How In‑house Counsel Should Assess Third‑party Funding in Singapore After the Civil Justice Reforms (2026)

Singapore’s 2026 Civil Justice Reforms have fundamentally reshaped the landscape for third party funding Singapore‑wide, abolishing the common‑law torts of champerty and maintenance and replacing them with a regulated, statute‑backed framework. For general counsel, CFOs and litigation managers, these changes convert third‑party funding from a niche arbitration tool into a mainstream risk‑transfer mechanism available across virtually all categories of civil proceedings. This guide delivers a practical litigation funding checklist, covering legal, commercial, governance and procedural considerations, so that in‑house counsel can evaluate funder proposals with confidence and negotiate agreements that protect the company’s interests. Every recommendation below is grounded in the Civil Law (Third‑Party Funding) Regulations, the Ministry of Law Guidance Note, and established institutional guidance from SIAC and SIArb.

What Changed Under the Civil Justice Reforms (2026), Third‑Party Funding in Singapore’s New Legal Status and Regulatory Framework

The short answer to the most commonly asked question, Is third‑party litigation funding allowed in Singapore after 2026?, is yes, and on far broader terms than before. Prior to the reforms, third‑party funding operated under a partial exemption carved out by the Civil Law (Third‑Party Funding) Regulations, which permitted qualifying funders to finance international arbitration, certain proceedings in the Singapore International Commercial Court (SICC), and related mediation. The civil justice reforms 2026 have expanded the regime comprehensively. Below are the three pillars of change that in‑house counsel must understand.

Abolition of Champerty and Maintenance, Practical Effect

The historical torts of champerty and maintenance in Singapore historically made it unlawful for a non‑party to finance or encourage litigation in return for a share of the proceeds. The 2026 reforms abolish these doctrines as both criminal offences and civil causes of action. The practical effect is straightforward: a funding agreement can no longer be challenged or struck down on the sole basis that it constitutes maintenance or champerty. This removes a significant enforceability risk that previously hung over any third‑party funding arrangement extending beyond the categories expressly permitted by regulation. Industry observers expect this change to accelerate funder entry into the Singapore market and normalise portfolio funding of domestic commercial claims.

Formalisation of Third‑Party Funding, Who May Fund, Registration and Disclosure

Under the Civil Law (Third‑Party Funding) Regulations, only “qualifying Third‑Party Funders” may lawfully fund proceedings. A qualifying funder must carry on the principal business of funding dispute resolution proceedings and must have a minimum paid‑up share capital or managed assets of not less than S$5 million (or its foreign‑currency equivalent). The regulations do not establish a formal licensing or registration regime, but the Ministry of Law Guidance Note (Council GN 10.1.1) imposes professional obligations on Singapore‑qualified lawyers: they must disclose the existence and identity of the funder to the court or tribunal and to every other party. In‑house counsel should treat this disclosure requirement as non‑negotiable when structuring any funded claim.

Cost‑Shifting and Security for Costs Changes

The 2026 reforms also modernise cost‑shifting rules and the security for costs regime. Courts now have express discretionary power to order a third‑party funder to pay adverse costs where funding has been provided. For in‑house teams evaluating third party funding Singapore arrangements, this means that a funder’s financial standing is no longer merely a commercial concern, it is a procedural one. A thinly capitalised funder increases the risk that the court will order security for costs against the funded party, eroding the cost‑transfer benefit that made funding attractive in the first place.

Key takeaway: The 2026 reforms make third‑party funding legally permissible across civil proceedings, remove champerty risk, and introduce cost‑exposure rules that make funder due diligence critical.

Quick Decision Matrix, Is Third‑Party Funding Right for Your Matter?

Before engaging with any funder, in‑house counsel should stress‑test whether the matter is suitable for external financing. The decision matrix below maps common case profiles against scenarios where funding adds value and where it introduces unnecessary risk.

Use the following six qualifying questions as a rapid screen before any funder meeting:

1. Does the litigation budget exceed what the business unit can absorb internally over the expected duration?
2. Has independent counsel assessed the merits as strong (above 60% probability of success)?
3. Is the anticipated award or settlement quantum large enough to satisfy the funder’s return and still deliver meaningful recovery to the company?
4. Are the respondent’s assets identifiable and realistically enforceable?
5. Is the company prepared to share a degree of settlement decision‑making with the funder?
6. Can confidentiality obligations adequately protect commercially sensitive information disclosed during funder due diligence?

