DTH v DTF [2026] SGHC(I) 5

Facts in brief

The Applicants were the successful parties in an international arbitration. To finance the arbitration, they entered into a third-party funding agreement. Under that agreement, the funder was entitled to receive the greater of:

• a variable multiple of the funded costs, ranging from 0.5x to 3x depending on how long the case took; or
• a percentage of the recovery, ranging from 5% to 30%, also depending on the time elapsed.

The Applicants’ total recovery appears to have included US$14,736,000 under the arbitral award, plus US$4,129,633.56 in legal and arbitration costs under the Costs Award. They also sought to recover US$14,608,695.11 in third-party funding costs.

The Tribunal, via the Majority, dismissed the claim for third-party funding costs. Its reasoning can be summarised in two main points.

• First, although the relevant amendments legalised qualifying third-party funding contracts, they did not create a right to recover the funder’s return from the losing party. Under the applicable law, the Tribunal had no authority to order the losing party to pay the Applicants’ third-party funding costs, nor did those costs fall within the definition of "other costs" under Rule 37 of the SIAC Rules.
• Second, section 12(5) of the International Arbitration Act provides that an arbitral tribunal “may award any remedy or relief that could have been ordered by the General Division of the High Court”. The Tribunal reasoned that, because the High Court could not have ordered an unsuccessful party to pay the successful party’s third-party funding costs, the Tribunal had no greater power to do so.

The Applicants asked the Court to set aside the part of the Costs Award dealing with third-party funding costs, or alternatively to remit that issue to the Tribunal for reconsideration. They relied on two grounds: first, that the Majority’s decision conflicted with Singapore public policy; and second, that the Majority had not followed the arbitral procedure agreed by the parties when deciding whether third-party funding costs were recoverable.

Public Policy Issue

Notably, the Court has engaged in a very helpful consideration of the concept of "public policy" under the Model Law, see cited below:

52 The first is that the purported public policy is impermissibly narrow in scope. “Public” policy in its orthodox common law sense necessarily refers to principles which engage, if not the entirety of the public, at least a substantial segment thereof. On the contrary, the class relied upon here and the policy in relation to such a class – namely, impecunious but deserving arbitrants seeking, in particular, the recovery of TPF costs – is manifestly limited and specific. A policy so confined cannot properly be characterised as “public” in nature.
53 This is well in accordance with the established distinction between public policy in the strict legal sense, and the broader invocation of policy considerations in judicial reasoning. The mere fact that a court or other authoritative source may refer to “policy” or even “public policy” in explicating the rationale of a rule or statute does not mean that such considerations are coterminous with public policy as a free-standing legal doctrine in the context of setting aside an award.
54 Second, and in that same vein, the Applicants’ formulation of their purported public policy risks eroding the distinction between public policy and social policy. The objective relied upon, namely the facilitation or improvement of access to justice for a defined class of impecunious parties, is a matter of social policy. It does not, in our view, rise to the level of a fundamental principle of public policy recognised to be such at common law or as the phrase is understood to mean under Article 34 of the Model Law.

The Court then considered VV v VW [2008] 2 SLR(R) 929. In particular, it reiterated that it is not part of Singapore public policy to require costs incurred in private dispute resolution processes, including arbitration, to be assessed according to any specific principle such as proportionality. It further stated:

On the reasoning in VV, the absence of any operative public policy constraint can only be explained on the basis that no relevant public policy is engaged at all. In other words, if no limitation founded upon public policy arises, it is because public policy has no application in the circumstances.

Court brought up a very significant argument against understanding illegality and public policy as mirror concepts. The Court's reasoning on this issue was encapsulated in the para 78–81, quoted below:

78 Similarly, the Applicants rely on AJU v AJT [2011] 4 SLR 739 (“AJU”) as authority binding on us that a tribunal’s determination on legality is fully reviewable by the court. Specifically, the Court of Appeal commented at [62] that “since the law applied by the [t]ribunal was Singapore law, the question that arises is whether, if a Singapore court disagrees with the [t]ribunal’s finding that the Concluding Agreement is not illegal under Singapore law, the court’s supervisory power extends to correcting the [t]ribunal’s decision on this issue of illegality. In our view, the answer to this question must be in the affirmative as the court cannot abrogate its judicial power to the [t]ribunal to decide what the public policy of Singapore is and, in turn, whether or not the Concluding Agreement is illegal (illegality and public policy being … mirror concepts in this regard), however eminent the Tribunal’s members may be” [emphasis added].

79 In our view, the reliance by the Applicants on this passage is misplaced, and places emphasis on the passage quoted above out of context. AJU concerned the risk of enforcing an award founded on a contract that might in fact be illegal under the law of Singapore. It is against that background that the court recognised a power of review – to prevent an award from being enforced in a manner contrary to public policy. The concern, therefore, was with false negatives on illegality (namely, where a tribunal wrongly upholds a contract).

80 Nothing in AJU suggests that this reasoning was to be applied symmetrically to cases where a tribunal finds a contract to be illegal. In such case, there is no comparable risk of enforcing something contrary to public policy and thereby shocking the conscience of the public. An erroneous finding of illegality does not, without more, engage the same public policy concerns as an erroneous finding of legality.

81 Accordingly, the Applicants’ attempt to characterise AJU as drawing no distinction between decisions on legality and illegality must fail. Properly understood, AJU is concerned with the court’s role in safeguarding against enforcement of illegal contracts, and does not go so far as to support a curial re-opening of all arbitral findings on illegality, irrespective of what the tribunal’s decision is on that question.

Arbitral Procedure Issue

The Applicants argued that the Tribunal’s refusal to award third-party funding costs amounted to a breach of the agreed arbitral procedure. The Court rejected that argument. It held that, properly construed, Rule 37 of the SIAC Rules, which provides that the Tribunal "shall have the authority to order in its award that all or part of the legal or other costs of a party be paid by another party", is not a procedural rule and does not fall within the concept of "arbitral procedure" under Article 34(2)(a)(iv) of the Model Law.