Legal Updates for November 2021
MAS Revises Corporate Governance Guidelines for Singapore-Incorporated Banks & Insurers
On 9 November 2021, the Monetary Authority of Singapore ("MAS") published revised Guidelines on Corporate Governance ("2021 CG Guidelines") for financial holding companies, banks and insurers incorporated in Singapore (collectively, "FIs").
This follows an earlier MAS consultation in May 2021. The CG Guidelines provide guidance on best good practices on corporate governance that FIs should observe. It comprises the Principles and Provisions of the Code of Corporate Governance 2018 ("CG Code") which apply to companies listed on the Singapore Exchange Securities Trading Limited ("SGX-ST") as well as additional guidelines prescribed by MAS having regard to the unique characteristics of the businesses of banks and insurers.
Singapore-incorporated banks and insurers which are listed on SGX-ST are already required to comply with the Principles of the CG Code. Among other changes set out in the 2021 CG Guidelines, Singapore-incorporated banks, Tier 1 insurers and designated financial holding companies that own a Singapore-incorporated bank or Tier 1 insurer are now expected to observe most of the Principles of the CG Code even though they are not listed on SGX-ST. Tier 2 insurers and other designated financial holding companies are also expected to observe the Principles or explain any variance in their annual reports or on their company websites.
This Update highlights the main revisions in the 2021 CG Guidelines.
Arbitration and Anti-Suit Injunctions: Singapore Court Issues Landmark Decision on the Proper Law for Determining Subject Matter Arbitrability
When a claim is filed in Court in breach of an arbitration agreement, the defendant's key recourse is to seek an anti-suit injunction at the national courts of the seat of the arbitration to restrain the counterparty. Such applications are usually heavily contested as the counterparty would invariably raise various defences as to why the court action should proceed. If the claimant's position is that the dispute is not arbitrable, how should the Court consider such an argument? Should the Court consider the issue of arbitrability under the law governing the arbitration agreement or the law of the seat of arbitration?
In Westbridge Ventures II Investment Holdings v Anupam Mittal  SGHC 244, the Singapore High Court was faced with the exact issue above. The decision is novel as this is the first time that the Singapore Courts or the Courts of the Commonwealth jurisdictions have decided this issue. In this Update, we highlight the key points of the Court's judgment.
Regional Guide on Fraud and Asset Tracing Litigation
The nature of fraud and asset tracing has becoming increasingly complex in light of globalisation and the almost seamless interconnectivity of the world's financial systems. The proceeds of fraud can now be dissipated in an instant across various jurisdictions, potentially frustrating any attempts at recovery whether via civil proceedings or by relying on the relevant government enforcement agencies. To increase the chances of recovery, it is important that fraudster(s) are quickly identified, with steps taken to trace any stolen assets in order to ascertain their location, after which the relevant applications should be filed to have them frozen to prevent further dissipation.
This publication serves as a guide to highlight:
- the similarities and differences in general framework between ASEAN jurisdictions in respect of fraud and asset tracing litigation;
- the options available to a fraud victim to identify the fraudster(s) and/or trace stolen assets;
- upon identification of the fraudster(s) and/or ascertaining the location of stolen assets, the mechanisms available to freeze such assets to prevent further dissipation; and
- the considerations to be taken into account when deciding on the appropriate jurisdiction to pursue recovery of any stolen assets, and the various courses of action that may be taken against the fraudster(s).
Singapore Court Sets Out When Contracts May Be Rectified for Unilateral Mistake
The provisions of a written contract may not always reflect the actual contractual intention of the parties. In certain situations, the Court may order the rectification of contractual terms to reflect such intention. In the case of Doo Wan Tsong Charles v Oxley Jasper Pte Ltd  SGHC 249, the Singapore High Court considered when it would be appropriate to order the rectification of a contract in the event of unilateral mistake by a contracting party. In particular, the Court considered the kind of mistake for which rectification is available and the scope of rectification that is allowed.
The Court rejected the Plaintiffs’ attempt to rectify certain contractual provisions in a sale and purchase agreement with the First Defendant. The First Defendant was successfully represented by Kelvin Poon, Devathas Satianathan, Cai Xiaohan and Jodi Siah of Rajah & Tann Singapore LLP.
Specialised Case Management System for Complex Disputes: SICC Announces the Establishment of the Technology, Infrastructure and Construction List
On 8 November 2021, the Singapore International Commercial Court announced the establishment of a specialised Technology, Infrastructure and Construction List ("TIC List"), effective from 31 August 2021. The TIC List features specialist judges and provides for additional case management tools and techniques. The TIC List aims to deal with technically complex disputes, such as building and construction disputes, engineering disputes and technology-related disputes. In this Update, we highlight the key features of the TIC List and the relevant criteria for a case to be placed in the TIC List.
