Recoverability of third party funding costs in Singapore-Seated Arbitration: DTH and another v DTF and others [2026] SGHC(I) 5

In DTH and another v DTF and others [2026] SGHC(I) 5 (“DTH v DTF”), the Singapore International Commercial Court (“SICC”) considered for the first time in Singapore whether a successful claimant may recover its third party funding costs from the losing party. DTH v DTF is significant as it clarifies the extent of recoverability of third party funding costs in Singapore-seated arbitrations as a matter of public policy.

Facts

The dispute arose out of a joint venture for the provision of financing technology services. The applicants and the first and second respondents were shareholders in a joint venture company, further to shareholder and investment agreements between them. The first and second respondents subsequently terminated these agreements. The applicants were also removed as directors and terminated as employees of the joint venture company. 

The applicants successfully brought contractual breach and minority oppression claims in a Singapore-seated arbitration against the first and second respondents, as well as the joint venture company as the third respondent. The tribunal issued a partial award that, among other things, ordered the first respondent and majority shareholder to buy out the applicants’ shares in the third respondent for an approximate total of US$14.7 million.

In the arbitration, the applicants claimed incurred legal costs and disbursements of approximately US$4.5 million, as well as additional third party funding costs of approximately US$14.6 million, and an uplift of approximately US$1.4 million on incurred legal costs under a conditional fee arrangement with their solicitors.

The tribunal awarded that the first respondent should pay the applicants’ legal costs, including the costs of the arbitration. The tribunal further determined that it did not have power or authority to award the applicants their third party funding costs or the uplift claim, and declined to award these costs to the applicants. 

The applicants then applied to the SICC to set aside or remit the relevant part of the costs award to the tribunal. 

The SICC’s decision

The SICC dismissed the application in its entirety. Among other things, the SICC considered that the tribunal’s dismissal of the applicants’ claim for third party funding costs (“TPF Decision”) was not in conflict with the public policy of Singapore.

As a threshold point, the court considered that the question before it was not whether the tribunal had erred in determining that it had no power or authority to award third party funding costs. The court emphasised the well-established policy of minimal curial intervention in arbitral proceedings, and that an alleged error in the application or interpretation of Singapore law does not, without more, mean that the award is in conflict with Singapore policy.

The applicants contended that the TPF Decision conflicted with the public policy of ensuring access to justice in arbitration, said to be applicable to impecunious but deserving parties with successful claims. The gist of this contention was that access to justice necessitates the recoverability of third party funding costs, as impecunious litigants may otherwise be deterred from pursuing claims where third party funding costs are irrecoverable. As illustration, the applicants argued that their obligation to remunerate their litigation funder its third party funding costs would effectively deprive them of the awarded damages if they were not also awarded these third party funding costs from the first respondent. The applicants also contended that recoverability promotes a more complete justice for the funded party, whether in arbitration or in litigation.

The SICC rejected the applicants’ public policy contentions at the outset, reasoning that public policy principles should engage a substantial segment, if not the entirety of the public. The applicants’ claimed public policy – being one limited to arbitrants – was impermissibly narrow in scope and could not be characterised as “public” in nature. As such, the TPF Decision could not be said to be in conflict with Singapore’s public policy. 

Applying the high threshold required to establish conflict with public policy under Article 34(2)(b)(ii) of the UNICTRAL Model Law on International Commercial Arbitration as given force of law in Singapore, the SICC also held that it would not shock the conscience if the fundee had been told that their third party funding costs were not recoverable from the respondents for the following reasons:

• Although amendments were made to the Civil Law Act in 2017 that legalised third party funding for specific types of disputes, these amendments did not provide that third party funding costs are recoverable from the unsuccessful party. 
• Broadly, access to justice is compatible with less than full recoverability of legal costs, and it is commonplace for litigants to recover less than actual costs even in arbitration.
• Access to justice considerations are not a one way street, and must have regard to the interest of successful and unsuccessful litigants. As such, there would be valid considerations against the recoverability of third party funding costs in any decision as to whether or not third party funding costs are in fact recoverable.
• Specifically, Singapore’s public policy of access to justice is compatible with third party funding costs being irrecoverable, for instance, the prohibition of recovery of third party funding under the SICC’s costs regime. As such, it cannot be credibly said that the inability to recover such costs from the unsuccessful party shocks the conscience, violates Singapore’s most basic notions of morality and justice, or is injurious to the public good.

The SICC observed that while the applicants’ real grievance appeared to be the outcome of the TPF Decision relative to their ultimate recovery of damages, this realised risk of not obtaining an anticipated monetary recovery at the commencement of proceedings was the same risk as that taken by any party engaged in dispute resolution, and did not engage or conflict with the public policy of Singapore.

Commentary

The decision in DTH v DTF provides important clarification that the public policy of ensuring access to justice does not necessitate the recoverability of third party funding costs in arbitration. Parties interested in third party funding arrangements should be careful not to assume that all third party funding costs are recoverable from the losing party as of right, even if the underlying third party funding arrangements are permitted at law. 

The authors thank practice trainee, Jolene Tan, for her assistance in preparing this article.