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

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1.  The TPF market in Hong Kong, S.A.R. (P.R. China)

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

In spite of being a leading financial center and seat for resolving international commercial disputes, Hong Kong has been slower than other jurisdictions in the evolution of certain legal developments, mainly, third-party funding. Historically, the funding of litigation and arbitration actions by those who were not themselves parties to the action (i.e., third-party funders) was illegal under the common law doctrines of champerty and maintenance. Champerty and maintenance are torts under Hong Kong law and were also indictable offenses at common law.

Given the rise in popularity and legalization of third-party funding in numerous jurisdictions, it became necessary for Hong Kong to review its position on third-party funding for arbitration proceedings to remain competitive and to support its position as one of the leading centers of international arbitration. Following such review, as of 1 February 2019, Hong Kong fortified its position as a leading financial center and seat of arbitration and legalized third-party funding for arbitration and related mediation and arbitration court proceedings.            

1.2.  Is it dominated by local or international Funders? Which Funders are active? Which cases typically get funded?

Third-Party Funding is dominated by international funders in Hong Kong. In particular, the most active funders in the jurisdiction are (listed in alphabetical order): Burford Capital, Deminor Litigation Funding, Omni Bridgeway, and Litigation Capital Management. There are also smaller, less prevalent funders from Mainland China who fund matters seated in Hong Kong.

Prior to the legalization of third-party funding for arbitration matters and related arbitration and mediation court-proceedings, cases which were typically funded were insolvency cases as the funding of such cases has been permitted in Hong Kong since 2010.  Following the legalization of third-party funding for arbitration matters, cases that are typically funded are commercial and investment arbitration and arbitration-related mediation and court proceedings. The key factor as to which cases are funded lies in whether the third-party funder believes such case to be worthwhile to fund (i.e., cases which have a good prospect of success).