Litigation Funding in Singapore 2026: a Practical Guide for Commercial Parties and In-house Counsel

Singapore’s 2026 civil justice reforms have fundamentally reshaped the landscape of litigation funding in Singapore, abolishing the common-law torts of maintenance and champerty and establishing a clear statutory framework for third-party funding of prescribed disputes. For general counsel, CFOs and claims teams weighing whether to pursue high-value commercial claims, the reforms represent both a significant opportunity and a new layer of procedural complexity. This guide delivers a practical decision framework, from eligibility triage and funder selection through to funding agreement drafting, disclosure management and settlement mechanics, designed for practitioners who need to act on the 2026 changes, not merely understand them.

What This Guide Covers

• Eligibility and legal framework. Which disputes qualify, which funders are authorised, and what the Civil Law (Third-Party Funding) Regulations require.
• Practical tools. A funding agreement checklist, sample clause language, a funder due-diligence process, and procedural guidance for SICC and arbitration proceedings.

What Is Litigation Funding?, Key Terms

Litigation funding (also referred to as litigation finance or third-party funding) is an arrangement under which a party that has no pre-existing interest in a dispute provides capital to a claimant to fund legal costs and disbursements in exchange for a share of the proceeds if the claim succeeds. The funder bears the downside risk: if the claim fails, the funded party typically owes nothing. The arrangement is non-recourse, recovery depends on the outcome of the case, not the claimant’s balance sheet.

Industry observers expect the litigation finance Singapore market to expand rapidly following the 2026 reforms, with several international funders already increasing their regional presence to serve the growing demand.

Litigation Funding in Singapore, What Changed in 2026

Singapore now permits third-party funding for prescribed categories of dispute, having removed the historical doctrinal barriers that previously confined funding arrangements to narrow exceptions. The reforms rested on two pillars: statutory amendment and subordinate regulation.

Abolition of Maintenance and Champerty

The 2026 amendments to the Civil Law Act formally abolished the torts of maintenance and champerty in Singapore. Historically, these doctrines made it unlawful for a third party with no legitimate interest in litigation to fund or profit from it. The abolition, a recommendation of the Civil Justice Commission and broadly modelled on reforms already implemented in England and Wales, removed the principal legal barrier to third-party funding and signalled Parliament’s intent to encourage access to justice and efficient dispute resolution.

Civil Law (Third-Party Funding) Regulations

The Civil Law (Third-Party Funding) Regulations, published via the Attorney-General’s Chambers (SSO), set out the qualifying criteria that a funder must satisfy before entering into a funding arrangement. These include capital adequacy thresholds, fit-and-proper requirements, and obligations concerning the management of funded proceedings. The Regulations define the types of proceedings for which funding is permissible and prescribe the conditions under which funding agreements may operate.

MinLaw Guidance Note

The Ministry of Law, in conjunction with the Law Society of Singapore, issued a Guidance Note on Third-Party Funding. The Guidance Note addresses the professional conduct obligations of lawyers who advise funded parties, including duties of disclosure to the court or tribunal, management of potential conflicts of interest, and the handling of confidential communications between funded parties and funders.

Key Legislative and Regulatory Timeline

Which Disputes and Parties Are Eligible for Third-Party Funding Singapore

Not every claim qualifies for third-party funding under the 2026 framework. The Civil Law (Third-Party Funding) Regulations confine permissible funding to prescribed categories of proceedings, and impose conditions on both the funded party and the funder.

Eligible Proceedings

• International arbitration. Arbitrations seated in Singapore and administered under recognised institutional rules (SIAC, ICC, LCIA and others) are eligible. This category has driven the majority of funded cases to date.
• SICC proceedings. Prescribed disputes before the Singapore International Commercial Court are eligible, reflecting the SICC’s role as a forum for complex cross-border commercial litigation.
• Insolvency-related proceedings. Claims brought by liquidators or judicial managers, including avoidance actions, preference claims and wrongful-trading proceedings, may be funded.
• Related mediation. Mediation proceedings connected to an eligible dispute (for example, a mediation arising from or ancillary to an SICC case or international arbitration) fall within the scope of the Regulations.

