Originally from Handbook on Third-Party Funding in International Arbitration, Second Edition

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This report expounds on the third-party funding (“TPF”) rules

and practice of the Chinese Mainland, but does not cover those promulgated under the laws of the Hong Kong Special Administrative Region of China (“Hong Kong”) or those issued by arbitration institutions in Hong Kong. Hong Kong and the Chinese Mainland are two different jurisdictions as the laws of Hong Kong are based on the UK’s common law system which is quite different from the judicial system of the Chinese Mainland.

PART I.   THE THIRD-PARTY FUNDING LANDSCAPE

1. The TPF market in China

1.1. Please shortly describe the TPF market in your Jurisdiction.

The TPF market in China is currently in the initial stage of development and has attracted a number of domestic and overseas third-party funders.

In 2015, BANGYING was founded in China as the first domestic litigation financing agency  that helps parties participate in litigation by funding them. It started an era of integrating legal services, funds, and technologies in China. Since then, a number of domestic third-party funders have been set up in China one after another, including DSLC,  WINHC,  and Hold Capital.  They focus on different fields and present diversified funding models. For example, the typical funding scenarios of Hold Capital include domestic dispute resolution, international litigation and arbitration, intellectual property disputes, domestic and overseas enforcement and property recovery, etc.   The scenarios of DSLC include house sale, equity transfer, house lease, intellectual property disputes, etc.

In addition, overseas third-party funders are also paying attention to the emerging TPF market in China and are actively funding PRC parties to participate in domestic and overseas arbitration and litigation. For instance, Deminor Recovery Services, an internationally famous third-party funder running offices in Brussels, Luxembourg, London, etc., has reached partnership with a domestic law firm whereby it provides financial support to PRC parties (including state-owned and private enterprises, banks and investment funds and natural persons in China) in international arbitration and overseas litigation.