All posts by Gayatri

Court documents that initiate proceedings against foreign states must be served on ministry of foreign affairs

In what has been described as an issue that has taken the court “into unchartered waters as far as Singapore jurisprudence was concerned”, the High Court of Singapore, in Josias Van Zyl and others v Kingdom of Lesotho [2017] SGHC 104, recently dealt with the issue as to whether an order granting a party leave to enforce an arbitral award against a State should be served in accordance with section 14 of the State Immunity Act (Cap 313, 2014 Rev Ed).

The High Court considered the statutory interpretation of the Act which was based on the UK State Immunity Act and the English authorities of Norsk Hydro ASA v State Property Fund of Ukraine and others [2002] EWHC 2120 (“Norsk Hydro”) and PCL and others v Y Regional Government of X [2015] EWHC 68 (“PCL”) and found that any court document which initiates the mechanism and power of the courts must be served on the Ministry of Foreign Affairs as required by s 14 of the Act.

If you have any queries pertaining to this article, please feel free to contact Joseph Liow at joeliow@straitslaw.com.sg or the Straits Law Director who usually attends to your matters.

Update on Shunfu Ville collective sale

A team led by N. Sreenivasan SC and Valerie Ang successfully acted as counsel for the Collective Sale committee (the “CSC”) of Shunfu Ville in a landmark decision of the Court of Appeal which explained and applied the statutory provisions relating to how a majority is obtained and recognised in relation to approval for en-bloc sales. The Shunfu Ville en-bloc, at $638 million is one of the largest in recent years.

The issues which the Court of Appeal considered were:

(a)     Whether the transaction was in good faith taking into account the sale price of the Property; and

(b)     Whether the respondents acted ultra vires m making the application for collective sale under s84A(l ).

The CA examined the legislation concerning collective sales and the policy reasons behind such legislation; and held that “What emerges from this is the clear policy intention of the LTSA’s collective sale scheme to meet a public interest in creating more homes for Singaporeans in prime freehold areas while ensuring that the rights and interests of all affected parties, especially those of minority subsidiary proprietors who oppose a sale, are taken into account and adequately protected.

The Good Faith issue

The Court of Appeal accepted our submission that there was nothing in the Land Titles (Strata) Act (“LTSA”) to require that a public tender had to be carried out at the same price as eventually reached in a sale by subsequent private treaty. The Court of Appeal recognised that the reason the private sale mechanism existed was to accommodate a situation where the CSC may enter into a private contract at a different price after the public tender had not been successful.

The objectors had also argued that the CSC had only carried out the 2nd public tender with the desire of entering into a private treaty and this amounted to a lack of good faith. The Court of Appeal disagreed and held that the other options available to the CSC were not viable for the reasons submitted by Straits Law, on behalf of the CSC. The option to abandon the sale altogether had drawbacks such as uncertainty as to whether to carry out maintenance works and the fact that the property may depreciate in the future. The Court of Appeal also agreed with the submissions that we made on behalf of the CSC that the option to call for a 2nd public tender at a lower price was not viable as a decrease in price required subsidiary proprietor consent and it was unclear when such consent would be obtained. This was risky as the CSC had other deadlines to meet.

With regards to the appellants’ contention that offering a public tender at $638m would have attracted more bids, the Court of Appeal accepted our submission that the objectors had shown no evidence that this would have been the case. The Court agreed with the CSC that if there were other developers who were interested in the property but were not prepared to pay $688m, they would have proposed their desired prices and entered into negotiations in the same way the ultimate buyer did.

The objectors also argued that the CSC failed to engage with all parties who had shown interest in purchasing the properties as they had not proactively followed up on the expressions of interest and had not used the offers as leverage to negotiate a higher price with some other party. The Court of Appeal disagreed and found that the CSC had engaged with the interested parties and that this requirement to engage related to firm expressions of interest rather than mere enquiries, as was the present case.

Whether the respondents acted ultra vires in making the collective sale application

The objectors argued that on a plain reading of the words of the LTSA, the consent of the subsidiary proprietors who signed the original CSA must continue until the time of application to the board and that it was not sufficient that there was a 80% majority which included parties who did not originally sign the CSA.

Straits Law argued that the contractual provisions in the CSA in the present case had specifically provided that new subsidiary proprietors may join the CSA by signing supplementary agreements. Since these were contractual provisions which were agreed to by and bound the original consenting parties, there was no reason that such a contractual arrangement would violate the scheme in the LTSA. Thus, CSC had not acted ultra vires in applying for a collective sale. These submissions were accepted by the Court of Appeal.

This case is a landmark case for various reasons, First, the size of the en-bloc deal is one of the largest, if not the largest, in recent years. Second, the contractual provisions in question which the CSC relied upon were quite unique. Third, the Court of Appeal’s decision clarifies the manner in which the majority for the purposes of an application for an en-bloc sale is to be established.

If you have any queries pertaining to this article, please feel free to contact Mr N. Sreenivasan S.C. at sreeni@straitslaw.com.sg or Ms Valerie Ang at valerieang@straitslaw.com.sg, or the Straits Law Director who usually attends to your matters.

Can a subsidiary proprietor bring a claim for and on behalf of an MCST in relation to breaches of duty by a member of the same council?

The recent case of Fu Loong Lithographer Pte Ltd and others vMok Wing Chong (Tan Keng Lin and others, third parties) [2017] SGHC 97 highlights the question of the proper party to bring a claim against breaches of duty owed to or wrongs perpetuated on a MCST by a member of the council – should it be a subsidiary proprietor (“SP”) or the MCST itself? Also considered was the question of whether an SP could seek to make a derivative claim on behalf of an MCST.

Brief facts of this case:

  • There were two camps of SPs – the Plaintiffs were in one camp whilst the Defendant (Chairman of the Council) was in the other camp.
  • The Plaintiffs’ camp collectively holds the majority of the share values in the Development.
  • The Plaintiffs had sought to table a resolution at an EGM directing the MCST to bring the claim against the Defendant, but the Defendant had ruled “out of order”. However, before the High Court Judge, the Plaintiffs elected not to proceed with their challenge to the Defendant’s ruling.
  • The Plaintiffs sought various declarations that the Defendant had breached his duties as chairman, and an account of sums that the Defendant had improperly caused MCST 1024 to incur.

The case is instructive as the Court held that there exists at a minimum a distinction between breaches of duty owed to or wrongs perpetuated on a management corporation on the one hand, and wrongs done to an individual SP in his personal capacity on the other. Prima facie, claims in respect of the former are to be prosecuted by the MCST itself, while claims in respect of the latter may be pursued by the individual SPs concerned. This is because an MCST of a strata plan is a legal entity separate from the SPs of the lots comprised in the strata plan.

The Court also held that the MCST is a creature of statute. It may share some attributes of a corporation but it is important to bear in mind it stands outside company law and the Companies Act.

The fact is that there is no statutory provision in Singapore for an SP to bring a derivative action in the name and on behalf of an MCST.

The Court did agree with the suggestion that the concept of fraud on the minority could apply to strata developments and stated that he could “envisage that in some circumstances and appropriate cases, especially (but not limited to) where several SPs control the Council and the MCST and are abusing their position as such, other SPs might never be able to pass a resolution for the MCST to commence actions against wrongdoers who are in control”.

The Court concluded that there is no reason why an SP cannot, in appropriate circumstances, bring a common law derivative action in the name and on behalf of an MCST.

On the facts of this case, the Court did not allow the Plaintiffs to bring the derivative action.

It is thus imperative that early advice is sought so as to ensure that the facts and circumstances of the case are established so as to allow an SP to maintain a derivative action.

If you have any queries pertaining to this article, please feel free to contact Ms Valerie Ang at valerie@straitslaw.com.sg or the Straits Law Director who usually attends to your matters.

IVF Case – First in the World – Court of Appeal Awards Damages for Loss of Genetic Affinity

This case concerns an egregious breach of safety standards on the part of a hospital which helped our client conceive for commercial gain by promising to perform an in-vitro-fertilization [IVF] using the sperm from her husband. Instead, it used the sperm of a total stranger. The matter was further compounded by the fact that the stranger belonged to a different race from that of the mother or her husband.

Action was commenced – contending that the hospital and its scientific officers had been negligent, breached contractual duties and also committed statutory breaches. The hospital and the scientific officers admitted liability.

In relation to the claim for damages, one of the hotly debated issues related to a claim for upkeep of the child. We argued that the upkeep of the child ought to be borne by the hospital as the mother, whilst she has decided to look after the child with love and care, should not be financially burdened with the costs of raising the child.

The High Court ruled that the claim for upkeep ought not to be allowed as it would be sacrilegious and an affront to morality to compensate the parents as any such ruling would be tantamount to denouncing the value of life. The High Court remained unpersuaded by the arguments based on the majority decision of the Australian High Court which by majority had ruled that however attractive argument of sanctity of life may be, there can be no denying that an unplanned baby had to be properly fed, clothed and looked after resulting in adverse financial consequences for the family which wanted to avoid such expenses.

Our clients appealed to the Court of Appeal. The main argument for the hospital on appeal remained the same, i.e. that the sanctity of life disallowed the upkeep claim. We argued that while sanctity of life was important, it would be wholly unfair and unreasonable to allow such a lofty argument to mask the real issue, i.e. whether the mother must be compensated fairly and in doing so, whether the quantum of damages should include the expenses in maintaining the child.

The case was one of its kind in the commonwealth if not the world, as no courts have had to deal with such a question in relation to an in-vitro fertilization mix-up. The case provided us with a unique opportunity to argue the matter before the Court of Appeal. We submitted among other things, that the matter really dealt with just an appropriate compensation for the mother and that any answer to the question ought to take into account the upkeep expenses.

The Court of Appeal considered this to be a difficult question and admitted that this was a uniquely difficult case to decide. The Court of Appeal considered the issues by looking at basic principles of tort law, law relating to reproductive autonomy and loss of genetic affinity. It even felt the question as to whether the hospital ought to be pay punitive damages to the mother was a matter worthy of consideration.

The decision by the Court of Appeal was that the mother must be compensated and that too, adequately. Even though it did not agree that this ought to include the full costs of upkeep, the court held that the mother in addition to receiving all other types of damages, must also be compensated with damages measuring 30% of the total upkeep costs of the child. It ruled that the upkeep costs should include expenses incurred in raising the child until it reaches financial independence which it held may differ from family to family depending on the individual circumstances and familial situations.

The Court of Appeal while endorsing the sanctity of life argument, left no doubt that patients attending in-vitro-fertilization treatment were vulnerable to scientific mishaps that may bring about disastrous consequences emotionally and financially and that the medical institutions providing such services for commercial gain cannot escape liability from paying their dues when they commit gross negligence.

This interesting and unique case, perhaps the first in the world or at least the commonwealth, provided the Straits Law litigation team an opportunity to ensure that the parents of baby P, as the child was referred to in the proceedings, to receive financial relief which may go some way to help them in the healing process.

Employment Claims Act 2016 and the Employment Tribunal commences operation from 1st April

The Employment Tribunal established under the Employment Claims Act 2016  will come commence operations from 1st April 2017 and will be housed within the State Courts.

Under the new regime, the Employment Tribunal is expected to hear all statutory claims for all employees covered under the Employment Act, the Children Development Co-Saving Act and the Retirement and Re-employment Act. It will also hear specified contractual dispute matters for employees, including professionals management and executive employees where such claims are related to monetary issues not exceeding $20,000.00. Mediation will be compulsory before a claim may be filed with the Employment Tribunal. Where the mediation is union-assisted, the monetary limit is raised to $30,000.00. Costs orders may be made against parties who refuse to attend mediation. However, a claimant whose claim exceeds $20,000 or $30,000.00 (whichever the case may be), may abandon the excess amount to enable their case to be heard by the Employment Claims Tribunal. It should also be noted that a claim must be brought within one year of the dispute arising, or within 6 months if the employment relationship has ended.

Legal representation will not be allowed under the new regime, in line with the policy that the tribunal will provide a simple and time-effective resolution to monetary disputes arising from employment disputes. Hearings are to be held in an informal manner and is to be judge-led as opposed to the usual adversarial style found in court proceedings. The tribunal is not bound by rules of evidence in the conduct of any proceedings and may inform itself on any matter in such manner as it thinks fit.

These developments represent a challenge to employers who may now have to handle their disputes with employees without legal representation and those involved in human resource management may have to develop new skill sets to deal with mediation and hearings before the Employment Tribunal.

If you have any queries pertaining to this article, please feel free to contact Joseph Liow at joeliow@straitslaw.com.sg or the Straits Law Director who usually attends to your matters.

High Court releases seized assets of alleged match-fixer when CPIB failed to explain reason for seizure

Strait’s Law’s Senior Counsel N Sreenivasan recently represented a client, alleged to be involved in match-fixing, to successfully challenge the seizure of the client’s funds in bank accounts and prohibition to deal with his three private properties, in a criminal motion argued before the Chief Justice. Chief Justice Sundaresh Menon expressed the view that “such a draconian action must be shown to be justifiable” and that the evidence of the police to justify the seizure was flawed and “fell far short” of what was required.

Whilst police officers are authorized to seize assets, or prohibit a person from dealing with such assets, in respect of which an offence is suspected to have been committed, or intended to be used to commit an offence, or which may be evidence of an offence, such powers are subject to the control of the courts. Police officers must provide sufficient details of the investigation and where it fails to do so, the actions of the police may be challenged.

For more details, please read: http://www.straitstimes.com/singapore/courts-crime/alleged-match-fixer-wins-bid-to-unfreeze-his-assets

If you have any queries pertaining to this article, please feel free to contact Mr N. Sreenivasan at sreeni@straitslaw.com.sg or the Straits Law Director who usually attends to your matters.

Strata Titles Board rules that MCST has no power to permanently remove common property

In a recently concluded case of Yap Choo Moi v The MCST Plan No. 361 (“Leonie Tower”) STB No.80 of 2016, a subsidiary proprietor of a condominium successfully challenged the authority of the MCST of that condominium to permanently remove the central cooling towers that serviced the air-conditioning systems in the estate by way of the passing of a by-law. The MCST sought to rely on an additional by-law passed at an EGM in September 2016 that empowered the MCST to permanently remove the central cooling towers, related fixtures and fittings.

The Strata Titles Board (the “Board”) held that the MCST did not have the power to make the by-law, highlighting that the MCST is a creature of statute and its powers are confined to the provisions in the Building Maintenance and Strata Management Act (the “Act”). The Board found that it is the MCST’s duty to maintain and keep common property in a state of good and serviceable repair, that such duty is unconditional, and that there is duty to renew and replace common property when reasonably necessary to do so. However, noting that common property is owned jointly by all subsidiary proprietors in undivided shares in accordance with their share value, the Board considered that since there was no provision in the Act that allowed for the permanent removal of common property, the MCST was wrong in seeking to permanently deprive the subsidiary proprietor the use of the common property.

Straits Law Practice LLC’s Director,Ms Valerie Ang represented the subsidiary proprietor.  A copy of the full grounds of decision of the Board may be found at
http://www.mnd.gov.sg/STB_APPfiles/judgment/Leonie-Towers-STB-80-of-2016.pdf.

If you have any queries pertaining to this article, please feel free to contact Valerie Ang at valerieang@straitslaw.com.sg or the Straits Law Director who usually attends to your matters.

Payment made by wound up company held to be valid. Liquidators attempt to recover payment disallowed.