Qualifying Funders

Under the Regulations, a qualifying funder must meet prescribed capital adequacy requirements and satisfy fit-and-proper criteria. The early indications suggest that the capital threshold is designed to ensure that only well-capitalised, professionally managed entities participate, screening out speculative or under-resourced operators. Funders must also maintain adequate processes for managing conflicts of interest and preserving the funded party’s control over key litigation decisions.

SICC vs Domestic High Court, Practical Considerations

A critical distinction for in-house teams evaluating SICC litigation funding is forum selection. Domestic High Court proceedings do not fall within the prescribed categories unless they involve insolvency-related claims. For commercial parties contemplating a high-value cross-border dispute, structuring the claim as an SICC action or an international arbitration seated in Singapore is the practical gateway to funding eligibility. The likely practical effect of the reforms is that parties and their counsel will increasingly weigh fundability as a factor in forum selection at the outset of a dispute.

Funding Models and Commercial Terms, How Litigation Finance Works

The litigation finance market offers several distinct funding models, each suited to different claim profiles and risk appetites. Understanding these models is essential for general counsel negotiating term sheets with prospective funders.

Common Funding Models

Typical Economics

Market practice in the litigation funding Singapore sector varies, but industry observers report the following general parameters:

• Funder’s share of recoveries. Typically ranges from 15% to 50% of net recoveries, depending on claim size, complexity, duration and risk profile. Smaller or riskier claims command higher funder shares.
• Multiple-of-investment return. Some funders structure returns as a multiple of the capital deployed (e.g., 2x–4x the investment), with the funded party retaining the balance.
• Cap on fees. Sophisticated claimants often negotiate a cap, limiting the funder’s total return to a fixed percentage of the gross recovery or a multiple of committed capital, whichever is lower.
• Default and exit provisions. Funding agreements typically permit the funder to withdraw funding if specified conditions are breached (e.g., material adverse change in merits, failure to comply with reporting obligations) or if the claim’s prospects fall below a defined threshold.

Selecting a Funder and the Due Diligence Process

Choosing the right funder is as important as structuring the funding agreement itself. A mismatch, in terms of capital commitment, risk appetite, sector expertise or governance expectations, can compromise both the commercial outcome and the litigation strategy.

Practical Steps for Funder Selection

• Verify qualifying status. Confirm the funder meets the Regulations’ capital adequacy and fit-and-proper criteria. Request audited financial statements and regulatory confirmations.
• Assess track record. Evaluate the funder’s experience with comparable claims, by sector, claim size, forum (SICC vs arbitration) and jurisdiction.
• Conflict checks. Run conflict-of-interest searches across the funder’s portfolio. A funder that has financed adverse parties or competing claims in the same sector may create irreconcilable conflicts.
• Confidentiality and NDAs. Before disclosing case materials, execute a robust non-disclosure agreement that defines permitted use, restricts onward sharing, and includes an undertaking to return or destroy materials if the funder declines the case.
• Data room. Prepare a structured data room containing the key pleadings, legal opinions on merits, quantum assessments, adverse costs estimates and budget projections. A well-organised data room accelerates funder decision-making and signals professionalism.

Red Flags

• Funders unwilling to disclose their own financial position or regulatory status.
• Pressure to accept non-standard governance provisions (e.g., funder veto over settlement without clear justification).
• Unusually aggressive return expectations that leave insufficient recovery for the claimant.
• Absence of a clear exit or termination mechanism.

Funding Agreement Checklist and Drafting Notes

The funding agreement is the central document governing the commercial, procedural and governance dimensions of the funded claim. A poorly drafted agreement can expose the funded party to loss of control over settlement, inadequate privilege protection and disputes with the funder that distract from the underlying litigation. The checklist below provides a clause-level framework for drafting or reviewing a litigation funding agreement under Singapore’s 2026 rules.

