Singapore to permit no-win, no-fee contracts

Singapore to permit no-win, no-fee contracts

Following the relaxation of litigation funding rules in 2017, new reforms have been implemented

Legislators in Singapore are seeking ways to reinforce the city state's role as a global hub for disputes by allowing no-win, no-fee agreements in certain proceedings.

After extensive consultation with Singapore's Law Society, the judiciary, international law firms and others using Singapore as a hub for their work, the Singapore parliament approved reforms that will allow conditional fee agreements (CFAs) in international arbitration.

The introduction of no-win, no-fee agreements follows Singapore's decision in 2017 to allow litigation funding in commercial disputes, initially for international arbitrations but expanded in 2021 to include domestic arbitrations and mediations and proceedings before the Singapore International Commercial Court (SICC).

The Second Minister for Law, Edwin Tong SC, wrote on LinkedIn that this is an area in which we had been more conservative since there were concerns about governmental interference in litigation and potential conflicts of interest.

Having studied the experiences of other jurisdictions, and after receiving calls from the ground, we will consider CFAs in certain proceedings where litigants are more commercially sophisticated and re-evaluate at a suitable moment," he added.

Darius Chan, a door tenant at London's Fountain Court Chambers, which has an annexe in Singapore, welcomed the move.

"We consider this an encouraging development, considering the introduction of third-party funding in 2017." The changes were implemented in response to an increasing number of clients requesting flexibility regarding the fee arrangements. An initiative of this magnitude suggests friendly competition between the principal arbitral seats in attracting legal spend to their jurisdictions," said Chan.

There were other Singapore-based lawyers who agreed. Herbert Smith Freehills's counsel, Daniel Waldek said: "This is another significant milestone in cementing Singapore's position as a global dispute resolution centre. The move promotes greater access to justice while also providing more flexibility in fee arrangements."

He added, "Combining CFAs with third-party funding will allow clients a great deal more flexibility to share risk when managing commercial disputes."

Foreign lawyers can also gain access to certain insolvency proceedings by seeking permission from the SICC, but their ability to engage in Singaporean legal proceedings has been restricted.

The SICC expanded its jurisdiction in September 2021 to take on cases involving both international and cross-border debt restructuring and insolvency, including cases from both domestic and international sources.

It preserves the oversight of the SICC while allowing Singaporean submissions on areas of law germane to the country. Singaporean advocates and international law firms will be divided up appropriately.

As a result of this move, a new list at the SICC has been established to handle cases pertaining to construction, infrastructure and technology.

"It is a very welcome but unsurprising change," said Sean Brannigan QC, of 4 Pump Court, who has seen an increase in instructions for infrastructure cases being determined in Singapore.

During the last five years, Brannigan noted, Singapore has "really stepped its game up in becoming a hub for solving disputes related to infrastructure across the Pacific Rim and beyond."

He added: "It appears to be constantly improving its dispute resolution offering by learning what works across the worldwide."