Complexities in Recovering Third-Party Funding Costs in Arbitration: A Case Study from Singapore

On 2 June 2026, the Singapore International Commercial Court (“SICC”) handed down its judgment in DTH and another v DTF and others [2026] SGHC(I) 5 (“DTH”), dealing with the recoverability of third-party funding (“TPF”) costs in international arbitration. The decision concerns the Singapore-seated arbitration in Christopher Davison and Navin Rajagopalan v AirAsia Digital Sdn Bhd, AirAsia Berhad and Big Pay Pte Ltd (“Arbitration”). To pursue the Arbitration, the Applicants had entered into a Funding Agreement (“FA”) with a third-party funder ("Funder"). The arbitral tribunal (“Tribunal”) found for the Applicants on their claims against the Respondents. At the end of the Arbitration, the Applicants claimed approximately USD 14.6 million of TPF costs, in addition to legal costs and disbursements.

This blog post analyses the Tribunal’s reasoning in declining to award TPF costs. In doing so, it compares the Tribunal’s decision with an earlier decision of a Singapore-seated tribunal in Speers and Johnson v MakeMyTrip Limited and Hotel Travel Limited (“Speers”), which came to the contrary conclusion. Further, it highlights that the Tribunal’s decision raises concerns about the validity of TPF agreements in arbitrations governed by Singapore law.

The Costs Award

In the Tribunal’s final award on costs (“Costs Award”), it declined to award the TPF costs to the Applicants, despite the Applicants prevailing in the Arbitration. The Tribunal, by a 2-1 majority, held that it lacked the power to award them, for three main reasons:

First, the Tribunal held that the legislative amendments effected by the Civil Law (Amendment) Act 2017 (“2017 Amendments”) to legalise TPF in Singapore do not “operate so as to permit the recovery of the funding costs from the opposing party” (see DTH at [21]). Second, the Tribunal found that Rule 37 of the Arbitration Rules of the SIAC (6^thEdition, 1 August 2016) (“SIAC Rules 2016”) did not confer upon the Tribunal the power to allocate TPF costs, as TPF costs are not “other costs” within Rule 37. In support of this conclusion, the Tribunal relied on section 12(5) of the Singapore International Arbitration Act 1994 (“IAA”), which permits arbitral tribunals to “award any remedy or relief that could have been ordered by the General Division of the High Court”. As the High Court does not have the power to allocate TPF costs, the Tribunal likewise denied having such power (at [21]).

Third, the Tribunal found that the TPF costs in question did not fall within the scope of TPF permitted under the 2017 Amendments as the FA did not satisfy the definition of a “third-party funding contract” in section 5B(10) of the Civil Law Act 1909 (“CLA”). Specifically, the TPF costs were not incurred for the Arbitration. They were an investment return. Therefore, in substance, the FA was “an investment agreement rather than a [TPF] agreement” (at [30]). Consequently, the TPF costs “represented a reward for risk assumed rather than part of the costs of funding the proceedings” (at [30]), such that the FA fell outside the maintenance and champerty exception under section 5B(2) of the CLA (at [22], [30]).

The SICC’s Decision

The Applicants applied to the SICC to set aside or remit those parts of the Costs Award that denied recoverability of TPF costs. The Applicants alleged a violation of: (a) Article 34(2)(b)(ii) of the UNCITRAL Model Law on International Commercial Arbitration (“Model Law”) for breach of public policy; and (b) Article 34(2)(a)(iv) of the Model Law for breach of the procedure agreed between the parties.

Breach of public policy

Regarding the breach of public policy, the Applicants claimed that the Tribunal violated their access to justice by erring in finding that it lacked the power to allocate TPF costs under Rule 37 of the SIAC Rules 2016 (at [44], [49]). Pursuant to their obligation under the FA, they would go almost empty-handed if they were not awarded the USD 14.6 million in TPF costs, despite being awarded around USD 14.7 million on the merits (at [50]).

The SICC held that the Tribunal’s findings did not violate public policy under Article 34(2)(b)(ii) of the Model Law. The SICC held that, among other reasons, the denial of TPF costs relative to the ultimate amount of damages awarded was likely the Applicants’ “real grievance” (at [58]), and that the allocation of TPF costs, from this perspective, is a matter of “social policy” which does not meet the high threshold of public policy (at [54]).