In the recent High Court decision of Centaurea International Pte Ltd (In Liquidation) v Citus Trading Pte Ltd [2016] SGHC 264, the High Court held that whilst any payment made by a wound up company after the commencement of winding up, as a starting point, is void, section 259 of the Companies Act allows the High Court to make a retrospective order to approve the payment (“validation order”).

In Centaurea, the company under liquidation had made payment to bunker suppliers of 5 tax invoices incurred before the liquidation. At the time that the payment was made, the Defendant was not aware that an application to wind up the Company was made. The order to wind up the company was made after the payment was made.

The High Court granted the validation order. In doing so, the High Court took the following into consideration:-

·    The payments were made bona fide (i.e. on good faith),
·    Good faith itself is not sufficient to grant validation,
·    Company receiving payment must not have actual or constructive knowledge of the winding up application,
·    The party receiving payment must show ‘special circumstances’ as to why the validation order should be given.
·    The fact that the payment was for the benefit of the Company or for its general body of creditors is one such “special circumstances”.
·    The relevant time to look at whether there was such a benefit would be at the time the payment was made.
·    As such, the correct test would be to consider if the payment was ‘likely’ or ‘apt’ for the benefit of the Company and its general body of creditors.
·   Given the fact that the Company under liquidation did receive a benefit from the payment made, in that the defendant continued to supply goods on credit terms and that the defendant was not aware of the winding up application when payment was made, the High Court granted the validation order.

If you require further information on this topic, please feel free to contact Valerie Ang (DID 6713 0228) or at valerieang@straitslaw.com.sg or any director from our Dispute Resolution Department.

Mediation Bill 2016 in the pipeline

The Mediation Bill 2016 was first read in Parliament on 7 November 2016.

It is likely to be passed as law in the near future. The Mediation Act is aimed at promoting and facilitating the resolution of disputes by mediation. It will strengthen the framework for mediation in Singapore and change the dispute resolution scene in Singapore.

Key Features of the Mediation Bill 2016 as proposed:

i.      Stay of Court proceedings

Presently, parties may refuse to proceed with mediation despite having contractually agreeing to refer their disputes to mediation. The present proposed bill seeks to provide a statutory basis for either parties to apply to court for a stay of court proceedings pending mediation. In addition, the Court will be given specific powers to make further orders to preserve the rights of parties whilst mediation is in process.

ii.     Recording of Mediated Settlement Agreement as Order of Court

Currently, in the event of a breach of a mediated settlement agreement, parties must institute court proceedings to enforce the mediated settlement agreement as a breach of contract. The proposed provisions in the Bill allow parties to have the ability of enforcing mediated settlement agreement as enforceable orders of court.

If you require further information on this topic, please feel free to contact Joseph Liow (DID 6713 0212 or at joeliow@straitslaw.com.sg) or any director from our Dispute Resolution Department.

Straits Law Practice LLC’s Tan Jee Ming and S Balamurugan successfully mitigate the sentences of two brothers who failed to report for NS

Straits Law Practice LLC’s Mr Tan Jee Ming and Mr Balamurugan defended Mr Sakthikanesh Chidambaram and Mr Vandana Kumar Chidambaram, who pleaded guilty to one count of failing to report for enlistment and one count of remaining outside of Singapore without a valid exit permit respectively under the Enlistment Act. The two men remained out of Singapore without a valid exit permit and failed to report for enlistment for more than five years and  more than three years respectively. However, both men went on to serve their national service.

After considering the mitigation plea tendered on behalf of the accused, the Court sentenced Mr Sakthikanesh Chidambaram to 3 weeks jail while Mr Vandana Kumar Chidambaram was given a fine of $6,000. They could have been jailed for up to S$10,000 and/or jailed for up to three years.

Read more here: http://www.straitstimes.com/singapore/courts-crime/2-brothers-sentenced-for-failing-to-report-for-ns-in-time

 

Straits Law Practice LLC’s Director Muralli Rajaram named in the 2016 edition of “Asian Legal Business 40 Under 40”

Straits Law Practice LLC’s Muralli Rajaram has been recognised as one of the brightest legal minds in the Asia-Pacific region under the age of 40 in the 2016 edition of “Asian Legal Business 40 Under 40”.

The “40 under 40” feature profiled young lawyers under the age of 40 for their high-quality work, such as appearing on important deals and key disputes, and earning accolades from their colleagues and clients.

Muralli, whose expertise is in dispute resolution and restructuring and insolvency, was praised by a client as “forceful in pushing forward his client’s best interest. He never shies away from a fight.”

At 34 years of age, he is also the youngest lawyer in the firm to be made Equity Partner.

Click here to see the full article.

Celine Liow

Associate
celineliow@straitslaw.com.sg
6713 0219

Celine is an associate in the Firm’s Litigation & Dispute Resolution practice group and her primary areas of practice are civil and commercial litigation. Celine graduated from the University of Birmingham in 2014 and was admitted to the Singapore Bar in August 2016.

Lim Shu Fen

Associate
limshufen@straitslaw.com.sg
6713 0256

Shu Fen is an associate in the Matrimonial, Probate and Wills Department and her primary areas of practice include Divorce and Annulment, Adoption and Guardianship, Wills and Probate and applications under the Mental Capacity Act. Shu Fen graduated from the University of Warwick in 2014 and was admitted to the Singapore Bar in August 2016.

Court allows service of documents by social media

Generally, all originating processes must be served in person. However, where personal service is unsuccessful or impractical, a Plaintiff can apply for substituted service, which includes use of electronic means of service.  In the recent case of Storey, David Ian Andrew v Planet Akradia Pte Ltd and others [2016] SGHCR 7, the Court permitted substituted service via Skype, Facebook and internet message boards. The High Court also observed that the phrase “electronic means” is wide enough to include WhatsApp and other smartphone messaging platforms linked to mobile phones.

The question of whether a court will allow service via social media is likely to turn on whether the applicant can demonstrate that:

(a) Attempts to effect through traditional methods of substituted service were unsuccessful;
(b) That a service through an electronic platform will be effective in bringing the communication to the Defendant’s attention;
(c) The electronic platform in question is used by the person to be served;
(d) There is  proof that the electronic platform in question was recently used by the person to be served. For instance, there must have been activity within a reasonable time frame.

The High Court, however, noted that electronic service per se to effect substituted service is insufficient. Electronic service must therefore be accompanied by conventional forms of substituted service, such as, posting on the front door of the defendant’s known address or via AR registered post. The aforementioned forms of service would be dispensed with if the address of the person to be served is attested to be unknown or if there is proof that the person no longer owns or is no longer a resident at the said address.

The decision is significant as it is now easier for a Plaintiff to effect service and correspondingly more difficult for a Defendant to evade service.

Please contact Mr N. Sreenivasan, SC, at sreeni@straitslaw.com.sg, Mr Shankar A.S. at shankar@straitslaw.com.sg or the director who usually deals with your matters if you require more information with regard to this article.

Financial Crime in Singapore: A Q&A guide to corporate crime, fraud and investigations in Singapore.

Straits Law Practice LLC’s N. Sreenivasan, SC, Palaniappan Sundararaj, S Balamurugan and Ahmad Nizam Abbas recently published an article on Financial Crime on Thomson Reuter’s Practical Law.

The Q&A guide gives a high level overview of matters relating to corporate fraud, bribery and corruption, insider dealing and market abuse, money laundering and terrorist financing, financial record keeping, due diligence, corporate liability, immunity and leniency, and whistleblowing.

 

Click on the link below to view the full article.

Financial Crime in Singapore: Overview

Article on Volunteering by Abigail Dawes

VOLUNESIA

“Volunesia” (noun) – that moment you forget that you’re volunteering to help change lives, because it’s changing yours.

Lawyers are professionals with a specific skill-set. We spend days (and nights) interpreting the law, arguing the law and advising on the law. It would come as no surprise then that when we are asked to avail of our time to serve society in a meaningful way, we feel that volunteering in a community legal clinic or taking on a pro bono case would be the best way to do so. Indeed it is an admirable thing to sacrifice your own time for pro bono work knowing that ordinarily it would have been billable hours. However, is that the only way that lawyers can give back to society?

As a student volunteer at my university’s community legal clinic I too used to think that that was the only way for me to give back to society. What else would I have to offer? I had spent my time in university living on every word that proceedeth from case law and the law textbooks. The idea of mentoring young delinquents or organising a drama workshop seemed like something more for a social worker than for a lawyer. My misconceptions were changed three years ago when I was invited to join my church group in organising a Christmas party for a girls’ hostel. There was no turning back and since then I have been a volunteer with them for three and half years to date. The girls at the home are minors mandated by the Courts to serve out their probation or sentence in the girls’ hostel. I volunteer as a mentor and help to organise skills training workshops such as writing, drama and photography. Twice a month I go down to the home and help facilitate character-building sessions that focus on topics such as anger management, self-esteem and social awareness.

While the girls’ home is part of the legal system of Singapore, my volunteer work is unrelated to the law in that I do not provide any law related advice. The experience has opened my eyes to the fact that as lawyers we have a lot to offer in other areas of society and still more to gain from diverse volunteering opportunities.

Developing Soft Skills is Hard Work

Lawyers are specialists. We are experts (or hope to become experts) at distilling legal principles, drafting submissions and legal briefs for complex matters. Volunteering with the girls’ home has not only helped me to hone other skills that are also useful for practice but to realise that there are other skills required for succeeding at legal practice.

For young lawyers, volunteering stints outside of the sphere of law can provide opportunities to develop leadership skills. While community legal clinics and pro bono cases are often undertaken by yourself, volunteering with an organisation will give you the opportunity to work as part of a team whose members are from diverse backgrounds. It is a great way to network with a wider circle and also to develop leadership skills in leading small to large teams in organising events and programmes. It’s hard enough to manage a group of people that are on your payroll; imagine managing those that are giving of their time for free! You learn quickly how to read people and perceive what makes them tick, and use that to harness their best for the job at hand.

Time management is another skill that I picked up when I decided to volunteer. It is no secret that lawyers are busy – we have to manage filing deadlines, client expectations, partner expectations and still find time to fulfill CPD requirements. However, once I made the decision that I would be spending two hours every alternate Tuesday volunteering, I found that I was able to make the commitment save for the odd insurmountable deadline. I learned how to make a commitment and stick to it. You begin the work week with your volunteering stint in mind and say no to the little distractions during the day so much so that you end up working more efficiently. Interestingly I also discovered that your firm’s partners are more than happy to let you have the space and time to volunteer in meaningful activities.

Diverse Opportunities to Contribute as a Lawyer 

While my volunteer work with the girls’ home was in the capacity of a mentor to the residents, sometimes the hostel would encounter issues in its administration that I was able to help with. For example, the hostel wanted to build a cat shelter on their premises to encourage the residents to take responsibility for caring for pets. As they were not aware that they could not build any structure on the land without planning permission and other permits, I was able to assist with research into the matter. The areas of law that you are exposed to usually are outside of what you would generally practise and it is certainly an eye opener and a good challenge.

You may even end up discovering that you have more to offer than just legal advice and research skills. I for one discovered that I had a real talent for putting together programmes that deal with character building themes. I enjoy the process of researching self-help books and sourcing for activities that would help empower and equip the residents at the hostel.

Volunteering Refreshes You

Sometimes you just need to step out of your own world in order to appreciate it better. At the end of a tiring day at the office dealing with legal issues, I find myself looking forward to meeting with the residents at the hostel just to talk with them about their life and offer simple advice on school, career and even dating!

I am challenged to dig deep into myself to draw on life experiences and convert those experiences into principles or tips that can be shared with someone from a completely different walk of life or world view. You come to realise that people are not all that different and that we have the same basic fears and desires in life. You also discover a lot about yourself in the process and come to the realization that you have more to give to the world than you thought. People often ask me if I find volunteer work tiring or draining. I find that when I volunteer I am struck with a condition called “volunesia”, a condition in which you forget that you are volunteering to help change lives, because it is changing yours. To be honest, I believe that I have gained much more than I have given. I have learnt how to be more patient, work in teams and be comfortable in a leadership role. More importantly I learnt how to relate to people from all walks of life – surely an indispensable skill for legal practice.

The moment I stepped into the girls’ home I got a sense that it was going to be a life-changing experience. In my interaction with the staff and the residents I felt a palpable feeling of optimism and hope for a better day. I chose to continue volunteering with them over the next three years because I felt connected to and believe in the mission of transformation and second chances. I genuinely enjoy talking with the residents and spending time with them during activities such as drama workshops, character building sessions or a game of bubble soccer.

The residents are not the only ones who benefit. I have discovered my own strengths and talents in the course of planning and facilitating various activities for the residents. I have seen leadership and creative abilities develop in myself and within the team that I volunteer with. While I often come to the home after a long day at work, I am always refreshed when I leave at the end of each session. I feel compassion in my heart growing steadily even as I watch the residents grow and transform.

 

 Abigail Naomi Dawes

Straits Law Practice LLC

Member, Young Lawyers Committee 2016

The Law Society of Singapore

 

This article was first published in, and is reproduced with the permission of, the Singapore Law Gazette.

The Impact of The Choice of Courts Act on Singapore Businesses

The Choice of Court Agreements Bill (“CCA”) passed on  14 April 2016 will extend the enforceability of Singapore court judgments in 28 countries, notably, the European Union States (excluding Denmark), United States, Mexico and Ukraine (“the contracting states”). The United States and Ukraine have not ratified the relevant convention as this time. The CCA  has not yet come into operation but is expected to do so later this year.

Weaknesses of the current Framework in Singapore

Presently, a Singapore Court Judgment is only recognized in British Commonwealth countries as well as the Special Administrative Region of Hong Kong, People’s Republic of China. Recognition is only provided to judgments of ‘superior courts’ i.e. from the High Court of Singapore or judgments from the Court of Appeal.

Advantages that CCA will bring to Singapore businesses involved in international commercial transactions

Exclusive Choice of Courts – Parties will be able to contractually provide for their own choice of courts to have jurisdiction over any dispute arising from its commercial transaction. The CCA, in allowing parties to choose their choice of courts, will ensure that a stay is granted by the Singapore Courts in any proceedings brought to Singapore where the parties have chosen the court of another contracting state in an exclusive choice of court agreement. Conversely, where parties have chosen Singapore, the Singapore Court will have jurisdiction to hear the dispute unless certain exceptions apply.

Greater enforceability of Court judgments – Disputes can now be resolved at lower or subordinate courts and its judgment will be equally binding on the adverse party in any of the ratifying contracting states; the position prior to the CCA was that the judgment of a subordinate court was not enforceable at all, even in British Commonwealth countries and present-day Hong Kong. Without the CCA, parties whose counterparty was not within the British Commonwealth countries or present-day Hong Kong would have had to rely on arbitration since international arbitral awards were enforceable amongst the contracting states of the New York Convention of 1958.

Please contact Muralli Rajaram at muralli@straitslaw.com.sg  or the director who usually deals with your matters if you require more information with regards to this article.

High Court rules that insurance companies and insured persons cannot maintain separate action on same set of facts

Where an insurance company insures a person against particular types of losses that may arise from an unforeseen event, upon payment of insurance monies, the insurance company is entitled to step into the shoes of the party it insures and to pursue a claim against the party who caused the loss. This right is known as the right of subrogation. As such, there are occasions where the insured person will commence action for his uninsured losses; whilst the insurer will separately commence action, on the same set of facts and against the same defendant, for the losses insured under its right of subrogation.  It was thought that the English Court of Appeal’s decision in Brunsden v Humphrey (1884) 14 WBD 141 (“Brunsden”) supported the position that both the insured and insurer could sue the same defendant in two different legal action arising from the same facts.

