Legal Updates for February 2022
Singapore to Impose Sanctions on Russia
On 28 February 2022, the Minister for Foreign Affairs, Mr Vivian Balakrishnan, issued a Ministerial Statement in Parliament stating that Singapore intends to impose sanctions and restrictions against Russia. The potential imposition of country-based sanctions against Russia, in the absence of any underlying United Nations Security Council resolution, is an unprecedented step in the implementation of Singapore's foreign policy.
This Update looks at the possible scope of the prospective sanctions and what businesses may expect, particularly with regard to transactions with any links with Russia.
Two Bills Introduced in Parliament to Overhaul Singapore's Gambling Regulatory Regime
On 14 February 2022, the Gambling Control Bill ("GC Bill") and the Gambling Regulatory Authority of Singapore Bill ("GRA Bill") were read for the first time in Parliament. Their introduction marks the next stage of the reform of Singapore's gambling regime which began in 2021 with the Ministry of Home Affairs' ("MHA") recommendation for a holistic update to Singapore's gambling laws. This was followed by further recommendations pursuant to a public consultation on MHA's proposed amendments to gambling laws in Singapore, which we covered in our July 2021 Legal Update titled "Public Consultation on Proposed Amendments to Laws Governing Gambling Activities".
With the introduction of the GC Bill and the GRA Bill, Singapore has taken another step closer towards fully modernising its gambling regulation. If passed, the Bills will result in a significant overhaul and consolidation of the current regulatory regime. Key changes include:
In this Update, we will highlight the key changes introduced by both Bills.
- Establishing the Gambling Regulatory Authority of Singapore ("GRA") to regulate the entire gambling landscape in Singapore;
- Updating gambling laws and regulatory approaches to keep pace with the evolving gambling landscape;
- Legalising terrestrial social gambling;
- Criminalising underage and proxy gambling; and
- Introducing new licensing regimes.
Singapore Court Issues First Decision on Classification of Creditors in Lock-Up Agreements for Schemes of Arrangement
In a scheme of arrangement, scheme companies may incentivise the creditors to commit to the proposal at an early stage by entering into a lock-up agreement, in which the creditor provides an undertaking to vote in favour of the scheme in exchange for certain benefits. While lock-up agreements are advantageous tools in the hands of a scheme company, the principles underlying such agreements have so far not been considered in detail by the Singapore Court. In Re Brightoil Petroleum (S'pore) Pte Ltd  SGHC 35, the Singapore High Court, for the first time, issued the grounds of its decision on whether creditors who enter into lock-up agreements should be placed in a separate class from the other creditors for the purpose of voting on a scheme of arrangement.
The Court's decision provides some much-welcome clarity on this topic. In this Update, we provide a summary of the Court's decision and highlight the key principles of law regarding lock-up agreements.
Guidance on Assessing Responsible AI Use in Banking and Insurance Sectors (Veritas Phase 2)
Globally, regulators have come up with frameworks to promote the responsible use of Artificial Intelligence and Data Analytics ("AIDA") by financial institutions ("FIs"). Singapore endorses a principles-based and technology-neutral approach.
The Monetary Authority of Singapore issued a set of principles in 2018 centred around the key concepts of Fairness, Ethics, Accountability and Transparency ("FEAT Principles") to guide FIs on the responsible use of AIDA. MAS and the financial industry collaborated on the Veritas project to provide guidance to FIs to evaluate their AIDA-driven solutions against the FEAT principles.
The Veritas Consortium concluded Phase One of the Veritas project in January 2021 where it developed the fairness principles assessment methodology and applied it to credit risk scoring and customer marketing for the banking sector. Phase Two built upon the methodology in Phase One and developed the assessment methodology for all the FEAT Principles for adoption by banks in credit risk scoring and customer marketing, as well as the insurance industry in predictive underwriting and fraud detection.
This Update provides a high-level introductory overview of the assessment methodologies developed in Phase Two of the Veritas project along with some broad regulatory trends and considerations based on the whitepapers published at the conclusion of Phase Two by the Veritas Consortium.
Draft Law Potentially Lifts Prohibition on Ad Hoc Arbitrations in China
Arbitrations are by-and-large divided into two categories – those that are administered by an arbitral institution (institutional arbitrations) and those that are not (ad hoc arbitrations). Ad hoc arbitrations are usually cheaper and more flexible, but lack the support and supervision of a well-organised institution. As such, the Arbitration Law of the People's Republic of China ("Arbitration Law"), first released in 1994 and last updated in 2017, prohibited ad hoc arbitrations in China. This prohibition still remains as a general rule in the current legal system, although judicial authorities have made some small, case-by-case exceptions.
Almost 30 years later, China's arbitration system has undergone significant developments, and more and more scholars are advocating for ad hoc arbitration in China's domestic arbitration system.
On 30 July 2021, the Ministry of Justice of the People's Republic of China ("Ministry of Justice") published the Arbitration Law of the People's Republic of China (Amended Version) (Draft for Comments) (the "Draft Arbitration Law") for public consultation. The Draft Arbitration Law introduces for the first time the rules of ad hoc arbitration into the domestic arbitration regime.
In this article, we examine the current position and comment on the three draft Articles that touch on ad hoc arbitration.
Visit our Arbitration Asia website for insights from our thought leaders across Asia concerning arbitration and other alternative dispute resolution mechanisms, ranging from legal and case law developments to market updates and many more.
