By: Jonathan Clarke, Senior Associate, and Jake Marouane, Paralegal
DTH & Another v DTF & Others [2026] SGHC(I) 5
The metaphorical “third rail” in third-party funded disputes has long been that of overall recoverability when judgments return less than expected and necessary deductions for funding costs have been taken into account. The recent case of DTH v DTF[1] before the Singapore International Commercial Court (“SICC”) is a striking example of this tension.
In this case, DTH and DTI (collectively, the “Applicants”) were the successful parties in a Singapore-seated arbitration (the “Arbitration”) conducted under the SIAC 2016 Rules brought against DTF, DTG and DTJ (collectively, the “Respondents”). However, the Applicants’ claim for a share buyout figure of US$65 million was significantly reduced with the majority decision of the Tribunal only awarding approximately US$14.7 million. As part of this decision, the Applicants’ claimed third-party funding costs (“TPF costs”) of US$14,608,695.11 were deemed irrecoverable, leaving the Applicants with “almost nothing”[2] and a somewhat pyrrhic victory.
The particular facts and issues with this case are explored further below, as the Applicants (unsuccessfully) sought the SICC’s help in setting aside the impugned portion of the Costs Award.
Background
The Applicants entered into a joint venture agreement with the first (DTF) and second respondents (DTG) for the provision of financing technology services as shareholders in the third respondent (DTJ).
The parties’ relationship subsequently deteriorated, and the first and second respondents purported to terminate shareholder and investment agreements entered into with the Applicants (the “Agreements”). The Applicants were also removed as directors of the third respondent and terminated as employees.
As a consequence, the Applicants brought claims against all three respondents for alleged breaches of the Agreements, and against the first and second respondents for minority oppression under section 216(1) of the Companies Act 1967.
The funding arrangement
The Applicants had entered into a Litigation Funding Agreement (“LFA”) with an anonymised litigation funder (the “Funder”), pursuant to which the Funder was entitled to receive the following from any “Resolution Sum”:
- reimbursement of the total funded costs paid or payable by the Funder;
- an amount in respect of each “Resolution” calculated as the greater of: (a) a multiple of the total funded costs, the multiple varying from 0.5 times to 3 times depending on the length of time from the date of the LFA to the “Resolution”; or (b) a percentage of the total “Resolution Sum”, the percentage varying from 5% to 30% depending on the length of time between the date of the LFA and the “Resolution”; and
- if the Funder funded any ancillary proceedings, the amounts payable under (2) shall be increased by adding either another whole multiple to each multiple in (a), or 5% to each percentage in (b).
It is understood that the LFA was subsequently varied to increase the Funder’s entitlements in return for additional funding.
Arbitration Partial Award
In the Partial Award, the Tribunal unanimously determined that DTF and/or DTG had breached the Agreements in a number of respects, and that the purported termination of the Agreements was invalid. The Tribunal further determined that DTF had become the majority shareholder in DTJ in the course of the parties’ relationship, and had acted in a manner oppressive to the Applicants in contravention of section 216(1) of the Companies Act 1967.
In particular, the Tribunal declared that an issuance of shares in DTJ to DTF – which had the effect of watering down the Applicants’ interest in the joint venture vehicle – was invalid. Therefore, the Tribunal ordered that DTF should buy out the Applicants’ shares in DTJ for a total sum of US$14,736,000 – comprising US$9,824,000 to the first applicant and US$4,912,000 to the second applicant.
The Costs Award
As the Applicants had been the successful party in the Arbitration, they naturally submitted to the Tribunal that their costs should be recoverable from the Respondents – the classic “loser pays” principle. Accordingly, the Applicants sought US$14,608,695.11 in TPF costs, as well as legal costs and disbursements amounting to US$4,561,716.59 and a conditional-fee uplift relating to the legal costs of US$1,403,701.38.
In doing so, the Applicants relied on SIAC Rule 37, which empowered the Tribunal to order that “legal or other costs” be paid by another party. The Tribunal rejected the argument that Rule 37 included recovery of TPF costs and decided that section 12(5) of the International Arbitration Act 1994 limited the Tribunal to remedies or relief that could have been ordered by the General Division of the High Court, and that TPF costs did not fall within “other costs” under Rule 37.
