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Litigation funding is the contribution to the cost and disbursements of litigation by a third party, the funder, in exchange for a percentage of any settlement monies.
The Courts have historically disapproved of litigation funding. But, in certain jurisdictions, the law has evolved with the needs of society. With the sweeping aside of the traditional legal impediments of maintenance and champerty, litigation funding has become well entrenched in Australia where it has underpinned the growth of class actions.
In England, funded actions are broadly permitted; essentially the Australian experience has led the evolution - old law is falling away and the focus is upon upholding the integrity of the litigation process.
Until recently, there has been no case law in Hong Kong regarding the legitimacy of litigation funding. There continues to be an ongoing concern regarding impact of the principles of maintenance and champerty in Hong Kong. Maintenance and champerty both remain criminal offences, and civil torts; in 2008, 21 people were arrested for champerty, maintenance and conspiracy. They were recovery agents "helping" accident victims on a "no win no fee" basis. One of the people arrested was a lawyer. (Champerty and maintenance carries a sentence of up to seven years in Hong Kong). On 25 June 2009, a solicitor, Ms Winnie Lo, was convicted for “conspiracy to maintain” and a recovery agent for “conspiracy to champer”; Ms Lo was sentenced to 15 months' imprisonment. (Hong Kong did not adopt the UK Criminal Law Act 1967 which abolished the crimes and torts of maintenance and champerty, leaving such contracts to be void).
But even in Hong Kong, the law is developing. The role of the doctrines of champerty and maintenance in a modern context was considered by the Hong Kong Court of Final Appeal where Ribeiro P.J., delivering the judgment of a unanimous bench in Unruh v Seeberger [2007] 2HKLRD 414, emphasised the need for a balance to be struck between the public policy considerations upon which the doctrines of champerty and maintenance were developed against other countervailing public policy considerations, principally the promotion of access to justice.
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