April 24, 2020

COVID-19 Singapore: Guide to the Temporary Relief for Inability To Perform Contracts Regulations

In our earlier update on the COVID-19 (Temporary Measures) Act 2020 (the "Act"), we discussed the impact the Act would have on the enforcement of certain contracts and commercial disputes.  On 20 April, the COVID-19 (Temporary Measures) (Temporary Relief for Inability To Perform Contracts) Regulations 2020 (the "Regulations") were published. In this update, we provide a short guide to the Regulations.  

As outlined in our earlier article, the Act provides temporary relief to specified contracts by putting a freeze on the right to take certain legal actions for a prescribed period. The prescribed period is from 20 April to 19 October 2020.

Relief is not automatic and is triggered when a party serves a notification for relief on:

  • all counterparties to the contract;
  • any surety or guarantor; or
  • the issuer of a related performance bond, if applicable (the “Relevant Parties”).

What Information must a Notification for Relief Contain?

A Notification of Relief must be filed using Form 1, which can be found here or completed online here via CorpPass login. [1]. The following information must be provided:

  • the name, address and contact details  of the "Relevant Parties”.
  • the contract in dispute.
  • how the obligation cannot be performed due to a COVID-19 event.
  • any proposal for the obligation to be performed in another manner.

How to serve a Notification for Relief

Before serving the Notification for Relief, parties should explore whether there are other reasonable alternatives for the contractual obligations to be carried out.

A party can serve the Notification for Relief via an electronic Portal established by the Ministry of Law (link here), for individuals or for businesses.  Such a party will be able to access the Portal with either the individual's SingPass (if it is an individual submitting the notification for relief)[2] or an entity's CorpPass (if the notification of relief is submitted on behalf of an entity)[3]. The Portal will also help with service of the notification for relief to the recipient's "last email address" in the SingPass/CorpPass system which should ensure speedy notification.[4]

Other modes of service are provided for as well should a party not be able to access the electronic system. [5]  This includes service:

  • by any means to the Relevant Parties’ last email address;[6]
  • by internet-based messaging service, like WhatsApp or WeChat;
  • at a website, blog or social media page, if the parties had previously used such methods to discuss the contract;[7] or
  • by prepaid registered post to the recipient's designated postal address, or ordinary address.[8]

Service is deemed to take effect when the document, if sent by email, becomes capable of being retrieved,[9] or if sent by post, on the second day after the day the document was posted.[10]

What is the Timeline for Serving a Notification for Relief?

Any Notification for Relief must be served on the Relevant Parties by 19 October 2020. Any surety or guarantor to the contractor or the issuer of any related performance bond must be served no later than one working day after service to the Relevant Parties.[11]

Can a Notification for Relief be Withdrawn?

If the parties have managed to settle the dispute, the Notification for Relief can be withdrawn.[12] However, withdrawal does not preclude the party who served the Notification for Relief from serving a fresh Notification for Relief should a new dispute arise.

How do I file a Challenge?

When a party receives a Notification for Relief, they can apply for an assessor to determine whether the Act applies to the contract. The party must submit Form 6 to the Registrar through the Portal along with a copy of the Notification for Relief and a copy of the disputed contract[13].

If the Registrar is satisfied that the application is in order, it will send to the applicant an acknowledgement of receipt of the application and either the form of the response or the electronic location at which that form may be obtained.[14].

The applicant then has two working days, to serve on all Relevant Parties a copy of its application together with the documents received from the Registrar.[15]  

One working day after service on the Relevant Parties, the application must submit to the Registrar a declaration in Form 4 that he has made such service.[16]  

Within five working days after being served, the respondent can submit a response to the Registrar, if it chooses. Any response must also be served on the Relevant Parties.[17]

Following exchange of documents, the Registrar will appoint an assessor and issue a notice of the date and place for the hearing[18] Any request for extension of time to serve a response must be submitted in writing to the Registrar.[19]

Does it cost anything to file a Challenge?

No, the Regulations confirm that the filing fee for seeking an assessor's determination is free.[20]

How will hearings be conducted?