Breach of agreed procedure

Regarding the breach of the agreed procedure, the Applicants submitted that the parties agreed to arbitrate under the SIAC Rules 2016, which empowered the Tribunal to award TPF costs as “other costs”. By deciding that it lacked such power, the Tribunal failed to adhere to the procedure agreed between the parties (at [84]).

The SICC held that Rule 37 of the SIAC Rules 2016 is not procedural, and consequently does not fall within the ambit of Article 34(2)(a)(iv) of the Model Law. Rule 37 only authorises tribunals to award costs. Their allocation is a matter of substance (at [86]–[91]). Even if Rule 37 were procedural, the SICC could not review the Tribunal’s decision, as it is a “decision pertaining to the merits” (at [94]–[96]).

Comment

While the Costs Award and the SICC’s decision both raise questions about the recoverability of TPF costs, the Costs Award deserves special attention in three respects.

First, the Costs Award was only made by a majority of the Tribunal. The dissenting opinion inter alia pertained to the power to award TPF costs (at [17]). Thus, this aspect of TPF costs was the subject of disagreement among the arbitrators. In particular, with reference to the 2017 Amendments, the majority merely made a broad statement without further elaboration. In principle, even if the 2017 Amendments do not necessarily lead to the recoverability of TPF costs, it is doubtful whether they entirely prevent it.

Second, the Tribunal’s reliance on section 12 of the IAA leaves room for discussion. Although section 12 addresses the powers of an arbitral tribunal, section 12(5) specifically refers to the powers granted to an arbitral tribunal “in deciding the dispute”. Section 12(5) also points to Article 28 of the Model Law, which focuses on the applicable rules governing the substance of the dispute. Therefore, in the author’s view, section 12(5) of the IAA deals with the power to order remedies related to the merits of the case, rather than costs.

In addition, section 12(1) of the IAA clarifies that the powers granted thereunder are “[w]ithout prejudice to the powers set out in any other provision of [the IAA] and in the Model Law”. The Model Law and the IAA are silent on the allocation of costs. However, section 15A of the IAA stipulates that “a provision of rules of arbitration agreed to or adopted by the parties […] applies and is given effect to the extent that the provision is not inconsistent with a provision of the Model Law or this Part [of the IAA].” Therefore, any decision regarding the arbitral tribunal’s power to award TPF costs is more likely to be found in the SIAC Rules 2016 as “rules of arbitration agreed by the parties”. Indeed, this was the line of reasoning adopted by the arbitral tribunal in Speers (at [143]–[159]).

Further, the Tribunal’s ruling that TPF costs do not constitute “other costs” under Rule 37 of the SIAC Rules 2016 contrasts with the conclusions reached by the tribunal in Speers. In Speers, the tribunal confirmed its power to award TPF costs as “other costs” according to Rule 33.1 of the Arbitration Rules of the SIAC (5^th Edition, 1 April 2013), which has the same wording as Rule 37 of the SIAC Rules 2016. Specifically, the Speers tribunal held that the wording “other costs” is “extremely broad and, on its face, authorises an arbitral tribunal to award any costs incurred in connection with the arbitration, including third-party funding costs” (at [150]).

Third, while it may be debatable whether the Funder’s success fee is incurred for the Arbitration (for example, the tribunal in UAB Vilniaus Energija and Veolia Environnement S.A. v SP AB Vilniaus Silumos Tinklai and Vilnius City Municipality held that a third-party funder’s success fee was not “expended” in the arbitration (at [1850])), the Tribunal’s ruling puts all TPF agreements in arbitration at risk for violating the doctrines of maintenance and champerty, insofar as they are intrinsically linked to the success fee (except for pro bono funding). How the Tribunal’s ruling (and the SICC’s endorsement of the same at [99]–[108]) is in line with the 2017 Amendments which allow for TPF agreements in arbitration (at [39]) and where to draw the line, remains an open question.

Overall, the Costs Award raises interesting issues for consideration regarding the recoverability of TPF costs in international arbitration. It remains to be seen how future tribunals will deal with these issues, be it under the SIAC Rules or otherwise.