SINGAPORE: An Introduction

In recent years, Singapore has taken significant steps in strengthening its status as a trusted, conducive and efficient international commercial dispute resolution hub.

This overview focuses on the following developments in the past two years, all of which serve to further strengthen Singapore’s status as an international commercial dispute resolution hub: (i) third-party funding, (ii) conditional fee agreements, and (iii) the new Rules of Court 2021.

Third-Party Funding   

Third-party funding refers to the funding of legal proceedings by a third party which is unconnected to the dispute, in return for financial gain such as a share of a settlement sum or any sum awarded to the funded party in the proceedings.

In Singapore, only entities which meet the criteria set out in the Civil Law (Third-Party Funding) Regulations 2017 (the “TPF Regulations”) may provide third-party funding.

Under Regulation 4 of the TPF Regulations, the third-party funder must carry on the principal business, in Singapore or elsewhere, of funding of costs of dispute resolution proceedings and have a paid-up share capital of not less than SGD5 million (or the equivalent amount in foreign currency) or not less than SGD5 million (or the equivalent amount in foreign currency) in managed assets.

Singapore first introduced a framework for third-party funding in 2017 for international arbitration proceedings and related court and mediation proceedings. From 28 June 2021, the categories of proceedings for which third-party funding is permitted in Singapore are extended to include:

– domestic arbitration proceedings;

– court proceedings arising from or connected with domestic arbitration proceedings; 

– proceedings commenced in the Singapore International Commercial Court (SICC), for so long as those proceedings remain in the SICC, and appeals arising from any decision made in such proceedings; and

– mediation proceedings relating to any of the proceedings above (see Regulation 2 of the Civil Law (Third-Party Funding) (Amendment) Regulations 2021).

Conditional Fee Agreements  

Under the Legal Profession Act 1966 (LPA), conditional fee agreements refer to agreements between a lawyer and a client which provide for the whole or any part of the remuneration and costs in respect of contentious proceedings (in or outside Singapore) conducted by the lawyer to be payable only in specified circumstances.

Contingency fee agreements (ie, agreements where the lawyer shares in an agreed percentage of the sum recovered by the client with no direct correlation to the work done) continue to be prohibited in Singapore.

Examples of conditional fee agreements include “no win, no fee” and “no win, less fee” agreements.

In a “no win, no fee” agreement, the lawyer’s professional fees and the agreed uplift fee (if applicable) will not be payable if the specified circumstances are not met. In a “no win, less fee” agreement, if the specified circumstances are not met, only a discounted professional fee will be payable by the client.

From 4 May 2022, lawyers in Singapore are permitted to enter into conditional fee agreements with clients in the same categories of proceedings as the third-party funding regime (see above).

The statutory provisions on conditional fee agreements apply to all Singapore lawyers and Singapore law practices as well as certain registered foreign lawyers and foreign law practices (see section 115A of the LPA).

Rules of Court 2021 (ROC 2021)   

The ROC 2021 came into operation on 1 April 2022. They replaced the previous Rules of Court (Cap 322, R 5, 2014 Rev Ed), which continue to apply to civil proceedings and appeals filed before 1 April 2022.

The ROC 2021 are to be read with the new Supreme Court Practice Directions 2021, which also came into operation on 1 April 2022.

The ROC 2021 seek to enhance Singapore’s civil justice system by simplifying rules and modernising the language, streamlining procedural steps and enabling greater judicial control of the entire litigation process.

The ROC 2021 are underpinned by the following five Ideals: (i) fair access to justice; (ii) expeditious proceedings; (iii) cost-effective work proportionate to the nature and importance of the action, the complexity of the claim as well as the difficulty or novelty of the issues and questions it raises and the amount or value of the claim; (iv) efficient use of court resources; and (v) fair and practical results suited to the needs of the parties (see Order 3 Rule 1 of the ROC 2021).

The salient features of the ROC 2021 include the following.

First, under Order 5 Rule 1(1), a party to any proceedings has the duty to consider amicable resolution of the dispute before the commencement and during the course of any action or appeal.

Order 5 Rule 1(2) provides that a party is to make an offer of amicable resolution before commencing the action unless it has reasonable grounds not to do so. Further, Order 5 Rule 1(4) provides that a party to any proceedings must not reject an offer of amicable resolution unless it has reasonable grounds to do so.

Second, the court will, as far as possible, order a Single Application Pending Trial (SAPT) for matters which used to be the subject of interlocutory applications under the previous Rules of Court, such as addition or removal of parties, security for costs, further and better particulars, amendment of pleadings, striking out and production of documents (ie, what used to be referred to as discovery of documents) (see Order 2 Rule 9 of the ROC 2021).

The purpose of the SAPT is to prevent parties from litigating in a step-by-step fashion and generating a host of interlocutory applications and appeals. It is noteworthy that a SAPT may not necessarily be heard before the same judge or registrar at the same hearing. The matters in SAPTs can be disposed of over several hearings and be placed before different judges and/or registrars.

Third, under the previous Rules of Court, parties would typically file and exchange affidavits of evidence-in-chief (AEICs) only after discovery of documents had been completed and interlocutory applications had concluded.

Now, under Order 2 Rule 8 of the ROC 2021, the court may order the parties to file and exchange AEICs of all or some witnesses after pleadings have been filed and served but before any exchange of documents and before the court considers the need for any application.

The rationale for ordering AEICs before the production of documents includes avoiding the possibility that witnesses may adjust their evidence to match disclosed documents, crystallising the issues and streamlining matters to be dealt with in the SAPT and reducing the scope of disclosure and potentially obviating the need for expert evidence.

The developments set out above demonstrate Singapore’s firm commitment to the growth of its legal sector and ensuring that it remains attractive to investors and businesses.