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Change in arbitration funding law is ‘excellent news’

Hong Kong, 19 July 2017: Hong Kong’s long-awaited move to allow third party funding of arbitration and mediation has been welcomed by Boase Cohen & Collins Senior Partner Colin Cohen.

A bill passed by the Legislative Council means third parties can provide funding to a party involved in arbitration proceedings in return for receiving a financial benefit if the arbitration is successful.

“This is excellent news, given that we wish to see Hong Kong promoted as an international centre for arbitration. It brings us into line with many other jurisdictions, including Singapore, which recently approved similar legislation,” said Mr Cohen.

“It allows businesses involved in disputes to make better use of their financial resources and share the risks of pursuing a claim. Any business, no matter its size, is going to be happy to reduce legal costs while still being able to seek justice.

“The legislation also calls for a Code of Practice which will provide clear ethical and financial guidelines and implement safeguards against potential abuse. Overall, the change in the law is desirable and necessary.”

Mr Cohen is a Fellow of the Hong Kong Institute of Arbitrators and an Accredited General Mediator with both the Hong Kong International Arbitration Centre and the Law Society of Hong Kong.

The Arbitration and Mediation Legislation (Third Party Funding) (Amendment) Bill 2016 was passed in the Legislative Council last month following a public consultation in 2013 by the Hong Kong Law Reform Commission. It is expected to take effect later this year.

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Hong Kong is building a reputation as a regional hub for international arbitration.