Action for GCs: If the answer to questions 1, 2 and 4 is “yes,” proceed to formal litigation funding due diligence. If any answer is “no,” re‑evaluate the funding case before engaging a funder.

The Litigation Funding Checklist for In‑House Counsel, Legal, Commercial, Governance and Procedural

This 12‑point checklist is designed as a practical decision tool for in‑house counsel evaluating third party funding Singapore proposals. It covers five assessment pillars: legal, commercial, governance, procedural risk, and exit mechanics. Each item is framed as a question the legal team should resolve, and document, before signing any funding agreement.

Legal Due Diligence

1. Regulatory qualification. Confirm that the proposed funder meets the definition of a “qualifying Third‑Party Funder” under the Civil Law (Third‑Party Funding) Regulations, specifically the S$5 million minimum paid‑up capital or managed assets threshold. Request audited financial statements and certificates of incorporation in the funder’s home jurisdiction.
2. Enforceability of the funding agreement. With champerty and maintenance abolished, enforceability risk has diminished but not disappeared. Verify that the agreement does not contain terms that a court could characterise as an abuse of process (for example, clauses that give the funder unilateral power to direct litigation strategy). Have external counsel confirm enforceability under Singapore law.
3. Disclosure obligations. Under the Ministry of Law Guidance Note, the commercial litigation team must disclose the existence and identity of the funder to the court and all parties. Build this disclosure timeline into the litigation plan from day one, late disclosure can be used to support an adverse costs application.

Commercial Due Diligence

4. Funder track record and portfolio concentration. Assess the funder’s litigation funding history: number of funded cases, win rate, average case duration, and portfolio concentration (a funder with capital committed predominantly to a single sector or jurisdiction may face liquidity constraints). Request references from counsel who have worked with the funder on completed matters.
5. Capital adequacy and committed capital. Distinguish between capital committed to the fund and capital called and available. If the funder operates on a drawdown model, verify that capital calls have been met consistently and that committed LP capital is contractually binding. Thinly capitalised funders represent a direct procedural risk under the 2026 security for costs regime.
6. Return model and alignment of incentives. Understand the funder’s return expectation: is it a multiple of capital deployed, a percentage of recovery, or a hybrid? Misalignment typically emerges when the funder’s minimum acceptable settlement exceeds the company’s.

Governance and Conflicts

7. Internal approval process. Most boards and audit committees will require a formal resolution authorising management to enter into a third‑party funding arrangement. Document the commercial rationale, the estimated fee range payable to the funder, and any control rights being conceded.
8. Lawyer–funder independence. The Ministry of Law Guidance Note emphasises that a lawyer’s duty remains to the client, not the funder. Ensure that external counsel’s retainer letter explicitly states this and that the funder has no right to instruct counsel directly or to receive privileged communications without the client’s express, informed consent.

Procedural and Risk Allocation

9. Security for costs exposure. Under the reformed rules, a respondent may apply for security for costs against a funded claimant, and the court may order the funder to pay adverse costs. Negotiate a clause requiring the funder to provide a costs indemnity or after‑the‑event (ATE) insurance to cover adverse costs orders.
10. Appeals and cross‑claims. Confirm whether funding covers appeals (both prosecuting and defending) and any cross‑claims or counterclaims that arise. Funding agreements that terminate on first‑instance judgment expose the company to unbudgeted appellate costs.

Exit, Settlement and Confidentiality Mechanics

11. Settlement consent and veto rights. This is the single most contentious clause in any funding agreement. Insist on a threshold mechanism: the company retains sole authority to accept or reject settlements up to a defined quantum; the funder’s consent is required only above that threshold. Never accept a clause giving the funder an absolute veto over settlement.
12. Confidentiality and data handling. Funders will require access to case memoranda, expert reports and financial projections during due diligence. Use a standalone confidentiality agreement (not merely a clause within the funding agreement) with explicit data‑return and destruction obligations upon termination.