Consequently, the Tribunal awarded the applicants US$4,129,633.56 in legal costs, including the costs of the arbitration, plus interest. But by majority, it dismissed the claim for TPF costs and the uplift claim.
The Tribunal’s decision that the TPF costs were irrecoverable prompted the SICC application.
The SICC application
The application is brought by the Applicants on the grounds:
- that the Tribunal’s determination in the Costs Award is in conflict with the public policy of Singapore; and
- that the arbitral procedure adopted by the Tribunal in arriving at its decision on the recoverability of TPF costs was not in accordance with the agreement of the parties.
The Applicants requested that the SICC set aside the impugned portion of the Costs Award, or remit the matter for the Tribunal to reconsider its decision.
The decision
The SICC rejected the application on both grounds.
On the public policy issue, the SICC noted that “the Applicants must first identify the particular rule or principle of public policy with which the award is said to be in conflict, as well as the part of the award in respect of which such conflict is said to arise (BNX v BOE [2017] SGHC 289)”. The SICC continued and noted that such conflict must further meet the stringent standard articulated in PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA [2007] 1 SLR(R) 597 at [59], namely, that the enforcement or upholding of the award would “shock the conscience”.
The Applicants failed to meet this threshold, because in the SICC’s words:
“…[I]t cannot credibly be said that the inability to recover TPF costs from the unsuccessful party shocks the conscience, violates Singapore’s most basic notions of morality and justice or is injurious to the public good”.[3]
On the arbitral procedure issue, the SICC decided that SIAC Rule 37 is, in their view, not procedural. It is not part of the arbitral procedure as referred to in or envisaged by Article 34(2)(a)(iv) of the Model Law upon which the Applicants based their argument.[4]
Rule 37, as understood by the court, purports to authorise the Tribunal’s disposition of costs, not how the Tribunal shall act procedurally in coming to its disposition of costs. If the Tribunal was incorrect in its conclusion that it was acting outside of its ambit to award the TPF costs, then such a decision was at most an error of substance, not of procedure.[5]
Comment
This case illustrates the emerging global position in which courts and tribunals have largely moved beyond questioning the legitimacy of third-party funding and are instead concerned with ensuring early disclosure of its existence (for example, ICC 2026 Rules, Article 12(6)) and then focused on defining its limits.
In this regard, in DTH v DTF, it is notable that the court stressed that it was not challenging the permissibility of funding as a mechanism for enabling claims, but that it drew a clear boundary between the costs of pursuing litigation and the costs of financing it. In refusing to allow recovery of the funder’s return, this decision demonstrated a principled reluctance to treat private funding arrangements as part of ordinary cost-shifting norms, even where such funding may be essential to the advancement of a claim.
A similar parallel can be drawn to the UK position where the consequences of the Supreme Court’s ruling in PACCAR[6] are still being felt. In PACCAR, it was held that some LFAs were damages-based agreements (“DBAs”) and, consequently, fell under the purview of section 58AA of the Courts and Legal Services Act 1990, which strictly regulates DBAs and sets out specific statutory conditions that must be satisfied in order for the agreement to be enforceable. Again, placing limits on the scope of funding.
In the UK, it is fair to say that the market has since adapted, and pre-PACCAR LFA terms have been amended to try and avoid categorisation as a DBA. However, what these cases remind us of is that third-party funding arrangements will always be subject to scrutiny and the recoverability risks are clear. In DTH v DTF, an awarded sum of US$14.7 million was eroded by TPF costs of US$14.6 million, creating a somewhat pyrrhic victory.
Parties therefore need to carefully consider, prior to any potential dispute, whether third-party funding is:
- essential to bring the claim;
- lawful in the relevant forum;
- a permissible category of recoverable costs; and
- properly balanced against a range of potential outcomes and monetary awards.
This case serves as an important reminder for all.
[1] DTH & Another v DTF & Others [2026] SGHC(I) 5.
[2] Ibid, paragraph 16.
[3] Ibid, paragraph 72(d).
[4] Ibid, paragraph 86.
[5] Ibid, paragraph 91.
[6] R (on the application of PACCAR Inc and others) v Competition Appeal Tribunal [2023] UKSC 28.