That position was rejected by Justice Belinda Ang in the recent High Court decision of Ng Kong Chon v Tang Wee Goh [2016] SGHC 83 (“Ng Kong Chon”) where her Honour held that section 35 of the State Court Act prohibits a Plaintiff from dividing a single cause of action for the purposes of bring two or more action in the State Courts. The High Court observed that a  clear contravention of section 35 would be the division of a cause of action to sue one part in the District Court and the other part or parts in the same court or Magistrate Court. In her decision, Ang J are referred to the Canadian Supreme Court decision of Cahoon v Franks (1967) 63 DLR (2d) 274 and the dicta in Spandeck v DSTA [2007] 4 SLR(R) 100  to support her rejection of the English CA’s decision in Brunsden.

The impact of this case

The decision in Ng Kong Chon affects an insurer’s ability to make subrogated claims if their insured had earlier settled their claims with or brought a claim, which arises out of a common set of facts, against the defendant. Moving forward, insurers should be mindful of claim-splitting when exercising their rights to claim for insured sums paid out under subrogated to them; all claims arising from the same cause of action should be instituted in one action.  As rightly observed by the High Court in Ng Kong Chon, co-ordination between the insured and his insurer in litigation is key. The insurers should therefore ensure that the insured’s rights to make claims for their uninsured losses are not compromised; failure to do so would expose insurer’s to claims of negligence by their insured.

Should you have any queries pertaining to this article, please feel free to contact Mr M Ramasamy at rama@straitslaw.com.sg or the director who usually attends to your matters.

Corporate Insolvency Legal Update: Personal Liability of Directors for procuring undue preference

In a recent case, the High Court in Living the Link Pte Ltd (in creditors’ voluntary liquidation) and others v Tan Lay Tin Tina & ors [2016] SGHC 67  held that a director who had procured payment by the Company in liquidation to an associated company in preference over other creditors would be personally liable  for restoring the company to the position it would otherwise have been but for the undue preference transactions.

The Court’s rationale was that a director has a fiduciary duty to take into account the interests of the company’s creditors when a company is insolvent, or near insolvency, and purpose of the duty mirrors that of the statutory avoidance provisions i.e to protect general creditors from the diminution of the assets available for distribution to the creditors under the collective insolvency regime. The Court also highlighted that this liability to repay the company would exist even if (i)  the company has not suffered any loss; or (ii) the director has not personally benefitted from the undue preferences.

In this case, the defendant director had breach her fiduciary duties by granting preference to associate companies of which she is the sole shareholder. In particular, the Court found that the undue preferences was motivated by the director’s desire to better her own position as  guarantor of the associated companies ‘credit facilities with their banks. In this regard, the Court held that the errant director was jointly liable and severally  with the associate companies to pay back the sum representing the total value of the undue preferences.

If there are any queries arising from this article or if you would like to discuss this article with us, please contact Ms Valerie Ang at valerieang@straitslaw.com.sg or the director who is in charge of your matters.

Straits Law Practice LLC’s trainee awarded the SILE prize in Wills, Probate & Administration Practice subject

Ms. Lim Shu Fen, a practice trainee with Straits Law, was awarded the SILE Prize for the best student in Wills, Probate & Administration Practice, a subject taught in Part B of the Singapore Bar Examination 2015. Straits Law congratulates her on her achievement. Ms. Lim Shu Fen will be joining the Firm’s Matrimonial and Probate Law Practice Group after her call to the Singapore Bar in August 2016.

Corporate Insolvency Legal Update: Derivative action by minority shareholders not available where company is in liquidation

The Singapore Court of Appeal in the recent case of Petroships Investment Pte Ltd v Wealth Plus Pte Ltd and others and another matter [2016] SGCA 17 considered for the first time as to whether a statutory derivative action by minority shareholders under s216A of the Companies Act (Cap. 50,2006,Rev Ed) (“the Act”) is available to a company in liquidation. Minority shareholders had sought to commence action in Wealth Plus Pte Ltd’s name against its directors. Prior to the application being heard, Wealth Plus went into voluntary liquidation.

The Court of Appeal held that statutory derivative actions, whether under common law or s216A of the Act, are not applicable to a company in liquidation. Noting that there were no Singapore decision relevant on this issue, the Court of Appeal examined the statutory text of section 216A, legislative history and case law in other jurisdictions. The Court of Appeal formed the view that s216A envisages a situation where the directors are in active movement of the company. It noted that s216A(3)(a) sets a prerequisite for an statutory derivative actions i.e. a notice must be served on the directors of the company. The Court of Appeal also noted that since directors of a company are functus officio from the commencement of winding up, they would not be able to react to any notice served pursuant to s216(3)(a), to  defend or commence proceedings on behalf of the company. In considering the legislative history, the Court of Appeal found that there was no indication that s216A was intended to be available to as a shareholder’s remedy where the company in question had been placed in liquidation. The Court of Appeal also found support in Canadian legal authorities.

The Court of Appeal, in arriving at its decision, commented that minority shareholders are not without remedy as an action may be against the liquidator of the company.  This decision is instructive in clarifying the law relating to the right to commence derivative actions by minority shareholders.

Any queries with regard to the law relating to derivative actions by minority shareholders or corporate disputes may be directed to N. Sreenivasan S.C at sreeni@straitslaw.com.sg or Valerie Ang at valerieang@straitslaw.com.sg or to the director who normally handles your matters.

Straits Law Practice LLC successfully resisted against application to set aside registration of Foreign Judgment

Straits Law Practice LLC appointed and instructed foreign counsel, who represented Resorts World At Sentosa Pte Ltd (“RWS”) against an application to set aside the registration of Foreign Judgment in Western Australia, Perth.

Judgment was first obtained against the judgment debtor in Singapore. RWS then applied to register the judgment in Western Australia, which was resisted by the Judgment Debtor on the basis that it was contrary to public policy. Section 63 of the Gaming and Wagering Commission Act 1987 (WA) prohibits credit gaming and provides that no person is to be given credit for permitted gaming.

The judgment debtor’s application was dismissed by the Supreme Court of Western Australian. The decision by the Western Australian Supreme Court makes clear that a debtor cannot rely on Western Australia laws, which prohibits credit gaming, as a ground for refusing recognition or enforcement of a Singapore Judgment debt  in relation to provision of credit for gambling.

In the event of any interest in further discussion of this matter, please contact your regular contact partner or Mr. Shankar A.S at shankar@straitslaw.com.sg and Ms Lim Min at LimMin@straitslaw.com.sg.

Building and Construction Law Update: Only one adjudication application for one contract

Straits Law recently represented a maintenance company who was a respondent in an adjudication matter brought under the Building and Construction Industry Security of Payment Act (“Act”) by its subcontractor in SOP AA No. 34/2016 . The subcontract claimed for over S$700,000 being sums alleged to be due under various subcontracts for the provision of maintenance services of clients of the client. The client had failed to submit a payment response as required by the Act; the implication of such failure was that the client could not raise issues relating to the merits of the subcontractor’s adjudication application. Reasons for non-payment, if not provided in a payment response given within a prescribed time line prior to an adjudication application, cannot be considered by the adjudicator pursuant to section 15(3)(a) of the Act. Straits Law successfully argued on a jurisdictional ground, that the adjudicator had no jurisdiction to hear the adjudication application on the basis that that the legislative scheme of the adjudication regime only permitted one adjudication to be brought for one contract. In the present case, the claimant’s claim consisted of over 300 different sub-contracts. Consequently, the adjudication application was dismissed.

For more information on payment claim disputes and adjudication matters, please contact Joseph Liow at joeliow@straitslaw.com.sg or the director attending to you.

Straits Law Practice LLC successful in reducing client’s murder charge

Ms Jennifer Lim from the Criminal Practice Group successfully secured for a client a reduction of charge from murder to a lesser offence of culpable homicide not amounting to murder.  Upon mitigation being presented for the client, the Court imposed a sentence of imprisonment for 4 ½ years for the offence of culpable homicide. Under the laws of Singapore, there is only one sentence prescribed for a murder conviction – punishment by death.

Read more here: http://www.channelnewsasia.com/news/singapore/man-jailed-9-5-years-for/2599582.html

Straits Law Practice LLC takes part in 2016 Law Careers Fairs

Straits Law NUS Law Careers Fair 2016

Straits Law Practice LLC took part in this year’s NUS & SMU Law Careers Fair 2016. The annual affair was held at SMU on 22 January 2015 and NUS on 12 February 2016. Both events were well attended.

The career fairs provided a forum where students had  an excellent opportunity to network with practitioners  and discover future career prospects. Students interacted with the Firm’s Director and Associates to find out more about the firm’s unique culture, its various practice areas as well as openings for internship and practice training contracts.

Jeremy Choo, a Senior Associate of the Firm shares: “The students took interest in our legal journey and were very interested in learning about their potential roles and responsibilities as Practice Trainees.”

Straits Law Practice ranked in Chambers and Partners 2016 for Litigation

Straits Law Practice LLC has once again been ranked as Leading Firm by Chambers and Partners 2016.

Chambers and Partners is a highly acclaimed legal directory that stands out for its comprehensive view of the marketplace, depth and quality of research as well as its commitment to reporting integrity.

Straits Law Practice LLC is pleased to be recognised alongside other leading law firms in the 2016 edition.

Managing Director, N. Sreenivasan, SC, is also ranked for his Dispute Resolution work. Sources describe him as a “good all-round litigator,” who is “very active in the courts.”

The firm is also noted in the directory for its Restructuring & Insolvency work domestically.

Straits Law Practice LLC recognised on Singapore Mediation Centre’s “Mediation Advocacy: Power List 2015”

29 January 2016 – Straits Law Practice LLC has been recognised on the “Mediation Advocacy: Power List 2015” by the Singapore Mediation Centre (SMC). It recognizes Straits Law’s advance use of mediation as a dispute resolution tool and are providers of a more complete suite of services. Law firms were shortlisted based on data compiled and analysed over a 3 year time frame from 2012-2014 and based on the following criteria:-

–  number of SMC mediation matters a law firm has been involved in; and
–  number of SMC training workshops that a law firm has sent its lawyers for.

Straits Law Practice LLC received recognitions from Legal 500, Asialaw Profiles and IFLR1000

In the rankings recently released, Straits Law received recognitions from three internationally recognised legal directories.

In The Legal 500, Straits Law is recommended for Dispute Resolution as well as Corporate and M&A. N. Sreenivasan, SC and Suresh Nair are recommended for Dispute Resolution. M Rajaram and Robert Wong are recommended lawyers for Corporate and M&A. It reports that “Straits Law Practice LLC has particular strength in acting for Indian companies undertaking business in Singapore and wider South East Asia, as well as advising non-Indian companies venturing outbound into India”.

In Asialaw Profiles, the firm is “Highly Recommended” for Dispute Resolution and Corporate and M&A. It is also “Recommended” for Banking and Finance, Capital Markets, Construction and Real Estate. The firm is recognised for being “Active” in Financial Services Regulatory and Labour & Employment. Lawyers mentioned by the directory include N. Sreenivasan, SC, Suresh Nair, M Rajaram, and Robert Wong. In its review, Straits Law is praised for “Very good service and client-focused approach. The lawyers demonstrate a good grasp of the subject matter and have the experience to tackle complex matters”.

In the IFLR1000, Straits Law is one of the notable firms listed for Banking & Finance and M&A. In its review of the firm, IFLR1000 reported that “One of Straits Law Practice’s unique capabilities lies in its India practice. Rajaram leads the practice and has been able to provide comprehensive and quality legal support to Indian companies venturing into Singapore and acting for many of the Indian banks located in Singapore. In recent years, the firm has had a strong focus advising the Singapore branches of foreign companies, banks and local quasi-governmental and governmental authorities”.

Straits Law Practice LLC holds seminar for AXA Life Insurance Singapore Pte Ltd’s Financial Advisors

SLP AXA Seminar

25 November 2015 – Straits Law Practice LLC was approached by AXA Life Insurance Singapore Pte Ltd to give a seminar to its financial advisors on Power of Attorney, Lasting Power of Attorney, the Mental Capacity Act, Wills & Probate Law and Muslim Wills & Estate. The Straits Law team who spoke at the seminar, comprised Mr Stuart Palmer, Ms Chan Lai Foong, Mr Ahmad Nizam and Ms Judy Ang, led by Ms Valerie Ang.

The theme of the seminar was ‘control’. The seminar touched on instruments which one can draft in their life time or while they still had the mental capacity, to allow them to have control over their personal property and affairs when they are no longer in a position to do so. The seminar also covered situations where one has no control, i.e. when one has not drafted these instruments and the law steps in. Also briefly covered were the amendments to the Insurance Act in September 2009 as well as the position in Muslim Law in relation to nominations.

Straits Law Practice LLC Participates in 2nd SCCA Lunchtime Seminar

Joseph SCCA

20 November 2015 – Deputy Managing Director, Mr Joseph Liow, spoke at the Singapore Corporate Council Association (SCCA) on the topic of “Trade Union Representation for Professionals, Managers and Executives”.

During the seminar, Mr Liow explained the rationale and the law allowing trade unions to represent particular classes of PME employees; either collectively or for limited representations. He covered the eligibility of PMEs, an employer’s right to reject on eligibility, recognition of trade unions representing PMEs and the specific types of dispute resolution methods which may be employed by trade unions representing such employees.

This session was the 2nd SCCA talk conducted by Straits Law in collaboration with the SCCA.

Strong interest in Mediation Seminar jointly organised by Straits Law Practice LLC, Singapore Mediation Centre and Singapore International Mediation Centre

2015 slp mediation

With recent trends pointing to the use of mediation as an alternative form of dispute resolution, the strong interest garnered for the mediation seminar jointly organised by Straits Law Practice LLC, with SMC and SIMC was timely.

The seminar entitled “Mediation – Better than Cross-Border Litigation or Arbitration” drew close to 50 participants from local and multi-national companies across various industries.

The opening address was given by Mr Poon Hong Yuen, Director, SIMC and Deputy Secretary, Ministry of Law followed by a presentation on the SIMC by Ms Jolene Goh, Senior Business Development Executive of SIMC.

The panel commentary segment moderated by Mr M Rajaram, Senior Director of Straits Law Practice LLC, saw a lively discussion with interesting insights provided by the panel comprising Ms Gloria Lim, Director (Legal Industry), Ministry of Law, Mr Loong Seng Onn, Executive Director, Singapore Mediation Centre, Ms Jolene Goh, Senior Business Development Executive, SIMC and Mr N. Sreenivasan, SC, Managing Director, Straits Law Practice LLC.

“We are pleased to be one of the first few law firms involved in promoting the use of mediation as one of the alternatives to dispute resolution. As a law firm reputed for its strength in dispute resolution, we at Straits Law Practice LLC continually strive to provide practical and innovative solutions to resolving challenges faced by our clients” said Mr N Sreenivasan, SC, Managing Director of Straits Law Practice LLC.

SATA CommHealth presents Straits Law Practice LLC with a token of appreciation in acknowledgement of the legal advice and services rendered

12 September 2015 – SATA CommHealth presented Straits Law Practice LLC with a token of appreciation at the SATA CommHealth Dinner & Dance 2015 held at the Amara hotel.

The award was in recognition of the legal advice and services rendered by Straits Law Practice LLC to the voluntary and not-for-profit organisation.

Mr Suresh Nair, a Director of Straits Law Practice LLC, accepted the award on behalf of the firm, from the Chairman of the Board of Directors of SATA Commhealth, Mr. Ang Hao Yao.

