Litigation funding—Hong Kong—Q&A guide
Litigation funding—Hong Kong—Q&A guide

The following Dispute Resolution practice note provides comprehensive and up to date legal information covering:

  • Litigation funding—Hong Kong—Q&A guide
  • 1. Is third-party litigation funding permitted? Is it commonly used?
  • 2. Are there limits on the fees and interest funders can charge?
  • 3. Are there any specific legislative or regulatory provisions applicable to third-party litigation funding?
  • 4. Do specific professional or ethical rules apply to lawyers advising clients in relation to third-party litigation funding?
  • 5. Do any public bodies have any particular interest in or oversight over third-party litigation funding?
  • 6. May third-party funders insist on their choice of counsel?
  • 7. May funders attend or participate in hearings and settlement proceedings?
  • 8. Do funders have veto rights in respect of settlements?
  • 9. In what circumstances may a funder terminate funding?
  • More...

This Practice Note contains a jurisdiction-specific Q&A guide to litigation funding in Hong Kong published as part of the Lexology Getting the Deal Through series by Law Business Research (published: August 2020).

Authors: Herbert Smith Freehills LLP—Briana Young; Dominic Geiser; Priya Aswani; Simon Chapman

1. Is third-party litigation funding permitted? Is it commonly used?

Third-party funding is not generally permitted for litigation in the Hong Kong courts. Such funding is considered infringement of the doctrines of champerty and maintenance, which prohibit any party without a legitimate interest in the action from assisting or encouraging a party to that action in return for a share in the proceeds if the claim succeeds. Champerty and maintenance are both torts under Hong Kong law. They are also indictable offences at common law, punishable under section 101I of the Criminal Procedure Ordinance by imprisonment and a fine.

There are three—limited—exceptions to the general prohibition on litigation funding, namely the:

  1. ‘common interest’ cases, involving third parties with a legitimate interest in the outcome of the litigation;

  2. where ‘access to justice considerations’ apply; and

  3. a miscellaneous category, including insolvency proceedings.

These exceptions were set out in Unruh v Seeberger [2007] 10 HKCFAR 31. Where one of the exceptions applies, litigation funding will be permitted.

Litigation funding is most commonly used in Hong Kong in respect of the third category: insolvency proceedings. Hong Kong courts will permit

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