Forward, Together: Singapore Budget 2022
In light of Singapore's economy rebounding from the reverberations from the COVID-19 pandemic, Budget 2022 was unveiled by Singapore's Minister for Finance Mr Lawrence Wong on 18 February 2022. With the theme "Charting Our New Way Forward Together", Mr Wong laid out a wide range of measures to tackle Singapore's immediate challenges, including:
There were also tax measures and changes announced which were categorised as follows:
- S$500 million Jobs and Business Support Package to provide targeted help for workers and businesses in segments of the economy that are facing slower recovery;
- S$560 million Household Support Package that helps Singaporean families to manage cost of living pressures by providing support for daily essentials;
- S$600 million set aside to strengthen local enterprises under the Productivity Solutions Grant; and
- S$200 million to improve digital capabilities in businesses and workforces, such as investing in future technologies like 6G.
In this Update, we discuss selected tax measures, changes, enhancements, extensions, and refinements.
- Maintaining the Competitiveness and Resilience of the Tax System
- Building a Fairer and More Resilient Tax System
- Enhancing Service Delivery
- Increasing the Carbon Tax
Be Careful What You Wish For - Hastily Rendered Arbitration Award Set Aside by the Singapore High Court in Sai Wan Shipping Ltd v Landmark Line Co Ltd  SGHC 8
When does the issuance and the enforcement of the terms of a peremptory order in international arbitration cross the line such as to amount to a denial of justice? That was the principal issue in Sai Wan Shipping Ltd v Landmark Line Co Ltd  SGHC 8 where the Singapore High Court found the arbitrator to have acted in breach of the principles of natural justice in not giving the respondent sufficient opportunity to be heard and to have failed to give equal treatment to the parties.
The arbitrator in this Singapore-seated arbitration had issued what he described as a final and peremptory order that defence submission be served by a certain time, the breach of which would bar the respondent from advancing any positive defences or evidence. When the submission were served slightly late, the arbitrator refused to admit the defence submissions and subsequently made an award in favour of the claimant without hearing witnesses and on a documents-only basis. The Court set aside this award for the reasons stated above.
Regional Trade Highlights 2021
2021 has witnessed various developments related to trade law across Southeast Asia. In this publication, we provide a snapshot of these developments by discussing key highlights on trade related topics in 2021, such as regulatory activity relating to anti-dumping and safeguard measures, developments relating to export/import, free trade agreements, as well as sanctions. Amongst others, our highlights touch on Myanmar's introduction of a new Safeguard on Increased Imports Law as well as Malaysia's and Vietnam's regulatory activity in anti-dumping and safeguards; Thailand's implementation of catch-all controls to block exports of dual-use goods involving proliferation of weapons of mass destruction; the developments relating to controlled goods such as in the Philippines for wood products and Singapore for lead paint; Cambodia's new Law on Investment and its impact on duties involving prescribed investment sectors/activities; as well as developments in free trade agreements in the region such as the Regional Comprehensive Economic Partnership Agreement and Indonesia's Indonesia-European Free Trade Association Comprehensive Economic Partnership Agreement.
As things gear up in 2022, we remind businesses to keep abreast of legislative and enforcement updates on trade-related topics, which do not always involve only pure law but also involve very practical know-how aspects such as working with the regulators, and to always place a healthy emphasis on your internal trade processes – from the classification of your products to the determination of rules of origin to the securing of the necessary permits for import/export of controlled goods or strategic goods. This is critical not only to ensure continued compliance with the law, which is always developing, but also to catch existing areas of non-compliance.
State of Emergency in Myanmar – One Year On
On 1 February 2021, a state of emergency was declared for a period of one year in Myanmar ("Declaration"). More than one year after the Declaration, Myanmar still remains under a state of emergency with a new caretaker government pledging to hold elections by August 2023.
In the commercial cities of Yangon and Mandalay, daily lives of the residents appear to have resumed subject to the COVID-19 restrictions, although armed conflicts in the rural regions have continued. At the same time, the number of reported COVID–19 infection cases appear to have lessened and more medical assistance is being made available. The electricity supply and internet connections continue to remain unstable which has posed significant operational challenges for a number of businesses.
In spite of a blend of diplomatic efforts and punitive sanctions from the international community, Myanmar is still mired in severe unrest and political uncertainty, with millions living below the poverty line. As threats of civil war loom, there have been efforts behind the scenes to ramp up humanitarian efforts across the country as the situation on the ground is widely expected to worsen in the coming months. Amidst the currently volatile political and socio-economic backdrop of Myanmar, we discuss in this Update the legal and regulatory developments that have taken place in the country in the second half of last year since the Declaration.
New MAS Guidelines Restricts Promoting Digital Payment Token Services to Singapore Public
With the global fervour from retail investors surrounding the trading of cryptocurrencies (many of which would be regulated under the Singapore Payment Services Act 2019 ("PS Act") in Singapore as digital payment tokens ("DPTs")), the Monetary Authority of Singapore ("MAS") stance has been, and remains, that trading in DPTs carries very high risk and is unsuitable for the Singapore general public.
MAS noted that certain DPT service providers have been promoting DPT services online and through printed advertisements, as well as via automated teller machines that facilitate trading in DPTs, commonly known as "crypto ATMs". In view thereof, MAS issued a set of "Guidelines on Provision of Digital Payment Token Services to the Public" outlining restrictions on DPT service providers concerning the promotion of DPT services to the Singapore public ("Guidelines"). The Guidelines also set out new expectations of MAS for DPT service providers licensed or regulated under the PS Act to restrict the provision of payment token derivatives services.
In this Update, we highlight the key takeaways from the Guidelines which participants in the DPT space should take note of.