The Global Expansion of Litigation Finance into New Markets
Litigation finance, once confined to a handful of mature markets in the United States, United Kingdom, and Australia, is now experiencing rapid expansion across new jurisdictions worldwide. Governments and regulators from Asia to Latin America are recognising the economic and policy benefits of third-party funding — improved access to justice, efficient capital allocation, and enhanced competitiveness as arbitration and litigation hubs. This globalisation of the industry reflects a broader institutional acceptance that litigation finance is not merely permissible, but desirable as a tool for claimants, corporates, and national economies alike.
Among the most significant recent developments is Malaysia's introduction of a comprehensive regulatory framework for third-party funding in arbitration. The Arbitration (Amendment) Act 2024, which came into force in early 2024, expressly permits third-party funding in both domestic and international arbitration proceedings seated in Malaysia. This legislative reform was followed in January 2026 by the Code of Practice for Third Party Funding, which sets out detailed conduct standards, disclosure obligations, and capital adequacy requirements for funders operating in Malaysia. The Code requires funders to be registered entities with minimum paid-up capital, mandates disclosure of funding arrangements to arbitral tribunals, and imposes fiduciary duties on funders toward funded parties. This structured approach provides legal certainty to international funders while protecting the integrity of arbitral proceedings.
Malaysia's reforms are part of a broader regional trend. Singapore has permitted third-party funding in international arbitration since 2017, and Hong Kong followed in 2019 with amendments to its Arbitration Ordinance. Both jurisdictions have seen measurable uptake in institutional arbitration filings and growth in the litigation finance market as a result. India's 2024 regulatory clarification — permitting SEBI-registered Alternative Investment Funds to deploy capital into litigation finance — has similarly opened a large and previously untapped market. These jurisdictions are not merely tolerating litigation finance; they are actively creating environments where it can thrive as part of a competitive legal and commercial infrastructure.
Beyond Asia, other jurisdictions are moving in the same direction. The United Arab Emirates has introduced third-party funding in its international arbitration centres, including the Dubai International Arbitration Centre (DIAC) and the Abu Dhabi Global Market (ADGM). Brazil's Superior Court of Justice issued a landmark ruling in 2023 affirming that third-party funding agreements do not violate public policy, opening the door to institutional capital flows into Brazilian commercial litigation. In Europe, jurisdictions such as Ireland, the Netherlands, and Switzerland have long recognised third-party funding, and there is growing recognition of its role in insolvency litigation and class actions across the EU.
The benefits of this expansion are substantial. For claimants, particularly small and medium-sized enterprises, litigation finance removes the financial barrier to pursuing meritorious claims against better-resourced defendants. For law firms, it enables them to take on high-value, high-risk matters on a non-recourse basis, without straining their own balance sheets. For institutional investors, litigation finance offers uncorrelated returns in a diversified portfolio. And for national economies, a robust litigation finance market enhances the attractiveness of domestic arbitration and court systems, attracting cross-border disputes and professional services revenue.
As more jurisdictions adopt clear regulatory frameworks, the global litigation finance market is expected to continue its rapid growth trajectory. Industry estimates suggest the market could exceed USD 20 billion in deployed capital by 2028, driven by increasing institutional adoption, regulatory clarity, and the maturation of portfolio funding models. For funders, claimants, and policymakers alike, the message is clear: litigation finance is no longer an alternative or niche asset class — it is becoming a mainstream, globally recognised mechanism for unlocking value from legal claims.