Straits Law Practice LLC is proud to continue its support of SATA CommHealth as it continues to expand its scope of services to meet the healthcare needs of the community in line with its mission of ‘Promoting lifelong health, serving the community’.

Straits Law Practice LLC acts for Myanma Economic Holdings in a sale of controlling stake in Myanmar’s biggest brewery worth $560 million to Kirin

Straits Law Practice LLC acted for Myanma Economic Holdings (MEHL) in a sale of a 55% stake in Myanmar Brewery Limited previously held by Fraser & Neave, to Japan’s Kirin Holdings Co.

The sale was the result of a long-drawn arbitration between the MEHL’s previous joint venture partner Fraser & Neave.

The arbitral tribunal released its decision on 31 October 2014, affirming MEHL’s right under the JVA to require F&N to sell its 55% stake in MBL to MEHL or its nominee.

Japanese integrated Beverages Company Kirin was MEHL’s nominee and acquired F&N’s shares in the lucrative Myanmar Brewery Limited for US$560 million through its Singapore subsidiary, Kirin Holdings Singapore Pte Ltd.

Myanmar Brewery Limited controls over 80 percent of the Myanmar’s beer market and known for its beer brands such as Myanmar Beer and Andaman Gold.

The transaction was led by Straits Law Director, Ms Valerie Ang.

 

For more details on the transaction above, click on the links to the press articles below:

http://www.dealstreetasia.com/stories/japans-kirin-buys-fraser-and-neaves-myanmar-brewery-stake-for-560m-10925/

http://www.chinapost.com.tw/business/company-focus/2015/08/21/443793/Kirin-buys.htm

http://www.myanmar-business.org/2015/08/kirin-buys-stake-in-myanmar-brewery.html

http://sbr.com.sg/food-beverage/news/japanese-firm-kirin-snaps-fns-myanmar-brewery-stake-us560m

http://www.todayonline.com/business/kirin-buys-fns-stake-top-myanmar-brewer-s786m?singlepage=true

Straits Law Practice LLC acts for Myanmar (MEHL) in a dispute with F&N regarding its joint venture, Myanmar Brewery Limited

Straits Law Practice LLC acted for Myanma Economic Holdings Limited (MEHL) in a dispute regarding its joint venture with Fraser & Neave Limited (“F&N”) to operate a brewery in Myanmar, known as Myanmar Brewery Limited (“MBL”).

MEHL held 45% of the shares in MBL and F&N held 55%.

The dispute between the parties arose from the operation of a change of control clause in the Joint Venture Agreement (“JVA“) that stipulated that a party is obliged to seek prior written approval from the other party in the event of a situation where a third party acquires a direct or indirect controlling interest of more than 50% in either party to the JVA. The event of default entitled a Non-Defaulting party to enforce its legal rights against the Defaulting Party to sell all of its shares in the Joint Venture Company to the Non-Defaulting Party or its nominee.

Sometime in January 2013, there was an offer from a third party for all the shares in F&N with no prior written approval sought from MEHL before the sale was completed. The dispute related to the operation of the change of control clause i.e. whether MEHL was entitled to buy out F&N’s shares in MBL, the post-default procedures and the valuation to be used for the consequent buy-out.

F&N’s position was that MEHL had no basis to give notice of its intention to buy out F&N’s shares in MBL pursuant to the JVA.

MEHL commenced arbitration against F&N in accordance with the terms of the JVA. F&N vigorously contested the claim.

Mr N. Sreenivasan, Managing Partner together with Ms Valerie Ang, Director of Straits Law Practice led the arbitration.

The JVA and other associated agreements which were the subject matter of the dispute were governed by Myanmar Law. The arbitration was conducted in accordance with the Arbitration Act 1944 (Myanmar Act No. IV of 1944).

After the arbitration hearing that lasted 11 days in Singapore, the arbitral tribunal released its decision on 31 October 2014, affirming MEHL’s right under the JVA to acquire F&N’s 55% stake in MBL at a fair value to be determined by an independent valuer to be appointed by both parties.

On 20 August 2015, the transaction was finally completed when F&N’s 55% stake in MBL was transferred to MEHL’s nominee, Kirin Holdings Co. for a sum of USD560 million.

For more details on the case above, click on the links to the press articles below:

http://www.nationmultimedia.com/breakingnews/F&N-loses-fight-over-Myanmar-brewery-30246875.html

http://business.asiaone.com/news/fn-stock-falls-investors-swallow-bitter-news

http://www.straitstimes.com/asia/se-asia/myanmar-army-seeks-to-calm-investors-after-winning-brewery-row-with-singapores-fn

http://www.businesstimes.com.sg/companies-markets/myanmar-brewery-stake-arbitrators-rule-against-fn

http://sbr.com.sg/food-beverage/news/fraser-and-neave-bids-its-cash-cow-goodbye-after-losing-battle-myanmar-brewery

http://www.just-drinks.com/news/fraser-neave-to-lose-myanmar-brewery-stake-after-legal-defeat_id115298.aspx

http://www.mmtimes.com/index.php/national-news/12137-military-firm-wins-arbitration-battle-with-fraser-neave.html

Straits Law Practice LLC holds seminar for Corporate Counsel on Non-Reliance Clauses

Suresh SCCA

25 August 2015 – In a lunch-time seminar organised by the Singapore Corporate Counsel Association, Mr Suresh Nair, Head of the Litigation Department of our firm spoke on the topic of “Non-Reliance Clauses from Orient Centre to Goldring”.

Mr Nair shared that it used to be thought that non-reliance clauses gave rise only to evidential estoppels such that they were operable only if they were themselves relied upon. However since then developments in the law have had it that such clauses may give rise to contractual estoppels so that they are operable even in the absence of evidence that they were relied upon.

The seminar also covered the issues of estoppel, the operability of non-reliance clauses in cases of illiteracy and the applicability of the Unfair Contract Terms Act to such clauses.

The seminar drew positive responses from participants and represents part of Straits Law’s commitment to create partnerships with professional institutions with a view to sharing legal knowledge.

The seminar was the first seminar in a series of seminars to be held with the SCCA this year.

Liyana Sinwan

Associate
liyanasinwan@straitslaw.com.sg
6713 0239

Liyana’s practice experience include civil and commercial litigation, matrimonial disputes, probate and administration, as well as conveyancing. She has represented clients in the Court of Appeal for civil litigation matters, as well as at the Syariah Appeal Board for Muslim divorce cases.

Liyana’s passion lies in the area of matrimonial law. She is presently an Associate with the Matrimonial, Probate and Wills Department and her primary areas of practice include Divorce (both in the Family Justice Courts and the Syariah Court), Adoption and Guardianship, Wills and Probate, and applications under the Mental Capacity Act.

Liyana is a member of the Muslim Law Practice Committee of the Law Society of Singapore. She graduated from the Singapore Management University in 2012 and was admitted as an Advocate and Solicitor of the Supreme Court of Singapore in 2013.

Kalpana Sadanandan

Senior Associate
kalpana@straitslaw.com.sg
6713 0265

Kalpana graduated from the University of Wolverhampton and was admitted to the Singapore Bar in October 1999. Her areas of practice encompass a broad range of property related matters, Banking & Finance, Bankruptcy & Insolvency, Company Law, Landlord & Tenant Law.

She also acts for both corporate and individual vendors and purchasers in the sale, purchase and leasing of residential, commercial and industrial properties. She acts for many of the local and foreign banks in various financial transactions.

Tan Jee Ming

Director
ming@straitslaw.com.sg
6713 0203

Tan Jee Ming was called to the Singapore Bar in 1986 after graduating from the Faculty of Law, NUS a year earlier. He commenced practice immediately after that mainly in the field of litigation. As an advocate and solicitor, he undertook a wide range of both civil and criminal litigation. His work has brought him through almost every rung of the Singapore Judiciary.

In 1996, he started his own legal practice, Tan Jee Ming & Partners, a boutique practice which catered to a wide range of legal needs both domestic and cross-border.

After a span of 14 years, Tan Jee Ming & Partners merged with Straits Law Practice LLC in 2010. As a result of the merger, the scope of legal work which now undertaken by Tan Jee Ming has become even more diverse.

Currently, Tan Jee Ming sits on the Review Committee and Inquiry Committee of the Law Society of Singapore. He is also appointed by the Honourable Chief Justice as a member of the Disciplinary Tribunal.

Ahmad Khalis

Director
ahmadkhalis@straitslaw.com.sg
6713 0204

Khalis graduated from the National University of Singapore in 1985 and was called to the Singapore bar in 1986.

Khalis was in private practice from 1986 to 2005. He dealt with property, trusts, estates, corporate, criminal, Muslim law, family and civil litigation. He was the first Chairman of the Law Society’s Muslim Law Practice Committee.

Khalis was an elected Member of Parliament from 2001 to 2006. He was Vice-Chairman of the GPC for Law and Home Affairs Ministries.

He was Director of an Islamic Finance Consultancy firm in 2005-2006. He currently holds a Certified Islamic Finance Executive certificate issued by Ethica Institute of Islamic Finance (Dubai).

Khalis was corporate counsel for Meinhardt (Singapore) Pte Ltd, an international engineering firm with a presence in 22 countries, for two years.

Khalis later became Legal Director of Mubadala CapitaLand Real Estate LLC (“Capitala”) based in Abu Dhabi. Capitala is a multi-billion dollar joint-venture between CapitaLand (Singapore) and Mubadala Development Company of Abu Dhabi.
Khalis joined SLP in 2011.

P O Ram

Consultant
ram@straitslaw.com.sg
6713 0261

Periowsamy Otharam, more affectionately known as P O Ram, is a consultant with Straits Law Practice LLC’s Litigation and Dispute Resolution Practice. He commenced his legal career in the Singapore Legal Service as Deputy Public Prosecutor in the Attorney-General’s Chambers. Thereafter, he served in various appointments including appointed as Senior State Counsel.

P O Ram also has extensive experience in the field of parliamentary work. He served as Clerk of Parliament and Secretary of the Presidential Council for Minority Rights from 1995 to 2005. He was later appointed as Secretary-General of the ASEAN Inter-Parliamentary Association from 2013 to 2016. After an illustrious career in public service, P O Ram entered into private practice. His areas of practice include civil and criminal litigation.

For his contributions to public service, Periowsamy Otharam was conferred the Public Service Star (Bar) in 2012 for his services as Chairman of the Board of Visitors (Drug Rehabilitation Centres and Anti-Inhalant Abuse Centres).

Straits Law Practice LLC Profile Update

Legal Updates

SOUND FUNDAMENTALS
Straits Law Practice LLC (“Straits”) was incorporated in 2001 from the merged practices of Derrick Ravi Partnership and Raja Loo & Chandra. In 2006, Straits Law incorporated the practice of Choo & Lim LLC. Having been built on a solid foundation of experience and expertise in wide-ranging legal issues, Straits Law provides a broader and more comprehensive service which is personalised to meet our clients’ needs.

Our “long arm of the law” extends into areas of Litigation, Banking, Conveyancing and Corporate practice. Within our team of lawyers we have practitioners with South Asia and East Asia expertise. The firm has established links and effective working relationships with law firms in India, China, Australia, Indonesia, Malaysia and the United Kingdom.


STRENGTH IN DIVERSITY

Straits is a limited law corporation registered as a company under the laws of the Republic of Singapore. Its shareholders, by law, are Advocates & Solicitors admitted as officers of the Supreme Court of Singapore. Given the numerous high value work that it carries out, Straits backs its services with an $85 million professional indemnity arrangement.

Straits’ lawyers are from various backgrounds and walks of life, and are equipped to deal with and address legal issues on a multi-dimensional level. Straits provide practical and commercially viable solutions without being overtly legalistic. Straits is driven by its 34 lawyers (including foreign lawyers) and support staff strength of 32 employees including legal executives with legal qualifications from various jurisdictions, p1aralegals and qualified secretaries.

INTRODUCTION
Straits is a dynamic full service law corporation, built on a solid foundation of experience and expertise in wide-ranging legal issues. We provide a broader and more comprehensive service which is personalised to meet our client’s needs. Our expertise extends to Litigation, Conveyancing, Banking and Corporate practices. We have established links and effective working relationships with law firms in India, China, Australia, Indonesia, Malaysia and the United Kingdom.

Our key philosophy is to put forth an ideal game plan for optimum results, helping our clients deal with legal issues in order to further their legitimate interests. Our outlook and expertise ensures that we provide our clients with crucial advice, taking a holistic view that considers matters of principle, commercial interest and cost effectiveness. We believe in building successful partnerships and customer centric relationships with our clients and legal partners.

As cost management is crucial to our clients, we are always conscious that the recommended solutions must make economic and not just legal sense. Our practice makes it a point to give as full an analysis of the possibilities to our clients so that they can make informed decisions.
Straits has a Professional Indemnity Coverage of about $85 Million on a renewable basis. We will be happy to provide you with copies of the annually renewed PI policies.

Straits has been recognised by the following organisations:
A) LEGAL 500
Straits has been listed for the 3rd consecutive year in Legal 500 and this year under the following headings.
Projects and Energy
Within Local firms, Straits Law Practice LLC is a second tier firm, Special Mention and
Recommendation to
“At Straits Law Practice LLC, M Rajaram acts for lenders, borrowers and sponsors in the financing of power plants, and mining and other major infrastructure projects.”

Corporate and M&A

Within Local firms, tier 4

Dispute resolution
Within Local firms: Other recommended firms
B) INTERNATIONAL FINANCIAL LAW REVIEW 1000
We have also been recognized in the International Financial Law Review 1000 – The Guide to the world’s leading Financial Law Firms as “other notable” firms for the first time in the following categories
(a) Banking – Local Firms;
(b) Capital Markets – Local Firms; and
(c) Mergers & Acquisitions – Local Firms

The following was said on the Website (http://www.iflr1000.com/Jurisdiction/104/Singapore.html) about the firm and it mentioned in particular, Mr. Rajaram, Mr. RobertWong & Mr. Sreeni.

Though Straits Law Practice is primarily known as a litigation boutique, its financial law practice has made inroads in Singapore’s competitive legal market. The firm is popular as Singapore counsel to international law firms or as a strong alternative to Singapore’s big firms.

In restructuring and insolvency, the firm leverages on its strong litigation capabilities. Managing director garners glowing comments from clients: “N Sreenivasan’s contentious work in the restructuring and insolvency space is very impressive and is someone to watch out for.”
On the corporate front, senior director M Rajaram wins accolades. A client says, “Mr. Rajaram is extremely helpful. When we need an immediate opinion or response, they’re easily the fastest firm we’ve worked with. The bigger firms need more time; as a smaller firm, Straits Law Practice is much more nimble.”

Clients also appreciate director Robert Wong’s amiable approach. “Robert is very senior and very experienced. He’s also very friendly, even when it’s hard for clients to understand law,” says a client. “He’s great at breaking things down in very straightforward terms and pointing out key critical points so that we know the risks and our options on transactions. Though any lawyer should be able to do this, Robert does it particularly well.”

Deals
The firm frequently acts as Singapore law counsel for international law firms in large cross-border transactions and acted as Singapore counsel to Honeywell in its S$430 million ($338.6 million) acquisition of Safe Step Holdings, the holding company of King’s Safetywear.

Partner Robert Wong also advised Singapore-listed See Hup Sung in entering a conditional sale and purchase agreement with GEP Asia Holdings to acquire a 51% stake in Eastern Tankshore for S$4.08 million. The acquisition strengthens the company’s presence in the refined petroleum industry.