Key takeaway: The checklist above should be completed, with written responses, before any term sheet is signed. Gaps in litigation funding due diligence are the primary source of disputes between funded parties and their funders.

Negotiation Playbook, Practical Clauses, Control Trade‑Offs and Red‑Flags

Once the checklist confirms that funding is appropriate, in‑house counsel moves to negotiation. The clauses below represent the core commercial battleground in any third party funding Singapore agreement.

Fee Structures and Waterfall

Funder returns typically follow one of three models: (a) a multiple of capital deployed (commonly 2–3x); (b) a percentage of gross recovery (commonly 20–40%); or (c) a hybrid that blends a lower multiple with a percentage carry above a threshold. The waterfall, the order in which proceeds are distributed upon recovery, determines who bears the risk of a partial recovery. In‑house counsel should insist on a waterfall that reimburses the company’s own out‑of‑pocket costs first, then the funder’s deployed capital, then the funder’s return, then the company’s remaining share.

Funder Control Clauses, Decision Rights, Litigation Plan Approvals and Settlement Veto

Funder control clauses are the most critical and most aggressively negotiated provisions. Industry‑standard agreements typically give the funder the right to: approve the litigation budget; receive periodic case updates; consent to material changes in legal strategy; and participate in settlement discussions. The line in‑house counsel must hold is between information rights (acceptable) and direction rights (unacceptable). A funder should never have the contractual power to instruct counsel, select or remove counsel, or force acceptance of a settlement. The Ministry of Law Guidance Note reinforces this by requiring lawyers to maintain their primary duty to the client.

In practical terms, negotiate a “consultation, not consent” model for strategy decisions and reserve consent rights for the funder only on settlement acceptance above an agreed monetary threshold.

Data Access and Confidentiality Safeguards

Limit the scope of data the funder can access to what is necessary for investment monitoring, typically quarterly case summaries and updated budgets. Privileged materials should be shared only under a common‑interest privilege arrangement reviewed by external counsel. Include audit‑trail provisions requiring the funder to log access to shared documents.

Red‑Flags in Funding Agreements

Action for GCs: If three or more of these red‑flags are present in a proposed term sheet, escalate to the board and consider alternative funders before proceeding.

Procedural Strategy After Reform, Security for Costs, Cost Shifting and Forum Choice

The 2026 reforms do not just affect the substantive law of funding agreements, they alter procedural dynamics in funded litigation. In‑house counsel must integrate these procedural considerations into the overall case strategy from the outset.

When to Seek Security for Costs and How Third‑Party Funding Affects This

Defendants facing a funded claimant now have a direct statutory basis to argue that the presence of a funder, particularly one without a demonstrated commitment to pay adverse costs, supports an application for security for costs in Singapore. Conversely, a well‑capitalised funder that provides a costs indemnity can actually reduce the risk of a successful security‑for‑costs application against the claimant, because the court can look to the funder’s undertaking as adequate security. The practical lesson is clear: negotiate the funder’s adverse‑costs commitment before litigation commences, and be prepared to present it to the court proactively if a security application is made.

Funded claimants who cannot demonstrate that their funder will stand behind adverse costs orders face a materially higher risk of being required to post security.

Arbitration, SICC and International Forum Considerations

Third‑party funding has been permitted in international arbitration seated in Singapore since 2017 and in SICC proceedings for several years. SIAC and SIArb have published practice guidance requiring disclosure of third‑party funding arrangements to the tribunal and to opposing parties. Under SIAC rules, a funded party must disclose the existence and identity of the funder at the earliest opportunity. SIArb’s guidelines go further, addressing potential conflicts of interest between funders and arbitrators. In‑house counsel choosing between Singapore court proceedings and arbitration should note that arbitration offers a more mature framework for funder participation, with established disclosure norms and tribunal familiarity with funded cases. Early indications suggest that the 2026 reforms will gradually close this experience gap in the domestic courts.

Costs Shifting and Settlement Dynamics

The prospect that a funder may be ordered to pay adverse costs changes settlement dynamics for both sides. Defendants may view the funder’s deep pockets as a reason to press for costs indemnities as a condition of any settlement. Funded claimants, meanwhile, should model the impact of potential adverse‑costs liability on the funder’s return, as this directly affects the funder’s willingness to continue financing the case through trial. Aligning the funder’s cost‑exposure assumptions with the litigation team’s settlement strategy early in the case is essential.

