Malaysia Embraces Third Party Funding In Arbitration: A New Era Begins

Malaysia has taken a major step forward in modernising its arbitration landscape with the entry into force of the Arbitration (Amendment) Act 2024 (Act) and the Code of Practice for Third Party Funding 2026 (Code). From 1 January 2026, Malaysian parties and international investors can benefit from a clear, robust, and progressive statutory regime for third party funding (TPF) in arbitration. This reform brings Malaysia into alignment with leading arbitral jurisdictions such as Singapore and Hong Kong, and signals a strong commitment to access to justice and investor confidence.

Key Features of Malaysia's Third Party Funding Regime

Scope

The new regime expressly recognizes and regulates third party funding in arbitration, abolishing the common law doctrines of maintenance and champerty for arbitration-related funding agreements.¹ It applies to domestic and international arbitrations seated in Malaysia, as well as arbitrations seated abroad or with no seat,