Kim Rooney
The Law Reform Commission (LRC) has recommended allowing third parties to fund arbitration cases, saying this will boost Hong Kong’s competitiveness as an international arbitration centre. It said taxpayers' money would also be saved by diverting commercial disputes away from the courts and improve access to justice for smaller businesses.
Current laws do not explicitly bar third-party funding – in which a commercial entity with no interest in a legal dispute can bankroll arbitration cases in return for a share of the proceeds upon settlement.
However, an LRC subcommittee that has been reviewing the issue since 2013 said laws governing this practice were unclear, and the perception that third-party funding was prohibited in the territory was leading companies to seek such services elsewhere.
It suggested that the law be amended to make it clear that third-party funding for arbitration cases was legal.
The subcommittee said the due diligence conducted by entities that fund arbitration cases will give parties an objective view of the merits of their case.
Subcommittee member, Justin D'Agostino, added that the arrangement could be "very advantageous" to small and medium-sized businesses that currently lack funds to pursue legitimate arbitration cases.
The LRC said that altogether, the benefits of the arrangement clearly outweighed the risks which can be mitigated through clear guidelines.
Barrister Kim Rooney, who chairs the subcommittee, said it "firmly believes that having clear ethical and financial standards for third-party funding to parties in arbitration in Hong Kong was important. Such standards exist to varying degrees in all jurisdictions that permit third-party funding that we’ve reviewed".
The LRC also invited submissions on how standards should be regulated, and how the issue of adverse costs should be handled. A three-month consultation on the issue ends on January 18, 2016.
The LRC stressed that the proposed arrangement was not the same as a "no-win, no-pay" arrangement for litigation cases, and will not open the door to so-called "ambulance chasers".
Current laws do not explicitly bar third-party funding – in which a commercial entity with no interest in a legal dispute can bankroll arbitration cases in return for a share of the proceeds upon settlement.
However, an LRC subcommittee that has been reviewing the issue since 2013 said laws governing this practice were unclear, and the perception that third-party funding was prohibited in the territory was leading companies to seek such services elsewhere.
It suggested that the law be amended to make it clear that third-party funding for arbitration cases was legal.
The subcommittee said the due diligence conducted by entities that fund arbitration cases will give parties an objective view of the merits of their case.
Subcommittee member, Justin D'Agostino, added that the arrangement could be "very advantageous" to small and medium-sized businesses that currently lack funds to pursue legitimate arbitration cases.
The LRC said that altogether, the benefits of the arrangement clearly outweighed the risks which can be mitigated through clear guidelines.
Barrister Kim Rooney, who chairs the subcommittee, said it "firmly believes that having clear ethical and financial standards for third-party funding to parties in arbitration in Hong Kong was important. Such standards exist to varying degrees in all jurisdictions that permit third-party funding that we’ve reviewed".
The LRC also invited submissions on how standards should be regulated, and how the issue of adverse costs should be handled. A three-month consultation on the issue ends on January 18, 2016.
The LRC stressed that the proposed arrangement was not the same as a "no-win, no-pay" arrangement for litigation cases, and will not open the door to so-called "ambulance chasers".
http://news.rthk.hk/rthk/en/component/k2/1218247-20151019.htm
