Singapore’s Ministry of Law announces temporary Covid-19 bill

New law proposed to protect individuals, firms whose contracts have been affected by Covid-19

Singapore’s Ministry of Law has announced its intention to introduce a Covid-19 (Temporary Measures) Bill.

The Bill will enable companies’ whose businesses have been adversely affected by Covid-19 to seek relief from fulfilling their contractual obligations such as paying rent, paying instalments on bank loans, fulfilling their construction contracts, etc for a period of six months.

New law proposed to protect firms whose contracts have been affected by Covid-19

The Bill covers four areas. Under Part 1 – Temporary Relief for Failure to Perform Contractual Obligations because of Covid-19 are relevant sections for the business events industry.

The key points are:

1. Objectives of the Bill

  • Fairness
  • Targeted protection from legal action
  • Temporary relief

2. Proposed measures

  • Do not absolve or remove contractual obligations but suspend them for a prescribed period
  • Relief will be provided for 6 months in the first instance, starting from commencement of Act
  • Prescribed period of relief may be extended by the Minister
  • Bill will cease to have effect after one year

3. Contracts covered by Bill

  • Five broad categories
  • Excludes contracts entered into on or after March 25, 2020
  • Covering obligations to be performed on or after February 1, 2020
  • Includes contracts which the Government is a party to
  • Categories may be amended by the Minister subsequently through subsidiary legislation

4. Five broad categories of contracts

  1. Leases or licences for non-residential immovable property (e.g. lease for factory premises);
  2. Construction contract or supply contract (e.g. contract for the supply of materials);
  3. Contracts for the provision of goods and services (e.g. venue, catering) for events (e.g. weddings, business meetings);
  4. Certain contracts for goods or services for visitors to Singapore or outbound tourists, or promotion of tourism (e.g. cruises, hotel accommodation bookings); and
  5. Certain loan facilities granted by a bank or a finance company to SMEs.

5. Types of actions prohibited

  • Court and insolvency proceedings, and enforcement of judgements or arbitration decisions (international arbitrations excluded);
  • Enforcement of security over immovable property as well as movable property that is used for the purpose of business or trade
  • Call on a performance bond given pursuant to a construction contract
  • Termination of lease of non-residential premises

6. Body of Assessors

As a safeguard against unfair outcomes, assessors will be appointed by the Minister for Law to resolve disputes arising from the application of the Act. They will decide if the inability to perform contractual obligations was due to Covid-19 and will have the powers to grant relief that is just and equitable in the circumstances.

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