Driver Trett Digest Issue 21 03.2021 - Flipbook - Page 34
DIGEST | ISSUE 21
HOW IS SINGAPORE
HANDLING A NEW
WORLD ORDER?
PROTECTION THROUGH LAW
Singapore is no stranger
to adversity. It has risen
from colonisation, warfare
and expulsion from the
Federation of Malaysia
to become an impressive
city-state, considered by
many as the benchmark
on how a modern economy
should operate.
It should therefore be no surprise to
know that Singapore reacted decisively
against the global pandemic. After
entering a lockdown on 7 April 2020,
which ended on 1 June 2020, this has
been followed up with progressive
measures that have allowed the level
of COVID-19 found in the community
to reduce to nearly zero and only 29
deaths being linked to COVID-19 at the
end of 2020.
Compared with other countries, this
is a remarkable feat. However, it
has come at a cost. None more so
than to the construction industry
in Singapore. From Singapore’s
construction sector being at a five-year
peak in 2019 and contributing around
S$17.8 billion to Singapore’s Gross
Domestic Product (“GDP”)1, there was
a subsequent 46.6% contraction2. This
has been exacerbated by global travel
restrictions which affected the inflow
of foreign labour that Singapore’s
construction industry is heavily reliant
on3. Migrant workers were also the
most badly affected by the COVID-19
pandemic, forming the largest share of
infections in the country4.
In normal circumstances, such a
situation could destroy a sector and
the businesses found within it. So,
the obvious question to ask is - how
is Singapore managing to handle this
drastic shift to its construction sector?
Alasdair Snadden, Managing Director of Asia Pacific, Driver Trett
Danna Er, Partner, Eldan Law LLP
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The answer is quickly gathered from
an overview of the legal framework in
Singapore.
Singapore introduced the COVID-19
(Temporary Measures) Act (the
“COVID-19 Act”) which functioned as a
legal moratorium to prevent amongst
others, a huge increase in lawsuits and
insolvencies arising from the inability
to meet contractual obligations
under construction contracts, supply
contracts and performance bonds.
PART 2 OF THE COVID-19 ACT
On 20 April 2020, Part 2 of the COVID-19
Act which dealt with temporary reliefs
for construction contracts, supply
contracts and performance bonds
came into force.
Under Part 2 of the COVID-19 Act, a
non-performing party is generally
eligible for relief where it is able to
show that:
(i) The contract is one which is entered
into or renewed before 25 March 20205
or renewed automatically on or after 25
March 2020
(ii) The contractual obligation which it
is unable to perform or will be unable
to perform is one which is to be
performed on or after 1 February 20206
and
(iii) The inability to perform the
contractual obligation is one which
is materially caused by a COVID-19
event7.
The reliefs under the COVID-19 Act8 are
not automatic and parties will need to
issue a notification for relief under the
COVID-19 Act. The period of temporary
relief for construction and supply
contracts and performance bonds was
initially for a period of 6 months from
20 April 2020 but was further extended
to 31 March 20219. The types of reliefs
under Part 2 of the COVID-19 Act can be
categorised into two broad categories:
enforcement on a judgment, award and
adjudication determination (although
there is no prohibition on commencing
adjudication proceedings)11, seeking
enforcement
of
security
and
commencing insolvency proceedings12.
Under the second category of additional
reliefs, a party is prohibited from
making a call on a performance bond
in the seven days before the expiry
of a performance bond13, the period
of subject inability is disregarded for
purposes of calculating any liquidated
damages14 and where the inability to
supply goods or services in accordance
with the terms of the contract is
materially caused by COVID-19, it is
a defence to a claim for breach of
contract15.
PART 8 OF THE COVID-19 ACT
By 30 September 2020, Part 8
of the COVID-19 Act which deals
with contracts affected by delay
in the performance or breach of
a construction contract, supply
contract or related contract came
into effect.
Part 8 of the COVID-19 Act only applies
in three scenarios, of which one is of
interest to the construction sector.
This deals with a situation where a
person who has rented goods used for
construction work, is, or will be liable,
for rental expenses due to a delay or
breach in a separate construction or
supply (or related) contract, and that
delay or breach is due to COVID-1916.
Once an application for relief is
submitted under Part 8 of the COVID-19
Act, an assessor may arrive at a just
and equitable outcome, adjust the date
by which a party is required to return
the rented goods or the rental rate
for the duration that the party holds
possession of the rented goods17.
(i) A legal moratorium on dispute
resolution proceedings, and
(ii) Additional reliefs from breach of
contract.
BUILDING AND CONSTRUCTION
AUTHORITY (“BCA”) CIRCULARS,
PART 8A AND 8B OF THE COVID-19
ACT
Under the first category of reliefs, a
party is prohibited from amongst others,
commencing court and arbitration
proceedings (except for international
arbitration proceedings)10, seeking
A set of BCA circulars18 were issued for
public sector projects to expeditiously
grant a default 4-month extension of
time to contractors for the common
period of delay from the start of the
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