Singapore recently lifted the ban on conditional fee agreements ("CFAs") in proceedings before the Singapore International Arbitration Centre ("SIAC") and certain proceedings in the Singapore International Commercial Court ("SICC").
Features of the New CFA Framework
From 4 May 2022, lawyers in Singapore can enter into CFAs with clients for international and domestic arbitration proceedings (including arbitrations conducted under the SIAC rules) and certain proceedings in the SICC. CFAs are defined by the Legal Profession (Conditional Fee Agreement) Regulations 2022 ("CFA Regulations") to mean agreements providing for the remuneration and costs in respect of contentious proceedings conducted by lawyers in Singapore to be payable only in specified circumstances. Examples of CFAs permitted by the new framework include "win, more fee", "no win, no fee", and "no win, less fee" agreements.
To mitigate the risk of any potential abuse of CFAs, the CFA Regulations require lawyers to provide specific information on the CFA to the client before entering into a CFA. Under the CFA Regulations, a CFA must state in writing the circumstances in which remuneration and costs are payable to the lawyer and, if the CFA provides for an uplift fee, the basis of calculation and an estimate of the uplift fee. The CFA must also provide that uplift fees are not recoverable and that the client is liable for any cost orders made against it by a court or tribunal.
Impact of the New CFA Framework
This development brings Singapore regulations more in line with other English common law jurisdictions and opens the door for alternative fee arrangements in certain international commercial disputes. While the CFA Regulations are aimed at making Singapore a more attractive forum for business-to-business disputes, its success will ultimately depend on its implementation and the extent to which it is adopted by practitioners in Singapore and litigants.