Hearings will generally be conducted by exchange of email.[21] The assessor can direct that the hearing take place by way of video conferencing, teleconferencing or other electronic means or by attendance before the assessor if he is of the view that doing so would better serve the interest of justice.[22] The assessor is empowered to issue directions[23], adjourn the hearing[24] or even dispense with the hearing to make determination solely by reference to the forms and documents submitted.[25]

Even if a party is absent at the hearing, the assessor remains empowered to either dismiss the application[26] or proceed to hear and make a determination on the application[27]. However, a determination made in absence of a party may be set aside if the party had good reason for being absent.[28]

How will I find out the assessor's decision?

The assessor will provide a determination in writing, which will be kept by the Registrar. Parties may search the record and take a copy if necessary.[29] The Registrar can decide to publish the facts of the case, the arguments and the determination without disclosing the names of the parties concerned or any information that may disclose the identities of parties.[30]

What if I want to stop Court or Domestic Arbitral Proceedings?

To stay court or arbitral proceedings, a party may lodge a copy of the Notification for Relief with any court or arbitral tribunal where there are pending proceedings.[31] To do so, Form 2 must be completed and filed with the court or submitted to the arbitral tribunal along with a copy of the Notification for Relief.

If a notification for relief is challenged the applicant must file with the court or submit to the arbitral tribunal a notification of the status of the application for determination in Form 7 within 2 working days.[32]

Once the assessor has made a determination, the applicant is required to, within two working days after the conclusion of the application, submit a notification of status (i.e. Form 7) of the application to the court or arbitral tribunal.[33]

Are There Any Regulations That Affect Specific Contracts Or Industries?

Construction

The Regulations clarify that relief does not apply to employees to a construction or supply related contract.[34]

Construction and supply contracts have an extra two months to file a challenge to an Notification for Relief. An application for Assessor determination for a construction or supply contract must be filed by 19 December 2020.[35]

Assessors are specifically restricted from making further determinations for either:

  • A performance bond or equivalent that is granted pursuant to a construction contract or supply contract; or
  • A construction contract or supply contract.

Hospitality

Event and Tourism-related contracts have an extra two months to file a challenge to an Notification for Relief. An application for Assessor determination for an event or tourism-related contract must be filed by 19 December 2020.[36]

Considerations for Practical Alternatives

As part of Form 1, parties must include any proposal for the obligation to be performed in another manner.  Some practical alternatives some parties may wish to consider could include:

Construction

  • Fabrication: Off-site fabrication and manufacture that can continue in alternative countries which may have lifted restrictions e.g. China
  • Procurement: Items of supply that can be procured in alternative countries which may have lifted restrictions, which can be imported and stored off site

Hospitality

  • Postponement: Can the event be postponed to a later date?
  • Substitute Performance: Would a voucher be an acceptable alternative to cash?
  • Reduced Refund: Would the customer take a reduced refund taking into expenses already incurred?

Our article makes references to the below sections of the COVID-19 (Temporary Measures) (Temporary Relief for Inability to Perform Contracts) Regulations 2020, full text for which can be found here

[1] Regulation 4; [2] Regulation 8(1)); [3] (Regulation 8(2); [4] (Regulation 5(2)); [5] Regulation 5; [6] (Regulation 5(1)(b)); [7] (Regulation 5(1)(c)); [8] (Regulation 5(1)(d)); [9] (Regulation 6(1)(a)); [10] (Regulation 6(1)(b)); [11] Regulation 9(3); [12] Regulation 10; [13] Regulation 14(3) and 14(5); [14] Regulation 14(6); [15] Regulation 14(7); [16] Regulation 14(10); [17] Regulation 15; [18] Regulation 17; [19] Regulation 26; [20] Regulation 14(4); [21] Regulation 18(2); [22] Regulation 18(3); [23] Regulation 18(4); [24] Regulation 18(6); [25] Regulation 18(7); [26] Regulation 20(1)(a); [27] Regulation 20(1)(b); [28] Regulation 20(3); [29] Regulation 28; [30] Regulation 30; [31] Regulation 9(4); [32] Regulation 14(11); [33] Regulation 23(2); [34] Regulation 3(1); [35] Regulation 14(2)(a); [36] Regulation 14(2)(a)