Kuala lumpur:<Text>

The Legal Affairs Division (BHEUU) under the Prime Minister's Department has announced the implementation of the Code of Practice for Third-Party Funding 2026, which came into effect on January 1. This new code aligns with the forthcoming enforcement of the Arbitration (Amendment) Act 2024 (Act A1737).

According to BERNAMA News Agency, the code has been issued under Section 46D of the Arbitration Act 2005 (Act 646) and aims to establish ethical practices and standards related to third-party funding. These standards are expected to be observed and complied with by third-party funders. The introduction of this Code of Practice serves as an essential guideline that supports the enforcement of a light-touch regulatory framework and the legalization of third-party funding in arbitration as outlined in Act 646.

Previously, Datuk Seri Azalina Othman Said, the Minister in the Prime Minister's Department for Law and Institutional Reform, mentioned that Malaysia had taken lessons from the Sulu issue into account when addressing third-party litigation funding in Act 646. A key provision in Act 646 mandates that a third-party funding agreement by the funded party must be disclosed to the other arbitration party, the arbitral tribunal, and the court.

Azalina expressed support for third-party funding in international arbitration proceedings, emphasizing the importance of full disclosure. She described this requirement as a "gentleman's strategy" during her statement while concluding the debate on the Arbitration (Amendment) Bill 2024 at the Committee level in the Dewan Rakyat on July 16, 2024. Azalina highlighted that in a previous legal action by Sulu claimants against Malaysia, funded by Therium Capital Management Ltd, full disclosure was not provided. The information about the funding was obtained through an investigation conducted by Malaysia.