20 October, 2015
Third party funding should be allowed for arbitration taking place in Hong Kong, the Hong Kong Law Reform Commission (LRC) said yesterday.
The Hong Kong Special Administrative Region (HKSAR) has become a major arbitration centre and parties looking to resolve disputes in the region are starting to take funding options into account, a 'third party funding for arbitration' sub-committee of the LRC said in a statement.
Legal doctrines of "maintenance and champerty" prohibit the use of third party funding for litigation in most circumstances, and it has been unclear whether this also applies to arbitration, the sub-committee said.
The current law should therefore be reformed to allow funding by third parties who meet ethical and financial standards, to provide "clarity and certainty" and enhance Hong Kong's reputation as an international arbitration centre, it said.
The sub-committee proposed that Hong Kong's Arbitration Ordinance should be changed to expressly allow third party funding, and asked for submissions on how the ethical and financial standards should be developed, and whether they should be imposed by statute or by self-regulation.
The sub-committee also asked for submissions on the tribunal's powers on adverse cost orders.
"HKSAR should develop its own model of regulation to suit its culture and needs, which will be informed by the experience and approach of other relevant jurisdictions," it said.
For further information, please contact:
Peter Bullock, Partner, Pinsent Masons
peter.bullock@pinsentmasons.com
