A Brief Note on the Passing of Arbitration and Mediation Legislation (Third Party Funding) (Amendment) Bill

The Arbitration and Mediation Legislation (Third Party Funding) (Amendment) Bill (“Bill) was passed by Hong Kong’s legislature on 14 June 2017, following recommendations in the Law Reform Commission’s Report in October 2016.

The Bill, expected to come into effect later this year, seeks to change the outdated (if not antiquated) common law doctrine of maintenance and champerty, which basically bans a third party from providing funding to a litigant in civil proceedings, subject to several narrow exceptions. The Bill amends the Arbitration Ordinance and Mediation Ordinance to provide a carve-out to this rule so that this common law doctrine does not apply to arbitration and mediation proceedings in Hong Kong.

The Bill also contemplates a Code of Practice setting out the practices and standards with which funders are ordinarily expected to comply in carrying on their funding which is currently being developed and will be promulgated later this year.

However, the prohibition on providing funding to court proceedings (other than arbitration and mediation as provided in the Bill) still remains. Also, lawyers acting for a party to the arbitration proceedings cannot take advantage of the protection under the Bill so as to be able to provide the funding themselves.

Major takeaways:

  • Hong Kong has lagged behind many other important common law jurisdictions such as Singapore, Australia and England which have already abolished the antiquated common law rule of maintenance and champerty altogether, which is often seen as denying less financially capable litigants access to justice. Therefore, while the Bill only relaxes the rule in relation to arbitration and mediation, it is considered as a welcoming move and has the effect of bolstering Hong Kong as an important arbitration forum

  • The Bill allows for funding to cover not only the litigant’s own costs in arbitration and mediation but also the costs which he is liable to pay to his opponent in case he loses

  • For Mainland individuals and companies, it is now even more advisable to insert proper arbitration clause in their relevant agreements to provide for arbitration in Hong Kong, so that they can take advantage of arbitration funding permitted by the Bill, alongside with a more authoritative, impartial and efficient arbitral tribunal in Hong Kong. This is so even the relevant agreements may be governed by PRC law, because since the change of sovereignty in 1997 Hong Kong’s bilingual legal profession having exposure to both the PRC and common law legal system (and some of whom are qualified lawyers in both jurisdictions) is well-equipped to conduct arbitration proceedings relating to, and arbitrate on, disputes governed by PRC law

  • PRC lawyers when acting for financially weaker parties (such as SMEs and individuals) in negotiating commercial agreements with giant SOEs or multinationals should seriously consider fighting for their clients a clause providing for arbitration in Hong Kong, so as to narrow the disparity caused by financial strength when disputes arise. This is especially so considering that arbitral awards made by Hong Kong arbitration tribunal has long been enforceable in the Mainland, besides other important jurisdictions in the world.

  • It is expected that with the formal coming into effect of the Bill shortly, a lot of large international litigation funders who has already had an established presence in other jurisdictions will soon enter into the lucrative Hong Kong market to tap into the business opportunities presented by the Bill, especially in relation to the high-value disputes originating from Mainland China. There is therefore no concern that an arbitration party will be unable to access adequate funding, provided that his claim is meritorious.


該草案預計在今年稍後時間生效,其旨在改變過時(或陳舊)的普通法助訟和包攬訴訟原則,以容許第三方可向參與仲裁或調解的一方提供訴訟融資。原來在助訟和包攬訴訟的原則下, 随若干有限的例外情況外, 第三方向民事訴訟中的訴訟人提供訴訟資金是非法的。該草案現修訂了“仲裁條例”及“調解條例”,以令第三方向在香港參與仲裁或調解的一方提供訴訟融資變為合法,而使前述助訟和包攬訴訟原則不適用於香港的仲裁和調解程序。


然而,值得注意的是, 雖然該草案放寬了助訟和包攬訴訟維原則對仲裁和調解的限制,但該等限制對在法院進行的民事訴訟仍然適用和有效。而且,該草案亦規定,代表仲裁一方的律師均都不能利用草案内的保障,以自行提供仲裁或調解費用的融資。


  • 在訴訟融資上,香港已經落後於許多其他重要的普通法法區,如新加坡,澳大利亞和英國。這些法區已經廢除了過時的助訟和包攬訴訟維原則,因為這些原則往往被認為剝奪了經濟能力較低的訴訟人訴諸司法的權利。因此,雖然該草案只是放寬對仲裁和調解的限制,但卻被視為一個值得歡迎的舉措,有助加強香港作為重要仲裁中心的地位

  • 該草案所允許的融資資金不限於參與仲裁和調解一方本身的費用,而且還包括其在敗訴時需要支付對手的費用

  • 對於內地的個人和公司,現在洽談協議條款時更適合爭取加入適當的仲裁條款,以訂明在香港仲裁或調解有關的爭端,這既可獲得仲裁資金的同時,亦可使仲裁在一個更具權威性,公正及高效的仲裁庭進行。即使相關協議可能適用內地法律,但筆者認為並不妨礙仲裁在香港進行,因為自1997年主權回歸後,香港的雙語法律專業人員,對內地和香港的普通法法制均累積相當的經驗(其中一部分亦可能已獲得兩地的律師資格),因而具備在香港仲裁或調解適用內地法律或由內地衍生的爭端

  • 內地律師在代表財力較弱的一方(如中小企業或個人)與大型國企或跨國公司洽談商業協議時,應認真考慮為客戶爭取加入在香港仲裁的條款,以減輕一旦出現爭端時由於財政實力懸殊使其客戶處於下風的風險。而且,香港仲裁机構頒發的裁決, 亦一早已能在內地及世界其他重要法區執行了

  • 預計隨著該草案正式生效,很多現時在國際上已十分活躍的大型訴訟融資公司,必然躍躍欲試希望加入香港市場分一杯羹,尤其是對源自中國內地牽涉金額鉅大的糾紛。因此,只要仲裁一方理據充足,是不虞難以獲得仲裁資金的。

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