Third Party Funding In Arbitration In Malaysia: A Critical Examination Of Its Legality And Implications
- IJLLR Journal
- Jul 10
- 1 min read
Ms. Aditi Vyas, Doctoral Research Scholar at National Law Institute University, Bhopal
Dr. Padma Singh, Assistant Professor (Senior) at National Law Institute University, Bhopal
Ms. Vani Sharma, Doctoral Research Scholar at National Law Institute University, Bhopal
ABSTRACT
The concept of Third Party Funding (TPF) in legal proceedings, particularly in arbitration, has attracted significant international scholarly and practical discourse. It is increasingly recognized as an instrument to promote access to justice, alleviate financial burdens, and foster a more equitable playing field in litigation and arbitration. While TPF has gained widespread acceptance and is subject to robust regulation in jurisdictions such as the United Kingdom, Australia, and Singapore, its legal status in Malaysia has historically remained ambiguous, undergoing a period of nascent development characterized by cautious judicial engagement.
This article explores the contours of TPF within the Malaysian legal landscape, critically examining its legality, the evolving judicial stance, and its potential ramifications for the legal system, especially in commercial arbitration. It traces the evolution of the doctrines of champerty and maintenance which were historically formidable barriers to third-party intervention in legal claims and evaluates Malaysia's recent paradigm shift towards explicitly embracing funded legal claims. The article analyzes key judicial pronouncements, such as KS Energy Services Ltd v. BR Energy (M) Sdn Bhd, which have touched upon elements of funding, while assessing the absence of comprehensive regulatory regime governing third-party funders prior to recent legislative reforms. In doing so, the article also considers the relevance of international instruments like the UNCITRAL Model Law on International Commercial Arbitration and guidelines issued by arbitral institutions such as the Asian International Arbitration Centre (AIAC).