Key Commercial Clauses

• Funding amount and drawdown schedule. Specify the total capital committed, the drawdown mechanism (lump sum or staged disbursements), and any conditions precedent to each drawdown. Sample clause: “The Funder shall make available to the Funded Party the Committed Amount of S$[X], to be drawn in tranches upon written request by the Funded Party, subject to the conditions precedent set out in Schedule 1.”
• Permitted use of funds. Define the scope of expenditure covered, legal fees, disbursements, expert costs, adverse costs insurance premiums. Prohibit use for unrelated purposes.
• Carry percentage / waterfall. Set out the priority of payments from gross recoveries. A typical waterfall: (1) reimbursement of the funded party’s own unreimbursed costs; (2) repayment of the funder’s deployed capital; (3) funder’s share of net proceeds at the agreed percentage; (4) balance to the funded party. Sample clause: “Net Proceeds shall be distributed in the following order of priority: first, to the Funded Party in reimbursement of Unreimbursed Costs; second, to the Funder in repayment of Deployed Capital; third, to the Funder an amount equal to [X]% of the remaining Net Proceeds; and fourth, the balance to the Funded Party.”
• Cap on funder return. Consider a cap clause: “Notwithstanding the above, the Funder’s total return shall not exceed the lower of (i) [X]% of Gross Proceeds and (ii) [Y] times the Deployed Capital.”

Governance and Control

• Litigation management. The funded party should retain ultimate control over litigation strategy, including decisions on pleadings, evidence and procedural applications. The funder’s right to information should be clearly scoped, typically regular case reports and budget updates, but not unfettered access to privileged communications. Sample clause: “The Funded Party shall retain sole conduct and control of the Proceedings. The Funder shall have the right to receive quarterly Case Reports but shall not direct or instruct the Funded Party’s legal advisers.”
• Settlement. Settlement provisions require careful calibration. The MinLaw Guidance Note emphasises that the funded party must retain the right to accept or reject settlement offers. A consent mechanism, where the funder’s views are sought but not determinative, is standard. Sample clause: “The Funded Party shall not settle the Proceedings without first consulting the Funder in writing and considering the Funder’s views in good faith, provided that the Funded Party’s decision shall be final.”
• Appointment of lawyers. Specify whether the funded party retains the right to select and instruct counsel, and any role the funder plays in approving the legal team or fee arrangements.

Termination, Default and Assignment

• Funder withdrawal. Define the circumstances under which the funder may withdraw, typically a material adverse change in the merits of the claim, the funded party’s breach of reporting obligations, or a determination by independent counsel that prospects have fallen below a specified threshold. Include a notice period and an obligation to fund costs incurred up to the termination date.
• Funded party default. Specify default events (e.g., failure to cooperate, misrepresentation, use of funds for unauthorised purposes) and the consequences.
• Assignment. Address whether either party may assign its rights under the agreement. Funded parties should resist unrestricted assignment by the funder to unknown third parties.

Confidentiality, Disclosure to Court/Tribunal and Privilege

• Confidentiality. The agreement should contain mutual confidentiality obligations. However, carve-outs must account for disclosure obligations to the court or arbitral tribunal under the Regulations and the MinLaw Guidance Note. Sample clause: “Each party shall keep confidential the existence and terms of this Agreement, save to the extent disclosure is required by law, regulation, court or tribunal order, or the Rules of Court.”
• Privilege protection. Communications between the funded party, its lawyers and the funder must be structured to preserve litigation privilege. The safest approach is to ensure that all funder communications are routed through external counsel and are made for the dominant purpose of obtaining legal advice or conducting litigation.

Security, Remedies and Enforcement

• Security for costs undertaking. Where the funder provides an adverse costs indemnity, the agreement should specify the form and conditions of any security for costs undertaking to the court or opposing party.
• Dispute resolution. Include a dispute resolution mechanism for disputes between the funder and funded party, typically arbitration or expert determination, to avoid the funded litigation itself being disrupted by a satellite dispute.

