Litigation Funding Comparative Guide

1 Commercial legal finance basics

1.1 How is commercial legal finance defined in your jurisdiction?

There is no single definition of 'commercial legal finance' in Hong Kong.

Legal finance is often referred to as 'third-party funding' (TPF). This is where a third-party funder funds litigation or arbitration in return for a share in the proceeds recovered (or some other financial benefit) if the proceedings are successful.

This funding is on a non-recourse basis – that is, a funded party does not have to pay the funder if the proceedings are unsuccessful.

Some parties use TPF to access financial resources to pursue claims, while others use it to manage the risks of proceedings by sharing the risk of non-recovery and preserve cash for core business activities.