KUALA LUMPUR, Jan 5 — The Legal Affairs Division (BHEUU) under the Prime Minister’s Department today announced the implementation of the Code of Practice for Third-Party Funding 2026, which was implemented on Thursday (January 1).
It said the officiation of the Code of Practice is in line with the upcoming enforcement of the Arbitration (Amendment) Act 2024 (Act A1737).
In a statement today, the BHEUU said that the code was issued pursuant to Section 46D of the Arbitration Act 2005 (Act 646) and sets out the ethical practices and standards relating to third-party funding that third-party funders are ordinarily expected to observe and comply with.
The introduction of the Code of Practice sets forth as an essential guideline that complements the enforcement of the light-touch regulatory framework and the legalisation of third-party funding in arbitration prescribed under Act 646.
Previously, Minister in the Prime Minister’s Department (Law and Institutional Reform) Datuk Seri Azalina Othman Said said Malaysia had drawn lessons from the Sulu issue and addressed third-party litigation funding in the newly passed Act 646.
Among the new provisions in Act 646 is that a third-party funding agreement by the funded party must be disclosed to the other party to the arbitration, the arbitral tribunal and the court.
“We are supportive of any third-party funding in international arbitration proceedings. But we want full disclosure.
“In legal terms, this will be a gentleman's strategy,” she said when winding up the debate on the Arbitration (Amendment) Bill 2024 at the Committee level at the Dewan Rakyat on July 16, 2024.
Azalina added that no full disclosure was given in the previous Sulu claimants’ legal action against Malaysia, which was funded by British global litigation fund Therium Capital Management Ltd (Therium).
“We are faced with a situation where we cannot force them (third-party funders) to admit whether money was involved. We got this information from an investigation we carried out,” she said.
