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COVID-19 Singapore: Government proposes monumental temporary relief from commercial disputes

  • Market Insight 01 April 2020 01 April 2020
  • Asia Pacific

  • Coronavirus

The Ministry of Law in Singapore has announced that it will introduce a bill to the Parliament next week to offer temporary relief to businesses and individuals who are unable to fulfil their contractual obligations because of the COVID- 19 pandemic.

COVID-19 Singapore: Government proposes monumental temporary relief from commercial disputes

The proposed bill includes:

  1. A prohibition on taking court or insolvency proceedings;  seeking enforcement of security over property used in business or trade; calling on a performance bond given pursuant to a construction contract; and termination of leases of non-residential premises, for the following type of contracts:
    • Leases or licences for non-residential immovable property (e.g. lease for factory premises);

    • Construction contract or supply contract (e.g. contract for the supply of materials);

    • Contracts for the provision of goods and services (e.g. venue, catering) for events (e.g. weddings, business meetings);

    • Certain contracts for goods or services for visitors to Singapore, domestic tourists or outbound tourists, or promotion of tourism (e.g. cruises, hotel accommodation bookings); and

    • Certain loan facilities granted by a bank or a finance company to companies with turnover of $100 million or less.

  2. Temporary relief for individuals and businesses in financial distress by:
    • For individuals: Increasing the monetary threshold for bankruptcy from $15,000 to $60,000;

    • For businesses: Increasing the monetary threshold for insolvency from $10,000 to $100,000 (for companies/partnerships); and

    • Lengthening the statutory period to respond to demands from creditors.

  3. Directors will be also be temporarily relieved from their obligations to prevent their companies trading while insolvent if the debts are incurred in the company’s ordinary course of business. Directors will remain criminally liable if the debts are incurred fraudulently.

Importantly, the measures will have retroactive effect and cover relevant contractual obligations that are to be performed on or after 1 February 2020, for contracts that were entered into or renewed before 25 March 2020.

The Ministry has stated that these measures will be in place for at least six months from the commencement of the Act but may be extended, for up to a further six months  if required.

A copy of the bill has not yet been released and we are unable to comment on specifics. However, the proposed bill will have an unprecedented effect on the enforcement of legal obligations in Singapore. Parliament will sit next Monday 6 April at 12pm. Clyde & Co Clasis will be examining the bill in detail once it is released and will be providing specific comment across the following industries:

  • Insurance
  • Marine
  • Hospitality and Leisure
  • Projects and Construction
  • Commercial Disputes
  • Insolvency

In the meantime if you have any queries, please contact us. 


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