Three Models of Litigation Funding in Asia

Litigation funding in Asia has evolved through diverse regulatory approaches, reflecting differences in legal traditions, policy priorities, and market development. Some jurisdictions have adopted express statutory frameworks, while others are developing through arbitral institutions, court decisions, market practice, or the application of existing law. As a result, the relevant questions are not only whether third-party funding is permitted, but also how it is regulated, what procedural and professional obligations apply, and how individual funding arrangements must be structured.

Viewed through that lens, three broad models are emerging across Asia.

I. The Statutory Frameworks Model

Singapore, Hong Kong, and Malaysia have each adopted targeted statutory frameworks that expressly permit and regulate third-party funding in arbitration and other defined proceedings.

Singapore first introduced its third-party funding framework in 2017 for international arbitration and related proceedings. In 2021, it expanded the framework to cover domestic arbitration, specified proceedings before the Singapore International Commercial Court, and related court and mediation proceedings. Within the statutory framework, funding arrangements are limited to qualifying third-party funders that satisfy prescribed requirements, while professional-conduct rules impose disclosure and conflict-related obligations on counsel.^[1]

Hong Kong followed a similarly arbitration-focused approach. Part 10A of the Arbitration Ordinance expressly provides for third-party funding of arbitration, with the operative provisions taking effect on February 1, 2019. The statutory framework requires disclosure of the existence of a funding agreement and the identity of the funder, while Hong Kong's Code of Practice sets standards governing funder conduct.^[2]

Malaysia is the newest of the three to establish a dedicated regime. The Arbitration (Amendment) Act 2024 came into force on January 1, 2026 and introduced statutory provisions governing third-party funding in arbitration. The reforms disapply the common-law rules against maintenance and champerty in the arbitration context and impose disclosure obligations, supplemented by the Code of Practice for Third Party Funding 2026. The 2026 AIAC Arbitration Rules also contain a standalone provision addressing third-party funding.^[3]

Together, these jurisdictions illustrate why arbitration has become a practical entry point for legal finance in Asia. Arbitration allows external capital to be introduced within a defined procedural framework, while enabling policymakers and arbitral institutions to address disclosure, conflicts, funder conduct and counsel independence without necessarily extending the same approach to ordinary domestic litigation.

Their commercial significance is reinforced by their role as international arbitration hubs. In the 2025 Queen Mary University of London and White & Case survey, Singapore and Hong Kong ranked as the second- and third-most preferred arbitral seats globally.^[4] As a result, a dispute arising from commercial activity in one Asian jurisdiction may enter the funding market through an arbitration seated in another.

II. The Institutional Development Model

A different model is emerging in Northeast Asia, where third-party funding is increasingly addressed through arbitral rules, court decisions, and market practice.

Mainland China illustrates this model most clearly. Article 48 of the 2024 CIETAC Arbitration Rules requires disclosure of third-party funding and allows tribunals to seek further information and consider funding when allocating costs.^[5] The Beijing Arbitration Commission's revised Arbitration Rules, effective January 1, 2026, similarly recognize third-party funding and introduce specific requirements for disclosure, conflict-of-interest management, and consideration of funding arrangements in cost allocation. A similar pattern appears in the case law. Some Chinese court decisions have been receptive to funding in the arbitration context, including rejecting set-aside and enforcement challenges to a funded CIETAC arbitration.^[6] By contrast, at least one court in Shanghai has invalidated a litigation-funding agreement on public-policy grounds, highlighting the greater uncertainty surrounding funding of domestic court litigation.^[7]

Similarly, South Korea remains at an earlier stage in the development of third-party funding, following an institution-led model. Korean courts have not squarely addressed the validity of third-party funding arrangements, although a 2020 Supreme Court decision recognized that attorneys' fees paid by a third party may, in certain circumstances, be treated as litigation costs of the party.^[8] Meanwhile, the 2026 KCAB International Arbitration Rules have begun to regulate funding procedurally through disclosure and conflict-of-interest requirements.^[9]

Japan likewise has no specific statutory regime governing third-party funding in arbitration. Market practice therefore continues to develop within existing rules governing lawyers, professional independence, and related legal-services restrictions.^[10] The Japan Commercial Arbitration Association has also published analysis addressing third-party funding and the disclosure approaches adopted by major arbitral institutions.^[11]

The regional picture is further shaped by the cross-border nature of many disputes involving companies in China, Korea, and Japan. As a result, third-party funding may develop through disputes seated or enforced outside the company's home jurisdiction, even where the domestic funding framework remains limited.

III. The General Law Model

A third model appears in jurisdictions such as India and the Philippines, where funding-specific regulation and relevant institutional rulemaking remain limited and the permissibility and structure of third-party funding are instead determined largely through existing procedural rules, case law, contract principles, and professional obligations—an approach broadly characterized as the “General Law Model.”