Procedural and Evidential Issues: Disclosure, Privilege and Settlement Mechanics

Managing procedural risk is one of the most critical aspects of any funded claim. The three principal areas of concern are privilege, disclosure and settlement mechanics.

Privilege and Communications with the Funder

The general rule is that communications between a party and its lawyer are protected by legal professional privilege. However, communications with a funder, a commercial third party, carry a risk of waiver. The MinLaw Guidance Note advises that funded parties and their counsel structure communications with the funder through the legal team, ensuring that documents shared with the funder are prepared for the dominant purpose of the litigation and are clearly marked as privileged and confidential.

In practice, this means:

• All case updates and reports to the funder should be prepared by or at the direction of external counsel.
• The funded party should avoid direct communications with the funder about case strategy unless counsel is involved.
• Data rooms used during funder due diligence should operate under a common-interest privilege framework, supported by an appropriate NDA.

Disclosure Obligations to the Court or Tribunal

Under the Regulations and the MinLaw Guidance Note, a funded party is generally required to disclose the existence of the funding arrangement, and the identity of the funder, to the court or tribunal and to all other parties. The scope of disclosure obligations varies by forum:

• SICC. The SICC registry expects disclosure of the existence and identity of the funder at an early stage. The terms of the funding agreement itself are not ordinarily disclosable, although the court retains discretion to order broader disclosure in appropriate cases.
• International arbitration. Institutional rules (e.g., SIAC) increasingly require disclosure of third-party funding arrangements. The funded party should check the applicable rules and any tribunal directions at the outset.

When to Seek a Protective Order or In-Camera Treatment

Where the funded party is concerned that disclosure of the funding agreement’s terms could prejudice its position, for example, by revealing its litigation budget or settlement parameters, it should consider applying for a protective order or requesting that certain information be treated in camera. Early indications suggest that courts and tribunals are receptive to such applications where legitimate confidentiality concerns are demonstrated, provided that the existence and identity of the funder are disclosed.

Settlement Mechanics

Settlement of a funded claim involves additional layers of governance. The funded party must comply with any consultation obligations under the funding agreement before accepting or rejecting a settlement offer. The settlement proceeds must be distributed in accordance with the waterfall provisions. Where multiple funders or intercreditor arrangements are in play, a clear priority agreement is essential to avoid post-settlement disputes.

Suggested court-safe wording for settlement consent: “The Funded Party confirms that it has consulted the Funder in accordance with the terms of the Funding Agreement and that the decision to accept/reject the settlement offer is the Funded Party’s own.”

SICC and Arbitration: Forum Choice and Drafting Tips for Litigation Funding Singapore

Forum selection is one of the first strategic decisions a funded party and its counsel must make. The choice between the SICC and international arbitration has material implications for fundability, procedural management and enforcement.

When to Prefer the SICC

• The dispute involves multiple parties across jurisdictions and the claimant requires a binding judgment (rather than an award) that can be enforced under reciprocal enforcement arrangements.
• The claimant values the transparency and precedential value of SICC judgments.
• The SICC’s case management tools, including its power to order disclosure and its familiarity with funded proceedings, are advantageous for the claim.

When to Prefer International Arbitration

• The dispute is subject to an existing arbitration clause, or the parties have agreed to arbitrate.
• The claimant values confidentiality, arbitration proceedings are generally private, which may be preferable where the existence or details of funding are commercially sensitive.
• Enforcement under the New York Convention is required (particularly for awards to be enforced in jurisdictions that do not recognise SICC judgments).