PRACTICE STRUCTURE
The Corporate and Corporate Finance practice. The areas of practice include initial public offers, rights issue, issue of debentures, takeovers, mergers and acquisitions and joint ventures corporate financing, joint ventures and acquisitions of businesses, debentures and other asset based financing, insolvency practice, corporate re-structuring, corporate secretarial work.

The Real Estate Conveyancing, Banking and Transaction practice. The areas of practice include sale and purchase of commercial, industrial and residential properties, asset financing and refinancing. The lawyers are assisted by experienced conveyancing clerks. The Firm is on the panel of lawyers for several major local banks and all the Indian Banks operating in Singapore, and is capable of undertaking all manner of banking and transactional documentations including the taking of lead for syndicated loans.

The Litigation practice. The areas of practice include international arbitration, commercial litigation, corporate dispute resolution, tax law, mediation and arbitration, construction law, conveyancing related litigation, insurance law, personal injury and torts and criminal law. The lawyers are assisted by an experienced and qualified team of legal executives, paralegals, litigation secretaries and court clerks.

CLIENTS’ PROFILE
The clients of Straits includes Banks and other Financial institutions, quasi- government bodies and large corporations, such as Building and Control Authority, Central Provident Fund Board, National Parks, CISCO, Singapore Science Centre, Building and Control Authority, Singapore Medical Council, Exxon-Mobil Singapore, the NatSteel group of companies, TCM Practitioners Board, Yayasan Mendaki, Standard Chartered Bank, NTUC Income, India International Insurance Pte Ltd, Allied Irish Bank and CGEA, small and medium enterprises as well as individuals. Many of our clients have grown and become established in their fields, with some achieving listing and we are proud to have assisted them on this journey. Straits also assists other law firms with complex matters where the expertise and specialized knowledge of the lawyers is called upon.

LAWYERS

1. M Rajaram, P.B.M. (Admission No. 27 of 1980), Senior Director
Rajaram graduated from the University of Singapore in 1978. He holds an MBA from Maastricht. He has been in active practice since 1980. He started his professional career as a litigator in criminal and civil proceedings. He now actively practices in the areas of Banking and Transactional Work, Merger and Acquisitions, Cross Border Work, particularly India related transactions, Real Estate, insolvency and corporate restructuring. Raja is a Fellow of the Singapore Institute of Arbitrators (FSIArb) as well as a Fellow of the Chartered Institute of Arbitrators (FCIArb).

Rajaram is actively in social and community work. He is a Past Chairman of the Singapore Indian Chamber of Commerce and was the Vice-Chairman of the Singapore Business Federation, and council member of ASEAN Chamber of Commerce and Industry. He is the Honorary Consul of the Republic of Mali for Singapore. Rajaram is actively involved in social work at the grassroots level and is a Patron of the Taman Jurong Citizenship Consultative Committee, having served as a member of the Taman Jurong CCC for many years.

For his contributions to Society and to the business community, during his tenure as Chairman of the Singapore Indian Chamber of Commerce and Industry, Rajaram was bestowed the PBM (Pingkat Bakti Masyarakat – The Public Service Medal) by the President of the Republic of Singapore.

2. N Sreenivasan, Senior Counsel (Admission No. 67 of 1988), Managing Director
Sreeni graduated from the National University of Singapore in 1985. A PSC scholar and former Legal Service officer, he is a former member of the Executive Committee and Council of the Law Society of Singapore. Sreeni is a Fellow of the Singapore Institute of Arbitrators (FSIArb) as well as a Fellow of the Chartered Institute of Arbitrators (FCIArb). In recognition of his litigation skills, Sreeni was appointed a Senior Counsel at the Opening of the Legal Year 2013. His area of practice is litigation.

3. Robert Wong Kwan Seng (Admission No. 51 of 1983), Director
Robert graduated from the National University of Singapore and commenced practice in Khattar Wong and Partners in 1984. He practises mainly corporate law with emphasis on corporate finance. He has acted as solicitor in initial public offerings, rights issues, issue of debentures, takeovers, mergers and acquisitions and joint ventures.

4. Palmer Stuart Andrew (Admission No. 126 of 1988), Director
Stuart graduated from the National University of Singapore in 1988 and has been in legal practice since 1989 after serving 1½ years as Deputy Public Prosecutor and State Counsel. His area of practice is litigation.

5. Palaniappan Sundararaj (Admission No. 5 of 1994), Director
Raj graduated in 1988 from the National University of Singapore and subsequently obtained his Master’s degree in 1994. He was a former PSC Merit Bursary Award holder and served for 5 years as Deputy Public Prosecutor and State Counsel. His area of practice is litigation.

6. Liow Wang Wu Joseph (Admission No. 160 of 1992), Director
Joseph graduated from the National University of Singapore in 1992. He was a PSC ASEAN Scholar Pre-University from 1986 to 1987. He has been in legal practice since 1993. He is an active member of various committees of the Law Society of Singapore. He is a Lead Trainer and Committee member of the Advocacy Committee, a former Vice Chairman of the Criminal Legal Aid Scheme Committee and a member of the Inquiry Panel. Outside the Law Society of Singapore, Joseph also acts as a Legal Assessor to the Singapore Medical Council and has previously served as the Honorary Secretary to the Society of Construction Law (Singapore).

His area of practice is principally commercial, civil and building and construction litigation. He is a qualified Arbitrator and an accredited Adjudicator with the Singapore Mediation Centre.

7. Choo Si Sen, Justice of the Peace, B.B.M (Admission No 16/1970), Consultant
A former Deputy Public Prosecutor and State Counsel, he is active in social cultural and trade organisations to which he is also Honorary Legal Adviser, (in particular, the Singapore Federation of Merchants’ Association and its affiliates). He has been an Honorary Council Member of the Singapore Chinese Chamber of Commerce & Industry for many years.

He served on the Criminal Law Advisory Committee as member and Chairman of the Criminal Law Advisory Committee I, as well as a member of the Criminal Law Review Board appointed by the Minister for Home Affairs from 1974 to 2010. He was a member in the Economic Review Committee, Sub-Committee on Domestic Enterprises. Presently he is the Chairman of Retail Promotion Centre Pte Ltd.

8. Tan Jee Ming (Admission No. 131 of 1985), Director
Jee Ming graduated from the University of Singapore in 1985 and was called to the Singapore Bar in 1986. Thereafter he commenced practice and became a partner with Messrs Derrick Ravi & Partners. In 1996, he started his own boutique practice Messrs Tan Jee Ming & Partners. The firm merged with Straits Law Practice LLC in 2010.

He currently sits as both Chairman and member in the Review Committee and Inquiry Committee and also as a member of the Compensation Fund Committee of the Law Society. He is also a member of the Disciplinary Tribunal appointed by the Honourable Chief Justice. As of 2013, he is also appointed as an independent director of 2 listed companies in Singapore.

9. Ahmad Khalis Bin Abdul Ghani (Admission No. 104 of 1985), Consultant
Khalis graduated from the National University of Singapore in 1985 and has been in legal practice from 1986 to 2005. He was an in-house counsel from 2006 to 2011 for Meinhardt (Singapore) and Mubadala Capitaland Real Estate (Abu Dhabi). His area of practice is corporate, property and litigation.

10. Ms Lim Lay Choo Jennifer (Admission No 373 of 1991), Director
Jennifer graduated from the University of East Anglia in 1990 and was called to the Bar of England and Wales (Lincoln’s Inn) in 1991. She was called to the Singapore Bar in January 1993 and is a Commissioner for Oaths. She is actively involved in social, cultural and trade organisations such as the merchants’/trade associations, martial arts’ institutions, lion and dragon, clans/ associations and others. She is also very active at various grassroots organisations.

She sits as Legal Advisor to these organisations and is also the Legal Adviser to the Federation of Merchants Association. She sits in the Councils of the Singapore Hokkien Huay Kuan and the Singapore Chinese Chamber of Commerce and Industry. She also sits in the Criminal Law Advisory Committee as appointed by the Ministry of Home Affairs. She is a volunteer lawyer with the Criminal Legal Aid Scheme of the Law Society of Singapore. Jennifer practices Conveyancing and Property, Civil/Criminal Law, Matrimonial, Landlord and Tenant Law, Probate/Administration of Estate and general solicitors work.

11. Suresh Sukumaran Nair (Admission No.293 of 1993), Director
Suresh graduated from the National University of Singapore in 1993 and was called to the Singapore Bar in 1994. He has also been admitted to the roll of solicitors of the Supreme Court of England and Wales. Upon graduating, Suresh joined the law firm of Allen & Gledhill, where he was made Partner in 2000. In 2002 – 2003, Suresh spent a year as a Legal Officer with the United Nations Compensation Commission in Geneva, where he reviewed war reparations claims against Iraq arising from the 1st Gulf War. He returned to Singapore in 2003 and rejoined Allen & Gledhill. Suresh made the move to Straits Law in 2010, and is focussed on growing the firm’s litigation and dispute resolution practices. Suresh has appeared as Counsel in numerous international arbitrations and at all levels of the Singapore Courts. Suresh’s main areas of practice are banking and commercial disputes, shareholders’ disputes, Fund-related litigation, construction, employment and insolvency – related litigation.

Important cases in which Suresh appeared as Counsel include the cases of Orient Centre Investments Ltd & Anor v Societe Generale [2007] 3 SLR(R) 566, a landmark decision of the Singapore Court of Appeal on banking documentation, and the case of Animal Concerns Research & Education Society v Tan Boon Kwee [2011] SGCA 2, which is a landmark decision on the duty of care in construction cases.

12. Ang Mei-Ling Valerie Freda (Admission No. 47 of 1995), Director
Valerie graduated from the University of Hull, United Kingdom in 1993. She has been with the firm since her pupilage days except for a short one (1) year stint in the private sector in 2001. Valerie is a Member of the Singapore Institute of Arbitrators (MSIArb). Her area of practice is litigation.

13. Chan Lai Foong (Admission No. 163 of 1992), Associate Director
Lai Foong graduated from the University of Hull, United Kingdom in 1989 and was called to the Singapore Bar in 1993. Since then, she has been in private practice and started her career handling conveyancing, corporate and general litigation work. Her main practice now is Real Estate Conveyancing, Banking and Transaction work.

14. Ahmad Nizam Abbas (Admission No. 31 of 1993), Associate Director
Ahmad graduated from University Of Keele, United Kingdom, in 1991.He served on the Council of the Law Society from 1996 to 2000. His main area of practice is litigation. He is active in several committees of ministries and statutory boards, including serving as a Board Member of the Civil Aviation Authority of Singapore between 2002 and 2005 where he sat on the Investment, Audit and Tender committees.

15. Shankar (Admission No. 58 of 1997), Associate Director
Shankar’s area of practice is in international arbitration work and commercial litigation. He has handled various international arbitration cases where different arbitration rules such as the Uncitral Rules, Singapore International Arbitration Centre Rules and International Chamber of Commerce rules have been applied. He has gained much experience in international arbitration where disputes involved commodities such as agricultural products, coal, fertilisers, iron, steel and petroleum and petrochemical products. Shankar also advices and represents one of the Singapore casino in their casino related matters.

16. Selvarajan Balamurugan (Admission No. 267 of 1998), Associate Director
Bala graduated from the University of Wolverhampton, United Kingdom in 1996. He was admitted as an Advocate and Solicitor of the Supreme Court of Singapore in 1999. Bala’s areas of practice include criminal litigation, matrimonial as well as other general solicitors work.

17. Rajaram Muralli Raja (Admission No. 180/2006), Associate Director
Muralli went into the law as a default option, because his father and uncle were lawyers. But he knew that he made the right choice when he was defending officer for one of his men in a court martial, when as a 19 year old Second Lieutenant, he made a difference. Muralli underwent pupillage and three demanding years at Allen & Gledhill. This early training has made him tough and a glutton for hard work, responding to client’s requirements thoroughly and at short notice.

Muralli was recruited as part of Straits’ infusion of fresh blood. He is part of the litigation team and handles both civil and criminal litigation. In his first month, he has already become involved in a large and complex commercial disputed between two listed companies and in a Court of Appeal matter. In the longer term Muralli hopes to contribute significantly to Straits Law’s litigation department’s stature as a leading mid-sized practice.

Most Significant Legal Cases to Date
Acting for an Asian government in an ICC international arbitration of a dispute on a joint investment and management agreement with a multi- national transport company. Issues relating to breaches of the arbitration agreement, stay of proceedings and anti-suit injunctions arose during the course of the arbitration when parallel proceedings were commenced in another jurisdiction.

Advising an Asian government in relation to a regulatory authority’s power to halt trading of the shares of a listed government company so that several suspicious transactions could be investigated.

Acting for an investment company and several of its related entities and officers in a High Court suit commenced by one of its customers for breaches of fiduciary duties and conspiracy.

Acting for a bank in a High Court suit against one of its former customers for the recovery of monies owed to the bank under various facilities.

Acting for a bank in a High Court suit initiated by one of the bank’s former customers in which allegations were raised that the relationship manager had given wrong advice on the nature of a certain instrument purchased by that customer.

18. Ramesh Bharani (Admission No. 104 of 2006), Senior Associate
Ramesh graduated from the University of Liverpool in 2005. He was admitted as an Advocate and Solicitor of the Supreme Court of Singapore in 2007. Ramesh is also a qualified accountant. He was an auditor with a local accounting firm from 1999 to 2002 before leaving the accounting profession to read law. Ramesh is an associate member of CPA Australia. Ramesh’s areas of legal practice include civil and criminal litigation, matrimonial as well as other general solicitor’s work.

19. Zhu Zhihao Daniel (Admission No: 180/2011/K), Associate
Daniel graduated from the National University of Singapore in 2010. He was admitted as an Advocate and Solicitor of the Supreme Court of Singapore in 2011. Daniel’s areas of legal practice include civil and criminal litigation as well as other general solicitor’s work.

20. Vithyashree (Admission No: 170/2011/E), Associate
Vithya graduated from the University of Southampton in 2009. She was admitted as an Advocate and Solicitor of the Supreme Court of Singapore in 2011. Vithya’s areas of legal practice include civil and commercial litigation as well as other general solicitor’s work.

21. Judy Ang Pei Xia (Admission No: 160/2010/Y), Associate
Judy graduated from the London School of Economics in 2009. She was admitted as an Advocate and Solicitor of the Supreme Court of Singapore in 2011. Judy’s areas of legal practice include civil litigation and family law as well as other general solicitor’s work.

22. Jeremy Choo Joon Haw (Admission No: 293/2011/K), Associate
Jeremy read Economics and Sociology at the National University of Singapore and law at the University of Durham. He was admitted as an Advocate and Solicitor of the Supreme Court of Singapore in 2012. Jeremy’s areas of legal practice include mergers and acquisitions and corporate finance.

23. Lisa Chong (Admission No. 166/2012 ), Associate
Lisa graduated from the National University of Singapore in 2011 and was admitted as an Advocate and Solicitor of the Supreme Court in
2012. Her areas of practice include civil and commercial litigation.

24. Lim Min (Admission No. 13 of 2013), Associate
Lim Min graduated from the University of Warwick, United Kingdom, in 2011. She was admitted as an Advocate and Solicitor of the Supreme Court of Singapore in 2013. Lim Min’s areas of legal practice include civil litigation.

25. Nicole Oon Siew Sien (Admission No. 101 of 2013), Associate
Nicole graduated from the National University of Singapore in 2012. She was admitted as an Advocate and Solicitor of the Supreme Court of Singapore in 2013. Nicole’s area of legal practice is civil litigation.