Key takeaway: Procedural reforms on security for costs and cost shifting make funder capital adequacy and costs indemnities non‑negotiable requirements, not optional commercial preferences.

Sample Negotiation Checklist and Model Language for Third‑Party Funding in Singapore

The following checklist can be used as a pre‑meeting preparation tool before any funder negotiation. The model language is provided for illustrative purposes and should be adapted by external counsel to reflect the specific terms of each matter.

Pre‑meeting checklist, actionable asks:

• Capital verification. Request the funder’s most recent audited financial statements and confirmation of capital available for deployment (not merely committed).
• Adverse‑costs commitment. Ask whether the funder will provide a costs indemnity, after‑the‑event insurance, or both, and on what terms.
• Settlement consent threshold. Propose a defined monetary threshold below which the company has sole settlement authority.
• Counsel independence. Confirm that the funder will not have the right to instruct, select or remove external counsel.
• Appeals and counterclaims. Establish whether funding extends to appeals (both prosecuting and defending) and to the defence of any counterclaims.
• Termination rights. Negotiate mutual termination provisions, with the funder required to fund a reasonable wind‑down period (minimum 90 days) if it terminates without cause.
• Confidentiality undertaking. Insist on a standalone confidentiality and data‑handling agreement executed before any case materials are shared.
• Waterfall structure. Propose a distribution order that reimburses the company’s costs first.

Model clause, settlement consent (sample):

“The Funded Party shall have sole authority to accept or reject any settlement offer where the proposed settlement amount is equal to or less than [insert threshold]. For settlement offers exceeding [insert threshold], the Funded Party shall consult with the Funder and obtain the Funder’s written consent, such consent not to be unreasonably withheld or delayed. In the event of disagreement, the Funded Party’s decision shall prevail, provided that the Funded Party acknowledges that the Funder’s return shall be calculated on the basis of the settlement amount actually received.”

Model clause, adverse‑costs indemnity (sample):

“The Funder agrees to indemnify the Funded Party in full against any adverse costs order made by the court or tribunal in the Proceedings, up to a maximum aggregate amount of [insert cap]. The Funder shall, within [14] days of written request, provide security for such indemnity in the form of an irrevocable bank guarantee or after‑the‑event insurance policy naming the Funded Party as beneficiary.”

Model clause, confidentiality (sample):

“The Funder shall treat all Confidential Information received in connection with the Proceedings as strictly confidential, shall not disclose it to any third party without the prior written consent of the Funded Party, and shall return or destroy all copies within [30] days of termination of this Agreement.”

Action for GCs: Adapt these clauses with external counsel. They are starting positions, the funder will counter, and the final terms should reflect the specific risk profile of the matter and the company’s negotiating leverage.

Conclusion, Next Steps for In‑House Counsel

The 2026 Civil Justice Reforms have made third party funding Singapore a viable, regulated tool for managing litigation risk and cost. For in‑house counsel, the practical imperative is clear: use the 12‑point litigation funding checklist in this guide to structure your evaluation process, insist on adverse‑costs indemnities and settlement consent thresholds as baseline negotiating positions, and engage external commercial litigation counsel early to review any proposed funding agreement. Early indications suggest the post‑reform market will see increased funder competition and more favourable terms for funded parties, but only those who negotiate from a position of informed readiness will capture that advantage.

Start with the decision matrix, complete the checklist, and bring your external counsel and funder to the table at the same time.

Sources

1. Ministry of Law, Guidance Note: Third‑Party Funding (Council GN 10.1.1)
2. Singapore Statutes Online, Civil Law (Third‑Party Funding) Regulations
3. Allen & Gledhill, Third‑Party Funding Permitted for More Categories of Legal Proceedings in Singapore
4. Norton Rose Fulbright, Third‑Party Funding for International Arbitration in Singapore
5. WongPartnership, Opening Up Third‑Party Funding for International Arbitration in Singapore
6. Practical Law / Thomson Reuters, Third‑Party Litigation Funding (Singapore)
7. Exton Advisors, eGuide to Litigation Funding in Singapore