Drafting Tips

• Arbitration agreements. Ensure the arbitration clause specifies Singapore as the seat. A well-drafted seat clause anchors the funding arrangement within the prescribed proceedings framework. Model wording: “Any dispute arising out of or in connection with this contract shall be referred to and finally resolved by arbitration seated in Singapore, administered by [SIAC/ICC] in accordance with the [applicable] Rules.”
• SICC filings. When commencing SICC proceedings, include an early notification of the funding arrangement in the originating process or first case management conference submission, identifying the funder and confirming compliance with the Regulations.
• Funding-friendly clauses in commercial contracts. Industry observers expect that forward-looking commercial contracts will increasingly include clauses expressly permitting assignment of claims to funded vehicles or acknowledging the possibility of third-party funding, to avoid later disputes about the validity of the funding arrangement.

Risks of Litigation Funding: Mitigation and Governance

Third-party funding introduces commercial, procedural and reputational risks that must be actively managed. The principal risks and corresponding mitigation strategies are set out below.

• Loss of control. Risk: the funder exerts undue influence over litigation strategy or settlement. Mitigation: robust governance clauses preserving the funded party’s sole conduct and control, with the funder’s role limited to consultation.
• Funder insolvency. Risk: the funder becomes unable to meet its funding commitments mid-case. Mitigation: verify the funder’s capital adequacy at the outset; include a commitment to maintain adequate reserves or to provide security (e.g., an escrow or bank guarantee).
• Adverse costs exposure. Risk: the funded party loses and faces an adverse costs order that the funder does not cover. Mitigation: secure an adverse costs indemnity from the funder or obtain after-the-event (ATE) insurance.
• Conflicts of interest. Risk: the funder funds competing or adverse claims. Mitigation: conduct thorough conflict checks before engagement; include a non-conflict warranty in the funding agreement.
• Double recovery. Risk: multiple funding or insurance arrangements overlap, leading to disputes over priority. Mitigation: disclose all funding and insurance arrangements to each funder; establish a clear intercreditor priority agreement.
• Reputational risk. Risk: association with a funder perceived as aggressive or litigious may affect the funded party’s commercial reputation. Mitigation: choose a reputable, well-established funder with a track record in the relevant sector.

Mitigation Checklist

• Obtain ATE insurance for adverse costs.
• Negotiate an escrow or reserve fund mechanism for committed capital.
• Include a dispute resolution clause (arbitration or expert determination) for funder-claimant disputes.
• Require quarterly financial attestations from the funder.
• Review and update the funding agreement at key case milestones (e.g., after disclosure, after expert reports, before trial).

Quick Comparison: Key Legislative Dates and Funder Obligations

The table below summarises the core instruments governing litigation funding in Singapore and their practical effects for commercial parties.

The combined effect of these instruments is to create a regulated, transparent market for litigation funding in Singapore, one that balances access to justice against the need to protect funded parties and the integrity of proceedings.

Conclusion: Practical Next Steps for General Counsel

The 2026 reforms have made litigation funding Singapore a genuinely viable option for corporate claimants with meritorious high-value claims. To take advantage of the new framework, in-house teams should take three immediate steps:

1. Eligibility triage. Assess whether the claim falls within the prescribed categories (international arbitration, SICC proceedings, insolvency-related claims or related mediation) and whether forum selection can be structured to maximise fundability.
2. Shortlist funders. Identify qualifying funders with relevant sector expertise, verify their regulatory status and capital adequacy, and run conflict checks before sharing case materials.
3. Draft or review the term sheet. Use the funding agreement checklist in this guide to negotiate heads of terms that protect the funded party’s control, preserve privilege, and provide clear waterfall and termination provisions.

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Sources

1. Attorney-General’s Chambers (SSO), Civil Law (Third-Party Funding) Regulations
2. Ministry of Law (MinLaw), Guidance Note: Third-Party Funding
3. Chambers & Partners, Litigation Funding 2026 (Singapore)
4. Burford Capital, Litigation Funding in Singapore
5. Deminor, Litigation Funding Overview (Singapore)
6. Clyde & Co, The Landscape of Litigation Funding in Singapore
7. Exton Advisors, EGUIDE to Litigation Funding in Singapore
8. Clifford Chance, Third-Party Funding in Singapore: Out of the Shadows