India is one example. In a 2024 parliamentary response, the Government of India confirmed that there is no central legislation governing third-party litigation funding and no comprehensive national framework, while noting that procedural rules in certain states recognize financing of litigation by third parties.^[12] The Supreme Court has also observed that non-lawyer third parties are not generally prohibited from funding litigation and receiving repayment from the proceeds, while advocates themselves may not fund litigation on behalf of their clients.^[13] The result is a fragmented framework in which the validity and structure of a funding arrangement may depend on applicable contract law, procedural rules, and professional obligations.

The Philippines presents a similarly framework-light, but distinct, position. There is no dedicated regime governing non-counsel third-party litigation funding, and existing law addresses such arrangements through broader doctrines concerning champerty, public policy, and professional conduct.^[14] In RODCO Consultancy and Maritime Services Corporation v. Ross, the Supreme Court of the Philippines considered an arrangement with features of third-party litigation financing and left its invalidation in place based on the structure and terms of the agreement, including concerns that it was grossly disadvantageous to the litigant.^[15]

In both jurisdictions, third-party funding remains more dependent on transaction-specific legal analysis than on a defined funding framework. The enforceability and structure of each arrangement must therefore be assessed on its own terms, making the funding agreement itself part of the underwriting analysis.

IV. Conclusion

Taken together, these three models reflect a regional market at different stages of legal and institutional development. Some jurisdictions have established express statutory regimes, while others are developing through arbitral rules, judicial decisions, market practice, or the application of existing law.

As the Asian litigation funding market continues to develop, these models should be understood as a snapshot of the current landscape rather than fixed or permanent categories. Nevertheless, they provide a practical framework for understanding how third-party funding is currently regulated across Asia and the different legal considerations that may apply when structuring a funding arrangement.

[1] Singapore Ministry of Law, Third-Party Funding to be Permitted for More Categories of Legal Proceedings in Singapore (June 21, 2021).

 [2] Hong Kong Department of Justice, Comprehensive Legislative Framework on Arbitration (discussing third-party funding of arbitration).

 [3] Malaysia Legal Affairs Division, Enforcement of the Code of Practice for Third Party Funding 2026 (Jan. 5, 2026); Malaysia Legal Affairs Division, Code of Practice for Third Party Funding 2026 (2026); Asian International Arbitration Centre, AIAC Arbitration Rules, r. 31 (2026).

[4] Queen Mary University of London and White & Case, 2025 International Arbitration Survey: The Path Forward: Realities and Opportunities in Arbitration, chart 3 (2025).

 [5] China International Economic and Trade Arbitration Commission, CIETAC Arbitration Rules, art. 48 (2024).

 [6] Herbert Smith Freehills Kramer, PRC Law Does Not Prohibit Third Party Funding for Arbitration, Court Decisions Say (May 2023) (citing Ruili Airlines Co., Ltd. et al. v. CLC Aircraft Leasing (Tianjin) Co., Ltd., Case No. (2022) Jing 04 Min Te No. 368 (Beijing Fourth Intermediate People's Ct. 2022) (dismissing a set-aside application); Sunan Ruili Airlines Co., Ltd., Yunnan Jingcheng Group Co., Ltd. & Dong Lecheng v. CLC Aircraft Leasing (Tianjin) Co., Ltd., Case No. (2022) Su 02 Zhi Yi No. 13 (Wuxi Intermediate People's Ct. 2022) (rejecting an enforcement challenge arising from the funded CIETAC arbitration)).

 [7] Herbert Smith Freehills Kramer, PRC Law Does Not Prohibit Third Party Funding for Arbitration, Court Decisions Say (May 2023) (citing Shanghai Xu Ding Capital Management Ltd. v. Shanghai Weian Internet Technology Ltd., Case No. (2021) Hu 02 Min Zhong No. 10224 (Shanghai Second Intermediate People's Ct. 2021)).

 [8]Determination of Amount of Litigation Costs, Decision No. 2019Ma6990 (S. Kor. Apr. 24, 2020).

 [9] Korean Commercial Arbitration Board, KCAB International Arbitration Rules 2026, arts. 10.5-10.6; Chambers and Partners, International Arbitration 2026: South Korea, § 13.3.

 [10]See, e.g., Chambers and Partners, International Arbitration 2026: Japan, § 13.3.

 [11] Japan Commercial Arbitration Association, Unlocking the Potential of Third-Party Funding in Arbitration in Japan - Legal Landscape, Practical Considerations, and Arbitral Rules, Japan Commercial Arbitration Journal, vol. 6 (2025).

[12] Government of India, Ministry of Law & Justice, Department of Legal Affairs, Rajya Sabha Unstarred Question No. 1225, Third-Party Litigation Funding (Dec. 5, 2024).

 [13]Bar Council of India v. A.K. Balaji, 5 S.C.C. 379, ¶ 35 (India 2018).

 [14] Chambers and Partners, Litigation Funding 2026: Philippines, §§ 1.1-1.2; Roxas v. Republic Real Estate Corp., G.R. Nos. 208205 & 208212 (Phil. June 1, 2016).

 [15]RODCO Consultancy & Maritime Services Corp. v. Ross, G.R. No. 259832 (Phil. Nov. 6, 2023); Supreme Court of the Philippines, SC Voids Contract for Being Grossly Disadvantageous to Seafarer (March 15, 2024).