Block Exemption Order for Certain Liner Shipping Agreements Extended Three Years to 31 Dec 2024
Anticompetitive agreements are prohibited under section 34 of the Competition Act ("section 34 prohibition"). However, under recommendation by the Competition and Consumer Commission of Singapore, the Minister for Trade and Industry may order an exemption of certain types of agreements from the section 34 prohibition on the basis that a category of agreements fulfils the net economic benefit criteria, i.e. a block exemption.
Currently, the only block exemption in Singapore is the Competition (Block Exemption for Liner Shipping Agreements) Order ("BEO") which exempts certain types of liner shipping agreements from the section 34 prohibition. First introduced in 2006, the BEO has been extended several times with various amendments lodged under it over time and was due to expire on 31 December 2021.
The Competition (Block Exemption for Liner Shipping Agreements) (Amendment) Order 2021 extends the BEO for another three years, from 1 January 2022 to 31 December 2024, and amends the scope of liner shipping agreements covered thereunder. The extended duration of the BEO took effect from 15 November 2021 and the other amendments will take effect from 1 January 2022.
This Update highlights the extension and other salient amendments to the BEO, such as the categories of liner shipping agreements covered and the cancellation of exemption.
Conditional Fee Agreements: A New Avenue for Legal Funding
Legal fees are often a major factor for parties considering pursuing legal proceedings. Even where their claim is meritorious, parties may find themselves unable to afford the costs required to vindicate their legal rights.
For some foreign jurisdictions, one method of addressing this gap and enhancing access to justice is conditional fee agreements ("CFAs"). CFAs are a type of lawyer-client arrangement whereby a lawyer receives payment of the whole or part of his or her legal fees only in specified circumstances, for example where the claim is successful. Prospective litigants with strong claims are therefore better able to pursue their claims in court without being hindered by a lack of funds.
Thus far, CFAs have been prohibited under Singapore law. However, following a favourably received public consultation on a proposed framework for CFAs held in August 2019, the Legal Profession (Amendment) Bill ("Bill") was tabled for First Reading in Parliament on 1 November 2021. If passed, the Bill will create a framework to allow a statutory exception for CFAs for specific contentious proceedings.
While the exact categories of proceedings will be set out in future regulations, they are expected to include:
In this Update, we look at features of the proposed CFA framework and its advantages to both prospective litigants and the legal landscape in Singapore.
- international and domestic arbitration proceedings;
- certain proceedings in the Singapore International Commercial Court ("SICC"); and
- court and mediation proceedings related to the above.
Legislative Changes to Facilitate Transition to Low-Carbon Generation Sources Passed in Parliament
On 2 November 2021, the Energy (Resilience Measures and Miscellaneous Amendments) Bill ("Bill") was passed in Parliament. In line with the transition of Singapore's electricity generation to low-carbon generation sources, the Bill sets out amendments to the Energy Market Authority Act, the Electricity Act, and the Gas Act, to empower the Energy Market Authority to require electricity generation licensees to reduce the emission of greenhouse gases in the generation, transmission, import, export or supply of electricity. These changes may affect the emission standards that businesses in the energy industry are held to.
This Update highlights the key features of the Bill.
Court of Appeal Clarifies When Conditions May Be Imposed for Stay of Court Proceedings in Favour of Arbitration
Whilst the Singapore Court is empowered to impose terms and conditions as it may think fit when ordering a stay of court proceedings in favour of arbitration, when will it do so? This question was answered by the Court of Appeal in The Navios Koyo  SGCA 99 where it also considered whether the quantum of a potentially time-barred claim may be taken into consideration in assessing whether a waiver of a time bar defence should be imposed as a condition for the stay.
In this Update, we summarise the Court of Appeal’s decision and highlight the key points of the judgment.
Impending Legislative Changes to Enhance Transparency and Beneficial Ownership of Companies, Foreign Companies, and LLPs
In July 2021, the Ministry of Finance and the Accounting and Corporate Regulatory Authority ("ACRA") conducted a public consultation on proposed revisions to the Companies Act and the Limited Liability Partnerships Act to improve the transparency and beneficial ownership of companies and limited liability partnerships.
The proposed revisions aim to mitigate misuse of corporate entities for illicit purposes, in line with the Financial Action Task Force's standards to combat money laundering, terrorism financing, and other threats to the financial system.
The consultation ended on 30 July 2021 and ACRA recently published responses to feedback received on the consultation. The proposed changes are set out in the draft Corporate Registers (Miscellaneous Amendments) Bill which was presented in Parliament on 1 November 2021 and is slated for second reading in January 2022.
In this Update, we outline the main proposed legislative amendments.