Recommendations have been passed to make way for third party funding of arbitration proceedings in Hong Kong – though a code of practice to manage the system is yet to formally come into effect.
Clarification that third-party funding is now permissible appears in the Hong Kong International Arbitration Centre Administered Arbitration Rules 2018, published earlier this year and which come into force today.
A consultation period seeking views on a draft code of practice for third party funding closed yesterday. The code, intended to protect against potential abuse, is expected to be finalised shortly.
Under the rules, a funded party is required to disclose promptly the existence of a funding agreement, the identity of the funder, and any subsequent changes to the arrangement. A funded party will be permitted to disclose arbitration-related information to the funder.
The rules on third party funding bring Hong Kong into line with Singapore, Asia’s other main dispute resolution venue, and other common law jurisdictions.
Ing Loong Yang, partner in the Hong Kong office of international firm Latham & Watkins, told the Gazette that the provisions would help increase access to justice for parties who would otherwise not be able to afford proceedings but will also help weed out ‘unmeritorious claims’. The idea is that a funder would not back a claim where they do not see a return.
Today’s new rules mark the first time since 2013 that procedures for arbitration in Hong Kong have been changed. Other measures introduced in the 2018 rules include a procedure for an early determination of points of law or fact (enabling an unmeritorious point of law to be thrown out earlier).
Separately, a panel session on international arbitration discussed the possibility of appointing ‘non-lawyer experts’ to arbitration proceedings ahead of legally qualified arbitrators.
Alexis Mourre, president of the International Court of Arbitration, said experts are appointed from time to time but that usually if one side appoints a lawyer the other side will also want a lawyer. Lucy Reed, vice president at the International Council for Commercial Arbitration, said experience would be the key factor in most cases if opting for an expert over a lawyer.