The Price is Right? Third party funding in Hong Kong and its potential impact on the construction industry

• Author: Paul Starr (Partner),James McKenzie (Associate),Nicholas Lee (Trainee Solicitor)
• Published date: 03/11/2016
• Citation: jd0241
• Date: 03 November 2016
• Subject Matter: Dispute Resolution & Litigation

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Third party funding in Hong Kong and its potential impact on the construction industry

This article was written by Paul Starr (Partner), James McKenzie (Associate) and

Nicholas Lee (Trainee Solicitor).

In the recently released “Report on Third Party Funding for Arbitration” (“Report”)

the Law Reform Commission (“LRC”) has recommended that the Arbitration

Ordinance (Cap. 609) be amended to permit third party funding in arbitration,

mediation and litigation proceedings under the Arbitration Ordinance.

Though the reform still awaits passage through Hong Kong’s Legislative Council,

should it go ahead it is likely to herald a flurry of activity in the funding space, with

several funders having already set up shop in Hong Kong over the past 18 months

in anticipation of the reform.

The reform is also likely to have a significant impact on the construction industry

which continues to rely on arbitration, mediation and litigation proceedings under the

Arbitration Ordinance as its primary means of dispute resolution. We discuss below

the background to and results of the Report and our reading of the tea leaves on

some of the key takeaways for the construction industry in Hong Kong.

Background to the Report

As a common law jurisdiction, Hong Kong has inherited the now somewhat archaic

English legal doctrines of maintenance and champerty which prohibit funding of

legal proceedings by third parties. Whilst there has been a loosening of the scope of

these doctrines, the Hong Kong courts have continued to resist their outright

abrogation.

03 November 2016

The Price is Right? Third

party funding in Hong Kong

and its potential impact on

the construction industry