Malaysia implements a code of practice for third-party litigation funding, mandating full disclosure in arbitration to prevent conflicts and ensure transparency.
KUALA LUMPUR: The Legal Affairs Division (BHEUU) has announced the implementation of the Code of Practice for Third-Party Funding 2026.
The code, which came into effect on Jan 1, sets ethical standards and practices for third-party funders in arbitration proceedings.
It was issued under Section 46D of the Arbitration Act 2005 and complements a new light-touch regulatory framework.
Minister in the Prime Minister’s Department (Law and Institutional Reform) Datuk Seri Azalina Othman Said said the move addresses lessons learned from the Sulu claimants’ case.
Among new provisions is a requirement for funded parties to disclose their third-party funding agreement to all other parties, the tribunal, and the court.
“We are supportive of any third-party funding in international arbitration proceedings. But we want full disclosure,” Azalina said.
She explained this disclosure strategy as a “gentleman’s strategy” in legal terms to ensure transparency and prevent conflicts.
Azalina highlighted that no such disclosure was given in the previous Sulu legal action against Malaysia, which was funded by British firm Therium Capital Management Ltd.
The code’s implementation aligns with the upcoming enforcement of the Arbitration (Amendment) Act 2024.
