Singapore High Court Affirms Validity of Litigation Funding Outside Insolvency Context

In a landmark decision, the General Division of the High Court in DNQ v DNR [2025] SGHC 152 has upheld the validity of a third-party litigation funding agreement in the context of private enforcement proceedings. This marks the first reported Singapore decision recognising litigation funding outside the insolvency or arbitration contexts, and affirms the judiciary’s commitment to facilitating access to justice through modern financing mechanisms.

Setia Law acted for the claimant in this precedent-setting case.

The claimant, a UK citizen, sought to enforce judgment debts of approximately £31.2 million obtained in UK family court proceedings against her former spouse, a Chinese national and Singapore permanent resident. Due to financial hardship and significant health challenges, the claimant entered into a litigation funding agreement with a professional funder to support the enforcement proceedings in Singapore.

The defendant applied to strike out the claim on the basis that the funding agreement was champertous and rendered the proceedings an abuse of process. He also sought a stay of proceedings and opposed the claimant’s application for the appointment of receivers over his assets.

The Court applied the three-part test established in Re Vanguard Energy Pte Ltd [2015] 4 SLR 597, as refined by the Court of Appeal in DGJ v Ocean Tankers (Pte) Ltd (in liquidation) [2024] 2 SLR 790. The test considers whether:

• The agreement is incidental to a transfer of property;
• The funder has a legitimate interest in the litigation; or
• There is no realistic possibility that the administration of justice may suffer as a result of the agreement.

The claimant relied solely on the third exception.

Access to Justice
The Court found that the claimant was in a state of serious financial hardship and suffered from multiple physical and mental health conditions. Without the funding agreement, she would have been unable to pursue enforcement of the judgment debts. The Court accepted that the agreement was necessary to afford her access to justice.

Compensation Structure
Under the agreement, the funder provided up to US$6 million in funding and was entitled to a return of up to three times the amount funded, amounting to approximately 56% of the proceeds. The Court held that this structure was not objectionable, particularly given the risks associated with cross-border enforcement and the claimant’s otherwise limited prospects of recovery.

Control Over Proceedings
The Court examined the terms of the agreement and found that the claimant retained full control over the conduct of the litigation. While the funder had rights to receive updates and attend meetings, these were passive in nature and did not amount to undue influence or control. The Court emphasised that public policy concerns are addressed where the funded party retains primary control over the proceedings.

Rejection of Narrow Interpretation of the Civil Law Act
The defendant argued that litigation funding should be confined to prescribed proceedings under the Civil Law Act and that any development of the law should be left to Parliament. The Court rejected this submission, affirming that the common law exceptions under the Vanguard test remain applicable and that the absence of a statutory exception does not preclude the courts from recognising valid funding arrangements in other contexts.

This decision confirms that litigation funding is not confined to insolvency or arbitration proceedings and may be valid in High Court litigation where it does not prejudice the administration of justice. It sets a precedent for broader acceptance of third-party funding in Singapore and provides clarity for funders, litigants, and practitioners alike.

The Court’s reasoning reflects a pragmatic and principled approach to litigation finance, recognising its role in promoting access to justice while safeguarding the integrity of the judicial process.

This case represents a significant development in Singapore’s litigation funding jurisprudence. The Court’s detailed engagement with the funding agreement and its application of the refined Vanguard test demonstrate a willingness to adapt traditional doctrines to contemporary realities.

Setia Law’s Danny Ong,  Yam Wern-Jhien, Bethel Chan and Mazie Tan acted for the claimant.

Access the full judgment here.

Danny Ong
Managing Director
danny.ong@setialaw.com

Yam Wern-Jhien
Director
wern.jhien.yam@setialaw.com

Bethel Chan 
Associate Director
bethel.chan@setialaw.com

Mazie Tan
Senior Associate
mazie.tan@setialaw.com