COVID-19 TEMPORARY MEASURES ACT
What is it?
On 7 April 2020, the government passed certain laws to provide temporary measures to protect both individuals and businesses from the adverse effects of the pandemic of COVID-19. The Act can be found at: https://sso.agc.gov.sg/Act/COVID19TMA2020
The temporary measures are initially intended to last for 6 months but may be extended (or even shortened) by the Minister by order in the Government Gazette (“the prescribed period”).
Prescribed Period
The temporary measures are initially intended to last for 6 months commencing on 20 April 2020, (“prescribed period”).
The prescribed period, however, may be extended (or even shortened) by the Minister by order in the Government Gazette (“the prescribed period”).
Commencement date
The Act came into operation on 20 April 2020.
What does the Act do?
The Act essentially provides temporary relief by prohibiting any breach of contract actions by one party to a contract against another, including guarantors and sureties. Certain conditions must be satisfied before a party can avail itself of this relief:
a) The contract must be one listed in the Schedule to the Act (“Scheduled Contract”);
b) It must have been entered into before 25 March 2020 or automatically renewed after this date;
c) The contractual obligation breached must be due to be performed on or after 1 February 2020; and
d) The party in breach (and/or its guarantor or surety) must serve a Notice on the claimant that the failure of performance or breach was due to a Covid 19 event.
What are the prohibited actions?
These actions are:
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Any legal or arbitration actions against a party including a guarantor or surety;
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Any enforcement action against any security over any immovable property or movable property used for commercial purposes;
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Any winding up action or related proceedings against a company;
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Any bankruptcy application against an individual including a guarantor or surety;
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Any repossession of hire purchase goods which are used for commercial purposes;
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Termination of lease or licences of premises for non-payment of rent or the exercise of right of re-entry or forfeiture of lease;
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Enforcement of any judgment or arbitral award or adjudication award;
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Any call on any performance bond for a construction or supply contract;
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Any forfeiture of deposit for an event contract or tourism-related contract; and
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Such other actions as may be prescribed.
It must be noted that these are only temporary reliefs (save for any issue relating to forfeiture of deposit or cancellation fee for any event contract or tourism-related contract). The aggrieved party can still commence action against the party in breach once these measures are lifted.
What are the Scheduled Contracts?
(a) A contract for the grant of a secured loan facility by a bank or a finance company to an enterprise*
(b) a performance bond or equivalent that is granted pursuant to a construction contract or supply contract;
(c) a hire-purchase agreement or conditional sales agreement of (i) any plant, machinery or fixed asset used for manufacturing, production or other business purposes; or (ii) a commercial vehicle;
(d) an event contract or tourism-related contract;
(e) a construction contract or supply contract (essentially any contract related to construction works);
(f) a lease or licence of non-residential immovable property.
*“enterprise” means a body corporate or unincorporate that is incorporated, formed or established, and carries on business, in Singapore, where — (a) not less than 30% of its shares or other ownership interest is held by citizens of Singapore or permanent residents of Singapore or both; and (b) the turnover of the group (within the meaning of the Accounting Standards applicable to it) to which it belongs does not exceed $100 million in the latest financial year.
Notification for Relief
A party intending to benefit from the temporary measures of the Act must issue a Notification for Relief to the other party within a time frame, which has yet to be announced.
Upon receipt of the Notice, the recipient cannot take any action that is prohibited by the Act. Any such prohibited action that has already been commenced will also be stayed.
The Notification for Relief must contain the information prescribed in the Act, namely, information on (a) the other party or parties to the contract; (b) any guarantor or surety for the issuing party’s obligation in the contract; and (c) such other person as may be prescribed.
Appointment of Assessor
A party in receipt of the Notification for Relief may either cease any further action or apply to the Registrar of Assessor for an appropriate determination in the matter.
Adjudication process and No appeals
The assessor’s determination is binding on all the parties to the application, and there is no appeal from an assessor’s determination.
Enforcement proceedings
Apart from the above reliefs, the Act has also temporarily increased certain thresholds with respect to winding up actions and bankruptcy proceedings.
Penalty
A breach of the above prohibitions could result in a criminal conviction and a fine of up to $1000. Further, any court or arbitral proceedings will be dismissed by the court or tribunal. This may mean that you cannot seek any recovery action even after the measures are lifted.
Disclaimer
The above is only intended to serve as a brief and quick overview of selected provisions under the Act. It is not to be treated as professional legal advice in any case. If you wish to seek professional legal advice or find out more about the temporary measures, please contact us at: contactus@actus.sg or 97919497.
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