26. Bryan Tan Tse Hsien (Admission No. 109 of 2013), Associate
Bryan graduated from the University of Melbourne in 2008. He was admitted as an Advocate and Solicitor of the Supreme Court of Singapore in 2013. Bryan’s area of legal practice is civil litigation.

27. Tan Kai Ning Claire (Admission No. 132/2013), Associate
Claire graduated from the National University of Singapore in 2012. She was admitted as an Advocate and Solicitor of the Supreme Court of Singapore in 2013. Claire’s areas of legal practice include civil litigation as well as other general solicitor’s work.

28. Divya Pradha (Admission No: 268 of 2013), Associate
Divya graduated in 2007 from the Singapore Management University with a Bachelor of Business Management and a Bachelor of Science (Economics). She left a career as a Tax Consultant at PricewaterhouseCoopers in 2010, following which she read law at the Singapore Management University. She obtained her Juris Doctor degree in 2012 and was admitted as an Advocate and Solicitor of the Supreme Court of Singapore in 2013. Divya’s areas of legal practice include general corporate and banking work.

29. Pravin Shanmugaraj Thevar (Admission No: 303 of 2013), Associate
Pravin graduated from Singapore Management University in 2012. He was admitted as an Advocate and Solicitor of the Supreme Court of Singapore in 2013. Pravin’s areas of legal practice include commercial litigation as well as insolvency practice.

30. Chio Su-Mei (Admission No: 104/2010), Associate
Chio Su-Mei graduated from the University of Durham (UK). She was admitted as an Advocate and Solicitor of the Supreme Court of Singapore in 2011. Su-Mei’s areas of legal practice include commercial litigation as well as insolvency practice and other general solicitor’s work

FOREIGN LAWYERS

31. Leela Velayuthan, Foreign Lawyer
Leela graduated from the University of London in 1998 and was admitted to the Malaysian Bar in 2000. She was registered to practice foreign law as a Foreign Lawyer by the Attorney General’s Chambers, Singapore in 2010. Leela’s main areas of work now involves cross border corporate finance documentation and Mergers & Acquisitions.

32. Shiny VR, Foreign Lawyer
Shiny graduated from the University of Mysore (India) in 2002. She also holds a Master of Laws (Business Law) from University of Pondicherry (India). Shiny was admitted to Bar Council of India in 2003. She has also been admitted to the rolls of solicitors of the Supreme Court of England and Wales. Shiny was registered to practice foreign law as a Foreign Lawyer by the Attorney General’s Chambers, Singapore in 2010. Her main stay of work involves mainly cross border corporate finance documentation and Mergers & Acquisitions.

33. Kshitij Dua

Kshitij is a transactional lawyer involved with the corporate and banking and finance practices of the firm. He graduated from the National Law Institute University, India in 2006 and completed his Masters of Law with honors at the Northwestern University School of Law, Chicago in 2013. Kshitij is admitted to the Bar Council of Madhya Pradesh, India and is registered as a Foreign Lawyer with the Attorney General’s Chambers, Singapore.
Kshitij’s core areas of practice include corporate finance, mergers and acquisitions, syndicated lending, asset finance, acquisition finance and project finance transactions.

Waqf (wakaf) in Islamic Asset Management – A Singapore perspective

Legal Updates
Abstract :

After many years of relatively low profile, there appears to be a reinvigoration in the development of waqf . At the 8th World Islamic Economic Forum ( WIEF) in Malaysia from 4 to 6 December 2012, the buzzword on many lips was on ‘harnessing the Waqf for the Muslim Ummah ‘. Speakers from the  South-East Asia, the Middle East and even Bosnia-Herzegovina, shared their countries’ experiences in waqf and the common thread running through all the different countries is that waqf is an area which has been severely neglected over the years but that there is great potential in utilising this concept to bring about a host of economic and social benefits , while serving God. This paper takes a brief look back  at the evolution of the waqf over the course of Islamic history and  how we can learn from the lessons of the past as well as look forward and consider what are needed to give new life to waqf, especially in realising its potential as a value-creating asset which can be of benefit to the Muslim community . 

Background on concept of waqf 

The word ‘waqf’ literally means ‘detaining’ . In his book Mahommedan Law , Ameer Ali states that the term ‘waqf’ signifies the dedication or consecration of any property , either in express terms or implication, for any charitable or religious object, or to secure any benefit to refers to human beings3.

Waqf has sometimes been confused with zakat . While zakat is a quranic injunction , the concept and practice of waqf was emphasised by the Sunnah ( prophetic traditions) and Ijma ( consensur of Islamic scholars). Islamic scholars and jurists have traced the concept of waqf to several hadiths and one of the most famous one is from Ibn Majah :

” The best things that a man can leave behind are three : A righteous son who will pray for him, ongoing charity whose reward will reach him , and knowledge which is acted upon after his death”.

It has been quoted by various scholars too that the first waqf in Islamic history was the mosque of Quba’ in Madina , after the arrival of Prophet Muhammad.  This is often held as the prime example of a religious waqf . However, waqf has been created for wider purposes , there have been awqaf established for the benefit of the poor, social services, health care ,l libraries, roads and bridges , parks and animals.   A well-known hadith recounts the donation to charity of an orchard and its fruits by one of the Prophet’s companions/followers upon the direction of the Prophet as follows :

“If thou likest , make a property itself to remain inalienable , and give ( the profit from ) it in charity .So Umar made it a charity on the condition that it shall not be sold, nor given away as agift, nor inherited, and made it a charity among the needy and the relatives and to set free slaves and in the way of Allah….”

The proceeds from the sale of fruits thus became the revenue generating waqf  for social development . This spurred the creation of  awqaf by other companions of the Prophet and in particular , the family waqf , whereby one of the conditions stipulated that the children and relatives of the original owner of the waqf property  (the waqif)   have priority over the revenues generated .

There is considerable literature on how waqf expanded during the Umayyad and Abbasid dynasties .It has been documented that at the founding of the Turkey republic in 1923, about 75% of the country’s arable land were awqaf properties . At the end of the nineteenth century, vast lands in Algeria and Tunisia were aqwaf.

Decline of the waqf

The profile of the waqf over the course of Islamic history  to the modern day era has been described as  being in a ‘precipitous decline’8.  Commentators and scholars such as Professor Wael Hallaq have pointed out that colonialism and   government interventions in affected  Islamic countries are among the key reasons behind its decline9 . There are academics who expound that ‘a more likely reason for  the waqf’s decline may be the contemporary inflexibility of waqf doctrine and reluctance to respond to the rapid internal and contextual changes of the modern Islamic world’10.  What appears indisputable is that the reasons for the decline are manifold and are both intrinsic and extrinsic  to the Muslim ummah.

Why the renewed interest ?

Given the general consensus that waqf had been declining for a long time , it is curious as to why there is today a sudden interest in waqf . Is this just passing fascination tinged with nostalgia ? Is there really a benefit, when compared to conventional alternatives  ( like Trusts and Foundations) in today’s world ?  Who are the beneficiaries of the awqaf ?  If awqaf  were to be redeveloped as a system , how  do we ensure that it can be sustained and not fall into another precipitous decline ?

It is noteworthy that increasingly in the last few years , Singapore has been mentioned at various international forum as a model for the development of waqf .  Singapore’s experience with the issuance of Sukuk and more recently, the waqf Ilmu  as a cash waqf , has been cited favourably by several countries, especially given the fact that the Muslim community is a minority in Singapore . The factors that have driven this revival will be shared later in this paper .

Looking back and lamenting over the decline is not as worthwhile as using the past as an appreciation in the lessons from history and ensuring that the mistakes  of our forefathers are not repeated , while adapting the good practices from yore . One of the most crucial lessons goes right deep into the core – that of coming to a more uniformed understanding of the meaning of and hence the applicability of waqf .

Understanding the waqf  

Several authors have embarked on learned studies on waqf and through the vast literature  available  , we can summarise the essentials of waqf as follows :

(1)   the motive in waqf is always religious

(2)   waqf is a foundation endowed in perpetuity ( it belongs to God)

(3)   except in the case of the Hanafi, a wakf is not entitled to take any benefit in the wakf property

(4)   any property capable of being endowed in perpetuity can be the subject-matter of wakf

(5)   a mutawalli is merely a ‘procurator’, manager or superintendent , the property is not vested in him and he is not a trustee in the technical sense

According to Fyzee, waqfs may be divided into three classes :

(1)    in favour of the rich and poor alike

(2) in favour of the rich and then the poor

(3)    in favour of the poor alone

The common understanding in most literature of Islamic Law is that there are two forms of waqf, waqf am and waqf khas, where in the former , the waqf property is meant for religious and charitable purposes recognised by the Muslim Law and in the latter , the waqf property is specifically for certain persons or purposes stipluated in the waqf itself .

Waqf – in the Courts 

The history of the evolution of the waqf in the last two centuries is marked with years of uncertainty over how waqf would stand up in the overall legal system , particularly in countries which lived through long periods of colonialism . This is one of the manifestations both intrinsic and extrinsic forces at work . Countries which were once under the British empire , namely India, Malaysia and Singapore, have had their share of litigation over waqf properties and to a large extent, they stem from differences in understanding over the  definition of  waqf itself .

In India and Pakistan,  the courts grappled with their interpretations of the waqf over a span of more than  a hundred years. The difficulty in India and Pakistan were largely brought about by the different positions taken by the different madhabs. Even under the same school of law, Hanafi , there can be differences . In an 1892 case, Bikani Mal v Shuk Lal Poddar ( 1892) 20 Cal 116, the Calcutta court heard arguments under different sets of followers Hanafi . The followers of Abu Yusof and Imam Muhammad believed that the ownership of the waqif over the property abated in favour of God while those under Abu Hanifa believed that the waqf was revocable until there was a decree of court .There was also a divergence in views as to whether the perpetuity of a wakf must be expressly stated or could be presumed.

In his well-known book, ‘MUSLIM LAW : The Personal Law of Muslims in India and Pakistan’, distinguished academic and lawyer Faiz Badruddin Tyabji carefully stated  that ‘waqf in India and Pakistan implies ( my emphasis) the permanent dedication by a Muslim of any property for charity , or for religious objects or purposes, or for an object of public utility’.  The use of the word ‘implies’ was the most polite way for Tyabji to describe the various legal opinions from the Courts at that time . There were so many differing opinions that it was difficult to rely on any decision as conclusive in the eyes and minds of the practitioners of the waqf  . Putting it mildly, some judicial decisions were hard to respect.

It was in the second half of the twentieth century that some judges openly  described some of the famous decisions of the Privy Council as ’embarrassing’. In the Privy Council case of Abu Fata Mahomed Ishak v Russomoy Dhur Chowdury (1894) 22 IA 76;ILR 22 Cal 619  the Board effectively nullified the family waqf by holding that the wakaf in issue was  ‘invalid if the primary object is for the aggrandisement of the settlor’s family and the gift to charity is illusory either because of its small amount or of its uncertainty or remoteness of objective’. This decision was greeted with shock and fury by the Muslim scholars and jurists in India as it went against a practice that had become more and more prevalent in India . Great pressure was forced upon the authorities by these scholars and jurists , finally leading to the promulgation of the Mussalman Waqf Validating Act 1913  ( or commonly known as the Waqf Act 1913) .

While the Waqf Act stipulated that that the applicable law would be “the Hanafi school of Mussulman law”,  it did not solve the problem as the Indian High Courts hearing disputes on waqf were mainly presided by English judges with no background in Islamic law. An illuminating comment made in a Court judgment in Mt Rahiman v Mt Baqridan (1935) 11 Luck, 735 gives an idea of the state of affairs at the time .  The sarcasm is most replete in its statment  that ‘ strictly, dedication ought to be with religious motive , but that has been more or less lost sight of in India’.

Instead of taking heed on what happened in India after Abu Fata’s case, the Privy Council in 1952 case of Fatumah v Mohamed Bin Salim (1952) AC 1 , made another startling pronouncement that, contrary to wideheld belief that the decision in Abu Fata’s case had been confined only to Muslim Law as applied in India only , the Privy Council outrightly declared that the ‘interpretation of the Mohammedan Law given by this Board ( the Privy Council in Abu Fata’s case) is not confined to the law as applied or administered in India only”.

Fatumah’s case was an appeal from a decision of an East African court . The repercussions spread across the British empire .

The Privy Council decision was binding in Malaysia and led to Suffian FJ in  a Federal Court of Appeal judgement of Commissioner for Religious Affairs v Tengku Mariam ( 1969) 1 MLJ 110 , lamenting that he had no choice but to declare a particular waqf made in favour of the setllor’s family and relatives for religious purposes as invalid .Suffian FJ wrote in his judgement that ‘ the decisions of their Lordships of the Privy Council on waqf were binding upon the Court’and suggested ‘that the embarrassing situation should be rectified by legislation’. This was subsequently done in Malaysia and a history of the legislation amendments can be found in the Malaysian Federal Court of Appeal case of Haji Embong Bin Ibrahim v Tengku Nik Maimunah Hajjah Almarhum Sultan Zainal Abidin (1980) 1 MLJ 286 where the Court upheld the waqf by relying upon the saving provision in an amendment to the legislation that no wakaf is to be held invalid ‘if otherwise valid under Islamic law’.

The Court of Appeal in Haji Embong’s case made a pertinent statement that the  major factor which led  the judgements in the Privy Council could have been that the judges were  influenced by the concept of charitable trust and the rules against perpetuities as understood in English Law . To remedy this , the Court of Appeal sent a clear signal that the basic question of whether a waqf is valid or not should be answered by relying on pure Islamic Law . It quoted a renowned author Fyzee  that ‘it is clear that the objects of a waqf may be different from the objects of a charitable trust as understood in English Law’.

Even though legislation can and have been passed in various countries to redress the problems over the validity of waqf , there can continue to be differing views on what constitutes a valid waqf , for example, whether the beneficiaries must be the poor or  cannot be strangers ? There have been ample court cases on these ( mainly in India ) and it would be useful to have more research done and a closer study of the comparisons between the different madhabs , which is beyond the scope of this present paper .

Waqf as State Law

Today, the definition of Waqf are invariably entrenched in various written laws or judicial  pronouncements of specific countries .By way of illustration, theAdministration of Muslim Law Act ( AMLA) in Singapore defines a waqf as ‘ a permanent dedication by a Muslim of any movable or immovable property for any purpose recognised by the Muslim Law as pious, religious and charitable’. As has been shown in the earlier Privy Council cases , what is lacking however is not definitions but the deeper understanding of the principles behind these definitions .

The applicable law in ascertaining validity of waqf 

In Singapore , legislation has also made it clear that where any any question arises as to the meaning of any instrument creating or affecting any waqf, such question shall be determined in accordance with the provisions of Muslim Law .  The Singapore courts have had to rule on the validity of waqf, most notably inLS Investments Pte Ltd v Majlis Ugama Islam Singapura (1998) SGCA 55, where the Court of Appeal pronounced that ‘a waqf is a religious or pious endowment and although it often provides for charities, it should not be confused with a charity or trust as understood in English Law ‘.  A close reading of LS Investments will show how careful the Singapore Courts have been in the approach to be taken and its pointed reminder that ‘ Muslim law is part of the law of the land which the Court would take cognizance of ‘. Putting into practice what it preached , the Singapore Court of Appeal in LS Investments quoted very extensively the scholarly works on this subject of waqf such as AA Fyzee’s Outlines of Muhammadan Law ( 4th Edition), Ameer Ali’s Mohammedan Law ( 5th Edn) and  Baillie on Digest of Moohummadan Law . Such an approach , where a non-Muslim judge in a secular jurisdiction , goes to great lengths to understand Islamic Law , is remarkable .It gives confidence to those seeking to develop the waqf .

