All or Nothing – Singapore Introduces CFAs in Further Sign of Efforts to Become Dispute Resolution’s Number One

On 12 January 2022, the Parliament of Singapore passed the Legal Profession (Amendment) Bill (“the Bill”). The Bill, which allows lawyers and their clients to enter into Conditional Fee Agreements (“CFAs”) – otherwise known as ‘no win, no fee’ agreements – in certain proceedings is a further sign of what look to be continuing efforts to establish Singapore as one of the world’s premier destinations for resolving international disputes.

Typically, under the terms of a CFA, a law firm will agree that it is only entitled to bill its client for some (or all) of its fee if the claim is successful. If the claim is unsuccessful, the client will pay either no or a reduced fee. Some CFAs, including those allowed by the Bill, also enable lawyers to charge an uplift or ‘success fee’. This is an additional amount payable to the law firm in specified circumstances (usually, where the claim succeeds), over and above what would be payable if there was no CFA.

For cash-strapped business / individuals, CFAs can represent a much-needed source of funding in circumstances where they would otherwise be unable to pursue a claim. In that sense, the Bill builds upon similar ‘access to justice’ style initiatives that Singapore has introduced in recent years, such as enabling prospective claimants to utilise third-party funding (“TPF”), where a party unconnected to the dispute funds the claim (generally in exchange for a share of the damages (if any) awarded if the claim is successful). Indeed, Singapore’s Second Minister for Law Edwin Tong S.C. has announced that the scope of proceedings in which CFAs can be used by lawyers will be aligned to those under the existing TPF Framework. This includes international and domestic arbitrations, certain proceedings in the Singapore International Commercial Court, and related court and mediation proceedings.

As well as the ramifications for access to justice, the Bill’s proponents also tout its potential to ‘level the playing field’ between lawyers in Singapore and their international counterparts, with CFAs already available to prospective litigants in some form in many jurisdictions around the globe (including England and Wales). In that respect, the Bill is therefore also a statement of intent as to Singapore’s wider ambitions on the international dispute resolution circuit. Certainly, the country’s efforts to-date seem to have Singapore pointing in the right direction – Queen Mary University of London and White & Case LLP’s latest International Arbitration Survey placing Singapore and London in joint-first place among respondents when asked for their organisation’s most preferred seats. This follows the release of the Singapore International Arbitration Centre’s (“SIAC”) 2020 Annual Report, in which it announced that its caseload had crossed the 1000-case threshold for the first time.

With the passing of the Bill, Singapore’s popularity only appears likely to grow in the coming years. Recent statistics from the International Monetary Fund suggest that Asia and Pacific (“Asia-Pac”) is the fastest growing region in the world, and Singapore’s geographical location and status as a strategically important sea-air transport hub would seem to place its legal sector perfectly poised to take advantage of opportunities arising from this growth. Combined with its relative political stability and reputation for safety and impartiality, Singapore certainly seems to have the potential to serve as the go-to jurisdiction for the resolution of disputes in Asia-Pac and beyond for many years to come. Whether other jurisdictions will look to introduce their own legislative reforms to stop that from happening, remains to be seen.