In a move aimed at ensuring that Hong Kong will remain Asia's top Asian destination for dispute resolution, a subcommittee of the city's Law Reform Commission wants to clear the path for outside funding for arbitrations.

In a report released on Oct. 19, the Third Party Funding for Arbitration Subcommittee noted that a lack of clarity in Hong Kong law on whether third-party funding is allowed in arbitration could send companies seeking to resolve commercial disputes to Singapore and other rival jurisdictions. Hong Kong still outlaws maintenance and champerty, the practice of allowing an outside party to assist with a lawsuit in exchange for part of an award, although there are some exceptions. The subcommittee calls for an update in legislation that would explicitly permit third-party funding in arbitration.

“We consider that this reform is necessary to enhance Hong Kong's competitive position as an international arbitration center and to avoid Hong Kong being overtaken by its competitors,” the report said.