It is unlikely that a secular country like Singapore will create any special court just for Islamic Law matters apart from the existing Syariah Court system which deals primarily personal law matters of marriage and  divorce .  The current practice where it is the civil courts that hear disputes on waqf will continue for a long time . Although cases like LS Investments have shown that our civil courts are equipped to handle such disputes , this cannot be taken for granted and in this new issues may crop up in future . The judiciary would require the lawyers who handle such cases to also be familiar with Islamic Law and developments in the awqaf system.

The Administration of Muslim Law Act sets out procedures and even directs the texts to be relied upon when an Islamic Law issue arises but it does not go far enough to explain what the Islamic law is on the validity of the waqf . Lawyers and other practitioners must strive to enhance their expertise so that they can help the community and assist the judiciary better. Only then can there be better development of the institution of waqf.

Sharia Standards of AAOIFI 

It is a step in the right direction that the AAOIFI ( Accounting and Auditing Organization for Islamic Financial Institutions have come up with a set of Sharia standards as a guide to the creation and documentation of waqf. In an exercise spanning about two years and involving several meetings between the Sharia Standards Committee and the Sharia consultants engaged to specifically prepare a study on waqf, the Sharia Board of the AAOFII adopted the Sharia Standard on Waqf in 2008. It is an extremely useful piece of reference for anyone with an interest in waqf as the basis for each standard is explained . It covers a comprehensive range including the definition, rationale of permissibility and types of waqf, the conditions in waqf, supervision and management of waqf, application of modes of investment for development of waqf income and maintenance, renovation and replacemen of waqf assets.

Where there are differences in views between  the different school of laws, the Sharia standards contain an explanatory note as to why a particular school of law’s position has been adopted  . For example,’ the permissibility of temporary waqf is based on the viewpoints of the Maliki  and the Imamiyah Schools of fiqh, in adition to what has been reported about the viewpoint of Abu Yusuf of the Hanafi School ‘.

While this set of Standards is an indispensable tool for anyone who requires a quick and concise understanding of the technical and legal positions on waqf creation , I believe it can also be cited as the applicable guide or reference to parties in any jurisdiction in the resolution of any disputes arising from waqf . In contrast to the ’embarrassing situation’ sparked by the decisions in the  earlier mentioned Privy Council cases , the Sharia Standards of the AAOFII can be the agreed reference on the issues surrounding the validity of the waqf. It can , if it is not already is , be factored into arbitration agreements as well as in other forms of alternative dispute resolution . Even the Courts in the various jurisdictions would probably find the Sharia

Standards an attractive resource , given the stringent and rigorous thinking that went into the drafting of the Sharia Standards and the gravitas of the Shariah scholars who contributed their expertise .

Better documentation of waqf  

On the ground , guides such as the AAOFII’s Sharia Standards could and should lead to  greater care in  taken on the drafting of stipulations by the waqif  ( or their advisers ) . There have been litigation in Court over the intention of the waqif which could well have been prevented if more precise language had been used in the instrument . For example, in the Haji Embong case in Malaysia ,  parties litigated over whether the endowment was for both the capital and income or just the capital . In LS Investments in Singapore, there was not even an express statement that the property was dedicated to constitute the waqf .The Court had to make a finding based on inferences and it did so by relying on the approach set out in Ameer Ali’s Mohammedan Law (5th Edn)  where he wrote that ‘in case of ambiguity…….intention is to be gathered from the surrounding circumstances, and the evidence of the manner in which the proceeds of the property have been applied”.

Registration of waqf 

In LS Investment, the Court of Appeal in Singapore upheld the High Court’s decision that  the Trustees had no legal right or title to deal with the waqf property other than to carry out the waqif’s wishes . Accordingly, the sale from the Trustees to LS Investments was void as under the AMLA, all waqf property automatically vested in MUIS ( Majlis Ugama Islam Singapura or Islamic Religious Council of Singapore ) and the Trustees could not legally sell the waqf .  Although the LS Investments argued that they were bona fide purchasers, the Court ruled that this ( common law ) was not applicable given the fact that the Court could not create a title in these circumstances.

The LS Investments case stands out as an expensive lesson on the perils and pitfalls of not having a waqf registered . The misfortune on the purchasers in discovering belatedly that the property they bought turned out to be bad can have a huge impact on the commercial industry as a whole . Fraud can take place too by unscrupulous trustees and the overall reputation of waqfs may be affected . To this end , it becomes necessary for waqf to be registered to prevent incidents such as LS Investments, so that innocent buyers do not end up with nothing . Property lawyers ( conveyancers) would also be walking on  a tight rope as they would find it hard to advise on title without any mechanism to rely on as to whether it was waqf or not .

It is important that legislation is constantly reviewed and updated to plug loopholes and in this regard , the LS Investment case led to the 1998 amendment of AMLA where it became mandatory to register with MUIS all waqf , regardless of whether or not it was created before the enactment of AMLA into Singapore law.

Under section 64(3) of AMLA ( since 1998) , it is a strict legal requirement that the mutawalli , when registering the waqf, must furnish the following particulars :

(a)  a description of the wakaf properties sufficient for the identification of the properties;

(b)  the gross annual income from the wakaf properties;

(c)  the amount of rates and taxes annually payable in respect of the wakaf properties;

(d)  an estimate of the expenses annually incurred in the realization to the income of the wakaf properties;

(e)  the amount set apart under the wakaf for –

(i)     the salary of the mutawalli and allowances to the individuals;

(ii)   purely religious purposes;

(iii)  charitable purposes; and

(iv)  pious and any other purposes; and

(f)   any other particulars required by the Majlis

The Mutawalli – and the supervision thereof 

The role of the  mutawalli is an extremely important one  . His task is to oversee the investment of the property , its maintenance and the distribution of revenues to the beneficiaries .The discretion of the mutawalli is derived from what he is accorded  under the stipulations of the waqf. There is a belief that he is answerable only to God since there  are no specific accountability mechanisms provided for in any holy injunctions .

In Singapore , AMLA provides for MUIS to have oversight of the mutawallis .  In Syed Abbas bin Mohamed Alsagoff v MUIS ( Islamic Religious Council of Singapore) ( 2010) 2 SLR 136 , the High Court , in dismissing the applicant’s request to remove MUIS as trustees of the waqf , emphasised that section 58(2) of AMLA had empowered MUIS to clearly oversee the administration of all waqf in Singapore . Sections 58(4) and 58(5) of AMLA  granted MUIS the power to remove a mutawalli and to replace  him with another . In 1998, further amendments were made to AMLA whereby a mutawalli could be convicted of a criminal offence for faliures to do specific acts .

Section 64(11) provides that :

(11) Any mutawalli of a wakaf who fails to –

(a)  apply for the registration of the wakaf;

(b)  furnish statements of particulars as required under this section;

(c)  supply information or particulars as required by the Majlis;

(d)  allow inspection of wakaf properties, accounts, records or deeds and documents relating to the wakaf;

(e)  deliver possession of any wakaf property, if ordered by the Majlis;

(f)   carry out the directions of the Majlis; or

(g)  do any other act which he is lawfully required to do by or under this section, shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5,000 or to imprisonment for a term not exceeding 12 months or to both.

At the 2012 WIEF Forum , Haji Alami Musa , the President of MUIS , informed the audience present that the powers granted to MUIS under the AMLA was an effective tool towards the overall management of the waqf in Singapore . There have been reports of waqf

mismanagement and corruption in several countries  , but lack of efforts ( or political will )  in bringing the persons responsible to task. While it is acknowledged that the mutawallis final accountability is before God only , the threat of a criminal prosecution as in Singapore can be real deterrent in the here and now on this earth .

Difficulty in Management and Supervision 

At this juncture, I do acknowledge that the Singapore system where a central authority like MUIS has so much power and say over the administration of awqaf may not be applicable or feasible in many other countries . In a sense, Singapore is unique especially given that Muslims constitute less than 15% of the population . AMLA is very much a legacy of Singapore’s past as a British colony as well as its shared history with Malaysia .  MUIS is a statutory board created by AMLA , an Act of Parliament . It is hard to imagine any other country, where the Muslim population is so small, having similar institutions and powers like MUIS.

Even MUIS itself created a privately owned subsidiary , WAREES Investments Pte Ltd in 2000 so that it could focus on its administrative and regulatory roles while WAREES concentrated on the income -generating development of the waqf assets .

Wasted Potential 

In a recent Reuters report on the setting up of a fund management venture set up in Dubai in March 2013 specifically tragetting at waqf , there is an open acknowledgement that many of the awqaf  held for a long period of time operate with ‘little or no profit’ and are a ‘wasting asset’. Potentially they are worth billions as they are mainly in the form of real estate . The report’s conclusion was simple – the waste was due to the fact that few of the managers of these assets are good asset managers . It is ironic that while many parts of the Middle East have moved in an upward economic trajectory  over the last few decades and there have been an increase in awqaf in terms of quantity , the value of these assets have not kept pace with the growth . There is a need to relook at the management of these assets and be brutally frank as to the skill quality of the people entrusted to manage these assets .

The advent of new players into the awqaf sector under the bigger umbrella of the Islamic wealth management leads one to think that there could be more innovation in the future . Banks which have offices in Middle East and Europe have ventured into the world of awqaf as can be seen from their annual reports . The Bank Sarasin & Co Ltd , in its publication of its Islamic Wealth Management Report 2010  , even devoted a substantial portion on how to create a trust which replicates the waqf by preserving capital but allocating income to beneficiaries . It also recommended investments in alternative energy and water and environmental management as these sectors are in line with the important goal of waqf of perpetuity . Clearly , the efforts by such banks must be accompanied by the relevant expertise and capabilities, and if the old style mutawallis do not take heed, the assets they hold will appear even more stagnant if these new forms of waqf assets take off .

Development of the awqaf 

While the focus in the past has mainly , if not overwhelmingly been tied with social and economic improvement of the ummah, there are now calls for awqaf to embark on a wider focus, through business . As argued by Mohd Hisham Dafterdar at the 8th WIEF Forum, ‘the importance of the awqaf sector is seen in terms of the huge assets it controls, in its massive social expenditure, in the large number of people it employs, and its significant contribution to the economy which accounts for as much as 10 per cent of the GDP of some countries…it is a growth sector and represents a market niche with huge potential’.

Innovative Schemes 

Various countries have had different experiences in the development of awqaf . The Social Islamic Bank Limited in Bangladesh initiated a cash waqf scheme where the donors contribute cash waqf as permanent deposits , without any options for withdrawal.  Based on on information on its website , the cash waqf grew by 20 per cent between 2011 and 2010  , but this scheme is still relatively new and not much details have been made public yet .

In Malaysia . there have been mixed experiences . A well-known example is that of the Syarikat Takaful Malaysia Berhad which introduced in 2001 the “Takaful waqf Plan’, where clients would give a contribution every month towards an accumulated amount at the end whereupon a waqf would be created. The monthly contributions were supposed to be invested in Islamic mudaraba schemes and the returns added to the waqf fund . The bank would provide a list of institutions as potential beneficiaries ( orphanages, education funds, mosques ) . However , after some initial excitement, the interest in this scheme declined and In 2010, it was unceremoniusly withdrawn . This was partly due to uncertainty of its legality as under Malaysian law, the mutawalli had to be the Malaysian Supreme Religious Council but in this plan , it was the Takaful  company .

The building of the ZamZam Towers in Makkah , Saudi Arabia , through the leasing of waqf land , has also been held up as an epitome of innovation . The principle of perpetuity of the waqf was not diminished by the development of this project as there was no transfer of ownership. At the end of the 28-year lease , this property will be transferred back to the waqf . The Shariah Board took into account not only the above but also the purpose ( accomodation of pilgrims on Haj ) and  that the financing was through  a Sukuk backed by the Government of Saudi Arabia itself .

In Bahrain, a cash waqf was established in 2006 by the Central Bank of Bahrain where cash contributions from several banks were placed in a common pool and subsequently invested in Islamic financial products . The returns therefrom were then used to fund Islamic finance educational and research activities , thereby building up greater capacity and enhancing capability in the Islamic Banking field in the country .

The Singapore experience 

As alluded to at the early part of this paper , Singapore has received attention in the Islamic world for its success in the development of waqf. The factors that have contributed to this have been its strong legal framework, pro-development policies , innovative financing , progressive fatwa thinking, good governance and the professionalism and expertise acquired through collaboration .

The above factors are linked to one another . The push to step up the development of waqf has largely been due to the realisation that the waqf assets managed by MUIS  were mainly in inertia . Most of the properties were in terrible state of neglect and there was a real possibility then that the government could exercise its powers under the Land Acquisitions Act to develop the areas where these properties were sited. This propelled MUIS to move and the Fatwa Committee  issued a ruling allowing The concept of Istibdal (exchange) to be applied for the redevelopment of waqf properties which had deteriorated into a dilapidated state, or in danger of acquisition or located in inappropriate areas such as the red light districts .The proviso was that the asset, if relocated and redeveloped, must bring about better yield returns.  The ruling by the Fatwa Committee was a progressive one as hitherto, MUIS had not sought redevelopment as it adhered to the strict ruling (of most jurists) that it is forbidden to sell waqf property. It was indeed a bold move as there were no precedent. In the Saudi Arabian ZamZam Towers , the project was based on leasing and there had been no sale or transfer of ownership of the waqf land .

Value creation  

MUIS took the innovative step in applying Istibdal in  redeveloping a project involving 4 houses at  Duku Road . After selling 2 of the 4 houses , the land area of the original waqf had naturally reduced . But the main point was that the value in the waqf had increased . The income from the waqf had increased from  a pathetic $68 per annum to a respectable $106,357.00 in 2006 . The net asset value had also grown from a mere $14,281.00 in 1990 to $2.8million in 200633 . Although the ideal position would have been to leave the original waqf land size intact , the sale of 2 of the houses was necessary to finance the redevelopment of the project .

The opportunity to redevelop the waqf , without the downsizing of the land itself, came about in the Bencoolen project.  The original waqf consisted of a mosque and some shophouses which were in a rundown condition. Recognising the vast potential of the area which is sited within a prime business and shopping area ( and in close proximity to a brand new university ) , it was envisaged that the waqf could be redeveloped into a mixed  project comprising a mosque equipped with modern facilities as well as a commercial complex and a suite of a hundred service apartments.

Together with partners from the private sector with long established track record in corporate finance ( Allen & Gledhill ) and WAREES, MUIS issued the Sukuk ( Musharakah Bond)  to finance the project . MUIS brought in Bai-tul-mal to provide the amount needed to help develop the project . Today, the waqf has a brand new mosque , which is of course a benefit to the mosque-goers and a modern commercial property complex which brings in regular income for the mosques . The service apartments run on a lease which is renewable and the income goes to Baitul-mal as the party which bore the most risk in developing the $35 million project. In his speech at the 2007 Singapore International Waqf Conference, the former Prime Minister of Singapore Mr Goh Chok Tong cited the Bencoolen project and its use of the musharakah bond as an innovative way to  ‘unlock the potential of waqf’.  The Bencoolen

project has indeed sparked considerable interest in future projects as investors take cognizance of the knock-on effect it has on other economic sectors such as retail and food .

I anticipate that the Istibdal concept will be applied in more situations and more creatively too. There are already signs of this in a project involving the sale of several dilapidated houses in the suburban areas being sold off ( rather than being redeveloped ) and the proceeds being used for one major building ( at Beach Road which is near hotels and the business district)  . In fact, this building is where the present WAREES office is housed .

