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Malaysia and the European Union (EU) have acknowledged the necessity of regulating third-party litigation funding due to concerns over transparency, potential conflicts of interest, and the impact on the cost and duration of arbitral proceedings. Minister in the Prime Minister’s Department (Law and Institutional Reform) Datuk Seri Azalina Othman Said stated that during recent bilateral meetings, both parties reached a consensus that this issue requires heightened attention and coordinated efforts on an international scale.
Azalina emphasized that addressing the lack of a coordinated regulatory framework for third-party funding is a significant global concern impacting nations across various sectors, including EU member states. The need for a collective effort involving forums that include nations from regions such as the United States, EU, and ASEAN was underscored to effectively combat potential abuses.
While arbitration is recognized as an alternative dispute resolution, Azalina highlighted the exploitation of this system through unethical means, including attempts to seize sovereign assets, as unacceptable. She emphasized the urgency for global action to combat the misuse of third-party litigation funding solely for profit-seeking purposes, which undermines the pursuit of justice. Additionally, Azalina stressed the importance of addressing rogue arbitrators who tarnish global confidence in the arbitration system.
During the meetings, Azalina shared Malaysia’s experience in handling the Sulu case, which is actively litigated across four EU member states. She noted that consecutive landmark decisions in favor of Malaysia demonstrate the international legal community’s commitment to upholding the rule of law and preventing abuses of the civil justice system.
Azalina expressed Malaysia’s interest in understanding the European Parliament’s resolution proposing a directive on the regulation of third-party litigation funding, a framework championed by Malaysia as a response to the Sulu case. The Malaysian government has actively called for a robust debate on regulating third-party litigation funding, emphasizing the need for greater transparency, accountability, and ethical professionalism among funders.
The bilateral meetings involved representatives from the Attorney-General’s Chambers Malaysia, Legal Affairs Division (Prime Minister’s Department), Wisma Putra, the European Commission, European Parliament, and European External Action Service. The collaborative efforts reflect a commitment to address the challenges associated with third-party litigation funding and strengthen the integrity of arbitral processes at the global level.
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