Ordinary litigation in the General Division of the High Court or the State Courts that is not connected with arbitration falls outside the statutory framework. Parties in those cases should consider other options, such as self-funding or settlement strategies.
06What is the difference between third-party funding and a conditional fee agreement?
Third-party funding involves an outside funder paying legal costs in return for a share or multiple of the recovery. A conditional fee agreement is between client and lawyer: the lawyer agrees that some or all fees depend on success, sometimes with an uplift. Singapore has permitted conditional fee agreements since 4 May 2022 for arbitration, certain SICC proceedings and related matters. The two can be combined, and both affect how much of a recovery the client keeps.
Sources and official materials
- Ministry of Law: third-party funding permitted for more categories of proceedings — 2021 extension to domestic arbitration, SICC and related proceedings
- Civil Law Act 1909 — Sections 5A and 5B on maintenance, champerty and funding contracts
- Civil Law (Third-Party Funding) Regulations 2017 — Prescribed proceedings and qualifying funder criteria
- Law Society Guidance Note on Third-Party Funding — Rules 49A and 49B disclosure and conflict rules
- Rajah & Tann: SICC upholds refusal to award third-party funding costs — Summary of DTH v DTF [2026] SGHC(I) 5
- Singapore International Commercial Court — SICC procedures for funded proceedings
General information only, current as at 20 October 2026. It is not legal advice and does not create a lawyer–client relationship. Singapore law and regulatory practice change; check current official sources and take advice on the facts of your matter.
