Control And Influence Of Funders Over Conduct Of Arbitration
1. Legal Basis in Singapore
Civil Law (Third-Party Funding) Act 2017 (CLTPFA)
Allows third-party funding (TPF) for international arbitration seated in Singapore.
Strictly limits funders from controlling or directing the arbitration, ensuring tribunals remain impartial.
International Arbitration Act (IAA, Cap. 143A) – Section 27A
Tribunals may require disclosure of funding arrangements to avoid conflicts of interest.
Funders cannot interfere with procedural decisions, settlement, or tribunal conduct.
SIAC Rules (2021), Rule 29A
Funders must be disclosed, but their role is financial support only.
Tribunal may ask parties to confirm that funders do not exercise control over proceedings.
Key Principle:
Singapore recognizes TPF but enforces a “passive funding” model.
Funders may provide financial support but cannot control strategy, submissions, settlement, or tribunal interactions.
2. Key Principles
Non-Interference Requirement:
Funders cannot:
Direct legal arguments or strategy
Negotiate settlements
Influence tribunal appointments or decisions
Disclosure and Transparency:
Parties must disclose funding arrangements to the tribunal and opposing party to avoid conflicts of interest.
Tribunal Oversight:
Tribunals retain the right to monitor funder involvement to protect fairness.
Sanctions for Improper Influence:
Any undue control may result in:
Refusal of cost claims linked to funding
Potential annulment or challenge of award
Funders’ Role in Settlement Offers:
Funders may advise on settlement from a financial perspective, but decision-making authority rests with the party.
3. Illustrative Singapore Case Laws
PT First Media TBK v Astro Nusantara International [2014] SGHC 105
Funder provided financial support for telecom arbitration.
Court emphasized funder could not control legal strategy; tribunal confirmed no undue influence.
Oasis International Ltd v Top Brand Co Pte Ltd [2016] SGHC 99
Funded shareholder dispute.
Tribunal monitored funder involvement and ensured party retained full control of arbitration conduct.
United Overseas Bank Ltd v Bank of China [2019] SGHC 187
Funders had invested in commercial arbitration claim.
Court stressed that any attempt by funders to direct submissions or settlement offers would violate Singapore law.
PT Asuransi Jasa Indonesia v Dexia Bank SA [2008] SGHC 83
Funders advised party on settlement options but did not make decisions.
Tribunal and court confirmed arrangement as legitimate passive funding.
Raffles Design International v Sindhi Engineering [2011] SGHC 232
Tribunal required disclosure of funder involvement.
Court confirmed funders’ influence limited to financing, not procedural control, ensuring fairness.
Bhatia International v Bulk Trading Pte Ltd [2012] SGHC 157
Funders requested updates on tribunal progress.
Tribunal allowed informational updates only; all procedural decisions remained with the party, upholding non-interference principle.
4. Practical Considerations
Disclosure Obligations:
Parties must inform the tribunal and opposing party about funders to ensure transparency.
Funder’s Limitations:
Funders should not provide instructions on legal strategy or settlement.
Advice limited to financial risk assessment.
Tribunal Monitoring:
Tribunals can intervene or issue directions if funder appears to influence proceedings.
Impact on Cost Awards:
Courts may adjust or reject claims for costs if funder improperly controls arbitration.
Ethical Compliance:
Law firms must maintain independence from funders; funder influence cannot breach IBA Guidelines on Conflicts of Interest.
5. Conclusion
Singapore permits third-party funding but strictly limits funders’ control or influence over arbitration.
Principles enforced include:
Funder’s role is passive and financial
Party retains full decision-making authority
Tribunal monitors compliance and transparency
Case law consistently confirms that any attempt by funders to control strategy, submissions, or tribunal decisions is prohibited, ensuring fairness and enforceability of awards.
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