Singapore court paves the way for broader use of legal finance

In a landmark judgment in DNQ v DNR (2025) ¹, the Singapore High Court delivered a powerful affirmation of third-party litigation funding, expressly endorsing its application beyond the narrow confines of insolvency in commercial court proceedings. The judgment reinforces that legal finance can be permissible beyond the statutory list of “prescribed dispute resolution proceedings” under section 5B of the Civil Law Act (CLA) and the funding of insolvency professionals.

The case arose from enforcement proceedings in Singapore to recover over £31 million awarded by a UK family court. The claimant—facing severe financial hardship—had entered into a litigation funding agreement with a professional funder to pursue enforcement. The defendant sought to strike out the claim, arguing the funding arrangement was champertous and therefore contrary to public policy.

Presiding Senior Judge Tan Siong Thye dismissed that argument, finding the funding agreement fell within the third exception of the Vanguard²  test: it did not prejudice the administration of justice. Importantly, the court further rejected arguments that permissible funding is confined to insolvency or arbitration contexts, confirming that common law exceptions continue to apply post-amendments to the CLA.

In affirming the use of legal finance, the court emphasized three beneficial factors:

• Access to justice – Without funding, the claimant would have been unable to pursue enforcement.
• Reasonable compensation – The funder’s potential return (up to 56% of recoveries in this case) was not excessive given the complexity and risks of cross-border enforcement.
• Control – The claimant retained primary control over litigation strategy, settlement decisions and the power to terminate proceedings. The funder’s rights were passive and did not undermine procedural fairness.

Implications for legal finance in Singapore

This decision is another step in the ongoing expansion of third-party funding in Singapore, signaling judicial openness to legal finance in non-insolvency or arbitration contexts where access to justice would otherwise be impaired. While applying careful scrutiny to the funding terms, the court ultimately affirmed that such arrangements—when proportionate and non-intrusive—can advance, rather than hinder, the administration of justice.