Derek Loh quoted in the Business Times: “Emergency legislation ‘would help builders deal with delays'”

In a news story on possible legislation to help construction companies deal with Covid-19 related delays published by the Business Times on 24 March 2020, TSMP Head of Construction and Engineering Derek Loh said that the common standard form contracts in use in Singapore do not specifically identify pandemics or acts of foreign governments as amounting to “force majeure” that provide grounds for performance by the contractor to be modified, or relaxed.

He suggested looking to Parliament to enact emergency legislation to help the construction industry as force majeure is not a recognised legal right in Singapore.

“The mere fact of the Covid-19 outbreak or pandemic and the attendant actions of governments worldwide in and by themselves do not automatically give rise to any excuse for a contractor under Singapore law,” he said.

In summary, a contractor can only be excused is if the contract contains wording that allows or suggests some form of abatement for Covid-19 and its effects, he said.

“Therefore each individual contract must be examined to determine if a contractor can seek and obtain relief for the effects of the Covid-19 outbreak or pandemic and the attendant consequences under the terms of that particular contract.”

The situation is more serious between main contractors and subcontractors. Most of these subcontractors are obliged to absorb all risk under their subcontracts with the main contractors and this means that they shoulder all the financial consequences, he said.

“I suspect that many subcontractors will be carrying a hefty bill when the Covid-19 pandemic ameliorates.”

Given that Covid-19 is an extraordinary phenomenon, he said it is “entirely feasible for Parliament to consider giving relief to an industry that is most affected by restrictions on human migration and movement.”

He suggested a one-off targeted emergency event-linked legislation – for as long as Covid-19 continues. Such legislation is quite different from executive orders from the authorities (such as the Minister or regulator).

If Parliament passes legislation then the Courts will have to implement it, and the lack of rights in the contracts (regardless of whether standard form, or subcontract) to address the Covid-19 situation will be ameliorated, said Mr Loh.


TSMP law corporation