#1. A domestic pharmaceutical company in Korea leveraged TPF to reduce the financial burden in a patent dispute at the U.S. International Trade Commission (ITC). While the case ended in defeat, the funding partner absorbed all litigation costs, sparing the company any financial loss.
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#2. An American energy firm initiated arbitration and litigation against a Korean energy company over a $1 billion dispute, financing the process entirely through TPF. The case concluded with a settlement agreement.
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#3. A Turkish construction company, after winning a lawsuit, faced difficulties in enforcing the judgment. With TPF support, it successfully seized the debtor's overseas assets and defended against jurisdictional challenges, ultimately reaching a favorable settlement.
TPF, which covers litigation costs in exchange for a share of proceeds upon success, is gaining traction as a means to mitigate financial risks in high-cost international disputes such as arbitration. Losing parties bear no repayment obligation, making TPF an attractive option, particularly in jurisdictions like Korea, where the market is drawing increasing interest.
Evolving Regulatory Frameworks
TPF operates on a "success fee" model, yet common law jurisdictions traditionally prohibited financial support from third parties, considering it unethical under the doctrine of "champerty." However, regulatory relaxation has fostered TPF markets, especially in the U.S., Australia, and the U.K., where legal issues have been clarified through precedents.
Singapore officially permitted TPF for international arbitration in 2017 and extended its application to intellectual property and antitrust cases by 2021. In Europe, countries such as the U.K., Germany, and France are actively updating their regulatory frameworks to accommodate the growing TPF industry.
Speaking at the "Analysis and Outlook for Korea's TPF Market in 2025" forum in Seoul, attorney Hyungkeun Lee of Kim & Chang noted that "legal uncertainties surrounding TPF have largely been resolved in recent years, driving rapid global market growth." The TPF industry now sees annual investments reaching $15–20 billion, with growth rates of 8–12% annually.
Increasing Adoption in International Arbitration
TPF is particularly useful in international arbitration cases. Major arbitration institutions like the ICSID, ICC, and LCIA permit TPF use and regulate disclosure obligations and cost considerations. Sang-yeop Lee, a foreign attorney at the Korean Commercial Arbitration Board (KCAB), emphasized that arbitration, unlike court rulings, is final and enforceable, making TPF a valuable tool. He added that KCAB is working to establish TPF guidelines and a supportive environment in collaboration with the Ministry of Justice and the Korean Bar Association.
Hyungkeun Lee stressed the need to address issues like conflicts of interest, disclosure requirements, and the timing and scope of information sharing to firmly establish TPF as a key tool in international dispute resolution. Seoul National University law professor Joon-Hyug Chung highlighted TPF’s role in both funding disputes and overcoming enforcement challenges for arbitral awards.
Addressing Costs and Decision-Making Pressure
Jong-hyuk Shim, Legal Group Head at POSCO International, outlined how TPF alleviates financial and psychological burdens on companies involved in cross-border disputes. He stated, "As international transactions and investments grow, businesses face not only financial challenges but also significant decision-making pressures during disputes. TPF helps resolve cost issues and allows management to focus on strategic decisions." However, he cautioned against risks such as sharing sensitive company information with third parties and stressed the importance of careful consideration of confidentiality, success probabilities, and funding terms.
Korea’s Nascent TPF Market
Korea's TPF market is still in its early stages. While domestic law does not explicitly prohibit TPF, the restriction on fee-sharing between attorneys and non-lawyers hinders its growth. Attorney Sae Yeon Kim of Kim & Chang remarked that "Singapore and Hong Kong have laid the groundwork for TPF at the national level, and Korea must also develop rules for information sharing and conflict-of-interest management."
