Is third Party Funding legal in Asia? Yes, the third party is legal in Asia and the information compiled below shows that third party funding is permissible in the vast majority of jurisdictions, but not in China or Singapore, where it is clearly not allowed.

Indonesia

There appears to be no specific information regarding the perspective and application of third party funding in international arbitrations implicating Indonesian businesses. In terms of other funding mechanisms, Indonesia allows class actions in a fashion similar to the US model. It also allows contingency and conditional fees.

Japan

No statutes or judicial opinions expressly authorize or prohibit third party funding in Japan. The rule is that parties pay their own lawyers’ fees, but the loser may pay remaining costs. The exception is that the winning plaintiff may recover reasonable attorneys’ fees from the losing defendant in certain types of cases related to public interest and certain rights.

Taiwan

In terms of costs, the “loser pays” rule applies to “litigation expenses” but not attorney fees, except in the Court of the Third Instance. International arbitration lawyers negotiate their fees directly with their clients to save time. Litigation expenses include court costs, evidentiary costs related to documents and witnesses, transcription, translation, and per diem fees and expenses for witnesses. Court charges are calculated according to a graduated formula based on the price or value of the claim, and the current version of Taiwan’s Code of Civil Procedure derives from the German Code of 1977 and adopts the same procedure.

India

India does not recognize classic third-party funding agreements, but neither does India expressly prohibit them. Attorney contingency or success fee arrangements are illegal, however, so litigants must rely on third party funding or another financial mechanism if they cannot pay for their case. India follows the loser pays rule, including attorneys’ fees. The claimant may be ordered to provide security for costs, and costs awards may be adjusted in reference to the conduct of the parties in litigating the case. Traditional insurance policies may cover litigation expenses, but separate litigation expenses insurance is uncommon.

Korea

Third party funding is not prohibited in Korea, however, it appears to be little used. Contingency fees are allowed in Korea and more common.

Malaysia

Third party funding is vulnerable to accusations of maintenance and champerty in Malaysia, particularly if the claimant is not the original titleholder to the litigation, and it is unclear whether third party funding can be used in other situations. Large commercial disputes are typically funded by the parties themselves. Attorneys may not enter into contingency fee or success fee arrangements in Malaysia.

Brunei

Third party funding is permitted in Brunei. In terms of other funding arrangements, attorneys may also make contingency fee arrangements to receive up to 30% of the damages recovered at the trial court level, or 40 % of the damages recovered after a successful appeal.

Hong Kong

Third party funding is allowed in international arbitration in Hong Kong. Insolvency is a notable exception to the prohibition on third party funding in litigation in that a liquidator or trustee is allowed to assign a chose-in-action to a litigation funder. Hong Kong Lawyers negotiate their fees directly with their clients to save time.

In terms of other case-funding mechanisms, Hong Kong courts have discretion to order costs, including attorney fees, under the traditional “loser pays” rule, and the costs payable are called “taxation.”

New Zealand

The New Zealand High Court has indicated that “non-party litigation funding” is acceptable. In terms of costs, New Zealand follows the traditional version of the “loser pays” rule (including attorney’s fees). The calculation of costs awarded is based on an “appropriate daily recovery rate” and awarded at the court’s discretion only if they are reasonable according to the court’s perspective.

Vietnam

Vietnam does not prohibit third party funding. However, there is no clear text allowing it either. Also, there is no clear jurisprudence describing the perception of Vietnam on third-party funding agreements. Concerning cost awards, Vietnam does not follow the traditional “loser pays” rule, but the winner may be refunded court fees under certain circumstances. There is only exception: the winning party may recover lawyer fees from the losing party in an intellectual property dispute.

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