Third-Party Funding (TPF) comes up in international arbitration. Agreements typically require a successful party to reimburse the sums provided by the funder and pay an uplift. There is debate as to whether this uplift (TPF Costs) can be recovered in international arbitration from the unsuccessful party. Tribunals have discretion in costs allocation. The types of costs that can be considered are typically prescribed in institutional rules and the arbitral law of the Seat.

The recent decision of DTH v DTF[1] crystallises the position in Singapore. The Singapore International Commercial Court has refused to annul an award where the arbitral tribunal concluded that it did not have the power to award TPF Costs. This is to be distinguished from the position in England & Wales where TPF Costs have been found to be recoverable.[2] A funded party in a Singapore Seat will need to give strategic thought to the consequences of DTH v DTF.

DTH v DTF

Background

The claimants obtained external funding to prosecute claims which arose out of shareholder agreements. The TPF agreement entitled the funder to a reimbursement of the funded amount, along with a pre-determined multiple of this amount or a percentage of the total sum awarded. The claimants prevailed on the merits but recovered USD 14.7 million relative to USD 65 million as claimed. The funder was entitled to USD 14.6 million for TPF Costs. In Costs Proceedings, the claimants also sought TPF Costs. The arbitral tribunal, by majority, awarded only legal costs and rejected TPF Costs.

Majority’s Reasoning

The Majority found that TPF Costs did not fall within ‘other costs’ under Rule 37 of the SIAC Rules 2016 (2016 Rules) and that the parties’ agreement on Rule 37 did not confer a power on the arbitral tribunal to award TPF Costs. The Majority also noted that as per section 12(5) of the Singapore International Arbitration Act, it only had the power to award relief that could otherwise be awarded by the General Division of the Singapore High Court. The Singapore High Court cannot award TPF Costs and the Majority found itself similarly constrained in arbitration.[3] It also found that the TPF agreement could not be properly characterised as an agreement for ‘funding’.[4]

The Court’s Decision

The claimants challenged the Costs Award on the basis that (i) it contravened public policy, and that (ii) the arbitral procedure adopted by the arbitral tribunal was not in accordance with the parties’ agreement.[5] Both grounds were dismissed.

The Court found that the claimants’ suggested public policy, one that would necessitate recovery of TPF Costs to ensure access to justice, did not exist in Singapore. It found that the claimants’ real complaint appeared to be that the quantum awarded was such that any gain would be wiped out after paying the funder. The Court found that this consequence was a risk that any party engaged in dispute resolution takes. In light of Order 22 Rule 1(5) of the SICC Rules, the Court found that Singapore’s public policy was incompatible with recovery of TPF Costs [para 72(d)].

The claimants’ related challenge centred on Rule 37 of the 2016 Rules and SIAC’s Practice Note 01/2017 (Practice Note). The Practice Note states that an arbitral tribunal may take account of a funder’s involvement in apportioning the costs of the arbitration. The claimants argued that the Majority’s determination that it did not have the power to award TPF Costs contradicted agreed procedure (which did grant such power).

The Court held that Rule 37 of the 2016 Rules was not a part of ‘arbitral procedure’ as contemplated under Article 34(2)(a)(iv) of the Model Law. It found that Rule 37 only authorised an arbitral tribunal’s disposition of costs and did not prescribe any procedure for such disposition. It relied on PT Perusahaan Gas Negara (Persoro) TBK v CRW Joint Operation[6] to illustrate that ‘arbitral procedure’ contemplated by Article 34(2)(a)(iv) meant, for example, rules on timelines for submission of answers to requests for arbitration. The Court found that even if Rule 37 was procedural in nature, it was up to the arbitral tribunal to decide whether it applied, and if so, how it ought to be applied. Additionally, the Court reaffirmed Justice Judith Prakash’s view in VV v VW[7] that the principle of proportionality does not apply in strict terms in costs assessment in international arbitration.

Position in London

In Essar Oilfields Services Ltd. v Norscot Management PVT Ltd,[8] the English High Court found that TPF Costs fell within ‘other costs of the parties’ under section 59(1)(c) of the Arbitration Act 1996 and were therefore recoverable. It rejected the notion that the words ‘other costs’ ought to be construed by reference to only the English Civil Procedure Rules. Recoverability as a matter of English law was confirmed in Tenke Fungurume Mining S.A. v Katanga Contracting Services S.A.S.[9] Arbitral tribunals seated in England & Wales have the power to assess and award TPF Costs.

Our Thoughts

DTH v DTF is an important judgment for three short reasons:

• Singapore’s public policy of access to justice has been found compatible with TPF Costs being irrecoverable. The Court has also observed that access to justice is compatible with less than full recovery of legal costs.[10] Thus, Singapore-seated arbitral tribunals may now be unwilling to award TPF Costs even if the institutional rules are permissive. We note that Rule 38.6 of the new SIAC Rules 2025 adopts the Practice Note and states that ‘the Tribunal may take into account any [TPF] agreement in apportioning costs under these Rules’.

• The Court did not consider a scenario where a claimant is driven to impecuniosity by the respondent’s conduct. Under Rule 58.1 of the SIAC Rules 2025, an arbitral tribunal is mandated to consider, in costs allocation, circumstances it considers relevant, including conduct. A limited exception permitting TPF Costs recovery in such situations may emerge. We note that in 2020, a Singapore-seated and SIAC-administered arbitral tribunal held that TPF Costs were recoverable, but declined to award them on the basis, inter alia, that the claimant was not impecunious and that the respondent had no role to play in the claimant’s decision to seek funding.[11]

• The Court determined that Rule 37 of the 2016 Rules deals with substantive matters rather than procedural matters. Thus, an arbitral tribunal’s determination under Rule 37 cannot be challenged under Article 34(2)(a)(iv) of the Model Law. Even if the institutional rules permit recovery of categories of costs, an arbitral tribunal can determine whether and how the rule applies. If an arbitral tribunal exceeds its powers, parties may seek recourse under Article 34(2)(a)(iii) of the Model Law.

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^[1] [2026] SGHC (I) 5.

^[2] Essar Oilfields Services Ltd. v Norscot Management PVT Ltd [2016] EWHC 2361 (Comm); Tenke Fungurume Mining S.A. v Katanga Contracting Services S.A.S [2021] EWHC 3301 (Comm).

^[3] Order 22 Rule 1 (5) of the Singapore International Commercial Court (SICC) Rules expressly prohibits the recovery of TPF Costs – ‘the costs of a third-party funding contract are not recoverable as part of the costs of, or costs that are incidental to [court proceedings].’

^[4] TPF was legalised in Singapore by the Civil Law (Amendment) Act 2017. The Majority and the Court found that the TPF arrangement in the present case was more in the nature of an investment.

^[5] Articles 34(2)(b)(ii) and 34(2)(a)(iv) of the UNCITRAL Model Law.

^[6] [2010] 4 SLR 672.

^[7] [2008] 2 SLR(R) 929.

^[8] [2016] EWHC 2361 (Comm).

^[9] [2021] EWHC 3301 (Comm).

^[10] Senda International v Kiri Industries Ltd [2023] 1 SLR 96 at [45-50].

^[11] Blair James Speers and Graham Paul Johnson v. MakeMyTrip Limited and Hotel Travel Limited, SIAC Case No. ARB169/16/AB at [134-198].