Conclusion 

These appear to be exciting times for waqf . However , we must be mindful that in our quest to create value for the waqf, we should never lose sight of the waqf as a social institution too . In this regard , it is worth noting that a number of non-governmental organisations have called for there to be awqaf projects with social asistance in mind . There are ongoing debates on this , including arguments that provision for social services through waqf may reduce a state’s tax base , and I believe more research needs to be done on the implications , especially given each country’s own unique circumstances . One lesson from history we can draw upon though is how  ,in Istanbul during the Ottoman period, there resulted an oversupply of soup kitchens provided through awqaf created without a coordinated study of needs and services .

Singapore’s approach in awqaf development seems to be a balanced one . On the one hand, more innovative and progressive thinking  should be employed in developing the huge numbers of properties that MUIS has on its records as waqf . They should no longer be allowed to just rot away . With real property in Singapore appreciating in value at an astronomical rate in the last few decades , the returns are hugely attractive . The benefits it can bring to the community are immeasurable. The Muslim community must however be made to feel that they have a part to play in the development of waqf too .In this regard , the latest push by MUIS for cash waqf is welcomed . By giving cash, of any amount, towards Islamic education (the project is called Wakaf Ilmu ( knowldege) , the  Muslim will be made aware  that waqf is not just for rich people with houses and land to give .

Muslims in Singapore have been participating in cash waqf for some time, even if they do not fully realise this. This is through the Mosque Building Fund  where every Muslim employee is required by law in Singapore to contribute a stipulated amount to this Fund by way of deduction of salary. This scheme which started more than 30 years ago have enabled MUIS to build 22 mosques with an accumulated amount of more than $130million . The Wakaf Ilmu is different this time around as it is purely voluntary and a person can give any amount he wishes , knowing that the specific purpose is towards Islamic education in Singapore .

Ultimately, it is necessary for the management of waqf to be up to par with the latest developments in the financial world. While I am not saying that the mutawallis in the past, mainly relatives and religious persons , are no longer of use, there could be more exploration of tie-ups and co-opting of those whose professional knowledge and financial savviness can add value to the waqf . Last but certainly not least is the need to  constant study and adapt what we know of the past to the present and future . As shown by the Fatwa Committee in allowing the Istibdal in the Singapore example, there is room for progressive thinking in applying the Fiqh to the current realities on the ground . God willing, this will continue as we look towards a promising future for the waqf .

 

By

Ahmad Nizam Abbas

Sukuk in Singapore and the special role of MUIS in its development

Legal Updates

 

Abstract:

With a solid reputation as one of the world’s top financial centres, and sitting strategically in a region with a large Muslim population, Singapore seems to have the means to make Islamic finance extremely viable.  The recent announcement on 4 October 2012  by Hong Kong and Shanghai Bank that it was restructuring its Islamic Finance business in the region and would henceforth focus mainly on Malaysia and Saudi Arabia and maintain a limited presence in Indonesia was significant in the fact that Singapore was omitted. Singapore was only mentioned as being one of the jurisdictions to be offered sukuk through HSBC Saudi Arabia Limited. Why has the early promise shown by Singapore not been sustained?  Where lies the solution? In this paper, I will attempt to show why Singapore has to be more confident and innovative. Using the experience of MUIS (the Islamic Authority of Singapore) as an example, I will attempt to show how there can be room for development of sukuk in Singapore. 

In his Opening Address at the 3rd Annual World Islamic Banking Conference (WIBC Asia 2011) in Singapore on 5 June 2012, Mr. Ravi Menon, the Managing Director of the Monetary Authority of Singapore (MAS) noted that ‘following the global financial crisis (of 2007), investors have become more averse to the unknown risks embedded in complex financial instruments  ‘ and he made a call that ‘Islamic finance, with its stronger emphasis on transparency, price certainty and risk-sharing, can benefit from this renewed demand for more basic investments , from Muslim and non-Muslim investors alike’.

With its reputation as a financial hub, Singapore is in prime position to reach out to financial investors. It is thus curious and risk-sharingas to why there appears to be a lack of interest in the field of sukuk here. Apart from some, if there is indeed some, legal firms involved in sukuk, the rest of the legal industry seems to have adopted a ‘wait-and-see’ attitude. It has been the offshore firms who have manifested a more dynamic and vigorous attitude towards sukuk. While this can be put down to a lack of familiarity, it is possible that what is needed is for some key players to take the lead and help the surge of interest in this field.

Muslims in Singapore is a minority, constituting about 15% of the entire population.  Given Singapore’s relatively small size of about 5 million people in total,  it would be overly ambitious to expect a large buy-in in terms of numbers. Given such limitations, it is my view that the most realistic way for Singapore to enhance the development of sukuk is for a champion  (or champions) to be found, both in terms of spreading awareness and as an initiator.

In any study of the development of sukuk in Singapore, 2 statutory boards in Singapore, MUIS and MAS, will feature prominently. They each have contributed towards the growth of sukuk in Singapore, albeit, in different ways and from probably different perspectives and motivations.

The MAS is the regulatory body of the financial industry in Singapore, with a much wider ambit than merely an enforcer. The MAS has played a hugely significant role in creating the conditions for the development of sukuk and Islamic finance here in Singapore. It has formulated and implemented policies and set up a supportive framework for Islamic Finance to thrive. MAS has introduced incentives such as reduced taxes for Islamic transactions, waived off stamp duties for real estate financing and a concessionary tax rate for Islamic financing.

As will be seen at a later part of this paper, MAS has even played a direct role in the development of sukuk in Singapore with the issuance of its own sukuk. It however appears that while MAS’ direct involvement has helped kick start sukuk in Singapore, it may be worthwhile to consider how MAS’s presence can also lead to a lack of push by other players. In my view, MUIS has to step up its efforts and more importantly, its expertise, if it wants to lead the growth of sukuk In Singapore. MAS’ giant apron strings, while comforting in some aspects, may have inadvertently impeded the growth of the sukuk.

 

Wakaf /Waqf  

MUIS is a statutory body in a unique situation. I will focus on the recent push by MUIS for Muslims to understand Waqf (also spelt as wakaf) and revive the noble act of perpetual giving by creating a new wakaf called  Wakaf Ilmu. On its website, MUIS states that ‘the revenue generated through the investment of the wakaf in capital guaranteed instruments and possibly properties in future can help supplement and sustain MUIS’ long term financial commitments. …Specifically for the Islamic education in Singapore “. While this current campaign is primarily focused on development of institutions of Islamic education, it would be a wasted if MUIS does not extend this opportunity to wakafs in general.

Under the Administration of Muslim Law act (AMLA), a waqf is defined as a ‘permanent dedication by a Muslim of any movable or immovable property for any purpose recognized by the Muslim law as pious, religious and charitable ‘6.  Most of the waqf is in the form of freehold real properties.  It is common knowledge that in land scarce Singapore, freehold properties appreciate in value over time and command good returns.

In a speech in September 2012, the President of MUIS Mr. Alami Musa highlighted that ‘ unique to Singapore and not a common feature in many other Muslim minority countries, Muslims here have a good legal framework to govern our wakaf under AML…”Under AMLA , MUIS is empowered and given the responsibility to manage wakaf properties directly. Mr. Alami pointed out that in 1988; the Fatwa Committee (of MUIS) issued a groundbreaking fatwa ‘allowing wakaf properties to be sold off on the condition that the proceeds of the sale are reinvested in the purchase of other freehold properties which are then declared as wakaf. This is called ‘istibdal’ or wakaf asset migration.

Mr. Alami then posited that this fatwa may be the first of its kind in the world, but its benefits are clear in that MUIS could dispose off non-performing or poor-performing wakaf assets and acquire higher yielding ones. As an example, a total of 45 low yielding wakaf properties were sold off and the sales proceeds utilized in the purchase of 11, Beach Road, in close proximity to Raffles Hotel. This purchase is significant because it was one of two projects which formed the subject of the breakthrough Musharakah Bond issued, the other being Bencoolen Mosque project.

The issuance of sukuk to develop the Bencoolen Wakaf mosque cum mixed commercial development in early 2000s thus came about after years of little yield in wakaf properties.

It is quite a neat coincidence that the Bencoolen Mosque project is so near to the Singapore Management University, which is the first institution of higher learning to offer a programme on Islamic Finance. The Bencoolen mosque project was quite an innovation in Singapore, as funds were raised through the musharakah bond, a term which was hardly familiar beyond an esoteric few in the finance and legal sectors in Singapore. For its innovation, MUIS even received the Sheikh Makhtoum award for innovative Islamic financing. I will elaborate on the learning points of this Bencoolen Mosque project  but at this juncture, I will just say that the optimism and ambition felt after its success have somewhat stagnated and there needs to be a renewed effort to spur the growth of  sukuk in Singapore .

 

Some background on wakaf properties in Singapore 

In 1995, AMLA was amended to make it mandatory that all wakaf property in Singapore be registered in MUIS. This was in the aftermath of a famous court case involving LS Investment which had bought and had already started redevelopment works on a certain property before MUIS took action in the High Court on the ground that no good title had passed as it was a wakaf property. For purposes of this paper, suffice to say that not only did this cause a panic amongst some developers in Singapore; it was the catalyst (in my view) for MUIS to come up with a proper programme to develop the wakaf assets in their care. While MUIS was successful in retaining this property, it exposed the lack of expertise and experience in Singapore on the management of wakaf properties.

In 2000, Warees Investments Pte Ltd, a wholly owned subsidiary of MUIS was formed. Warees acts as the agent for MUIS. This was an important development as hitherto, MUIS handled both the regulatory function, overseeing the mutawallis and trustees as well as acting as the developer of wakaf properties. Obviously, if MUIS were to be more innovative in developing the wakaf assets in its care, a more specialized and focused approach was required.

‘Necessity is the mother of invention’ is a cliché, which was quite apt in propelling MUIS to come up with the idea of issuing sukuk to build up its wakaf portfolio . Prior to that, financing of the redevelopment of wakaf property had been through traditional means, with the Baitul mal (or General Endowment Fund), managed by MUIS, acting as a joint venture partner. No external financing was obtained and my assumption is that the size and scope of the wakaf development then were modest by comparison to what MUIS subsequently ventured into later with the Bencoolen mosque project.

From a cursory look at published MUIS Annual reports in the 1990s and early 2000s, most of the wakaf redevelopment involved small shophouses.

 

The Bencoolen Mosque Project (and 11, Beach Road) 

As already mentioned, the Musharakah Bond structure was created to raise $60 million (a relatively modest sum by global standards but a breakthrough nonetheless in Singapore) for this Bencoolen mosque project and 11, Beach Road.  3 parties formed a joint venture – Muis,Baitulmal, Warees and the Wakaf.

Bereft of precedents, and with no Islamic capital market issued in Singapore, MUIS was undoubtedly in unchartered waters. Legal advice and documentation was provided by Allen & Gledhill, an established law firm in Singapore with an outstanding track record in conventional bonds but could hardly be said to have made any proven mark in Islamic bonds. MUIS were involved in a sukuk for the first time and were relying on a law firm which was possibly in the same position too. To its credit, MUIS followed through.

In a paper delivered at the Singapore International Waqf Conference in 2007, Ms Shamsiah Abdul Karim, the MUIS officer in charge of wakaf, listed 4 challenges from the perspective of MUIS in the work leading to the issuance of the sukuk in the Bencoolen Mosque and Beach Road projects. These were:

(1) Documentation of the term return on capital employed which needs to be documented as interest so as to obtain a Qualifying Devt Securities concession.

(2) Forcing the use of the Musharakah Bond structure rather than sale of debt ( Bai-inah) or sale and leaseback ( BaiBithamin Ajil)

(3) Having to create an SPV ( special purpose vehicle )

(4) The lack of experts in Islamic finance in Singapore and difficulty in having to form a Syariah Panel

 

The Subscribers

The Musharakah Bond was 100% subscribed. This was surely due to MUIS being a statutory board, enacted under an Act of Parliament, and thus carried a sovereign rating for its certificates issued. This was thus officially the first Syariah-compliant musharakah bond issued in Singapore. The profile of the subscribers are quite telling – mosques, statutory boards and institutional investors. From an annual rental of a paltry $19,000.00 per annum, the gross income rose to $5.3million in 2006.

 

It is unfortunate that since the Bencoolen Mosque project, there has not been much headway in terms of sukuk issuance in Singapore. In a Business Times report by Siow Li Sen dated 21 August 2012, a damning headline ran as follows ” Malaysia leaves Singapore trailing in Islamic finance business “. The BT reported that there had appeared to be some improvements in 2010 when Khazanah, the Malaysian sovereign wealth fund sold S$1.5 billion sukuk and Sabana Reits raised $664 million through its initial public offer. However,’since then, the Islamic finance landscape here has been rather barren’.

 

I believe that any comparisons between Singapore and Malaysia in Islamic finance cannot ignore the fact that one has a Muslim minority while the other has a majority. Simply because Singapore has the stronger reputation in conventional Finance does not necessarily mean that Islamic finance will simply follow suit. In fact, given strong Singapore is in conventional banking, it is more difficult to get investors to change to or add Islamic bonds to their portfolio.

There is no sustained mass education on Sukuk and Islamic Finance in general. Even though the Malay language newspaper Berita Harian has an annual Money Seminar , the public that attends tend to be attracted , if at all, to only the topics on Takaful or Insurance . This could be due to a lack of interest in sukuk outright or a clearer idea on takaful . The fact that in general, the overall Islamic Finance market is not as dynamic (as voiced out by Mr Ravi Menon) as it could be means we are in a chicken and egg situation. People tend to wait for the boom to happen before walking into anything.

Although it is logical to argue that there need not be full support of the local Muslim population for sukuk to grow, it is not unreasonable, in my opinion, that this lack of support does little to encourage nonMuslims to invest in Islamic bonds. The 100% subscription for the musharakah bond was by mosques, statutory boards and institutional investors. Frankly, and I stand corrected if I am proven wrong, it does come across as contrived. All 69 mosques in Singapore, except for one (Masjid Ba’Alwie at Bukit Timah Road) receive funding from MUIS. The relationship between mosques and MUIS already existed before the issuance of the bonds.

 

If MUIS were to embark on another project with a Sukuk structure, it is conceivable that mosques will be amongst the subscribers again. But what about new investors? What about the pool of seasoned and sophisticated investors that have experience in conventional bonds? The potential the latter pool can provide, as against the pool of mosques, is hugely disparate. Unfortunately, it is a pool largely untapped.

MUIS must do more to reach out to these untapped investors and it has to do it differently from how Malaysian issuers do it. In Malaysia, there are indisputably more Muslim owned companies that form a more ready (as opposed to Singapore) market for investors searching for Syariah-compliant investments. Singapore does not have the same profile. This probably explains why the sukuk issued thus far where MUIS has been involved are subscribed by such a small pool. MUIS can and should consider joint ventures with larger, including global brand names, if they are serious about developing sukuk . I am of course aware that in the first place, MUIS must want to play the role of developing the sukuk. Personally, I believe that there appears to be an expectation on MUIS part that the State will always be supportive and therefore there is insufficient drive to push for more sukuk on its own.

 

In 2009, MAS set up an Islamic bond programme, a Syariah compliant equivalent of Singapore Government Securities (SGS). At its launch of the S$200 million Sukuk Al-Ijarah (sale and leaseback) Trust Certificate, it was highlighted by the then Managing Director of MAS Mr Heng Swee Keat that these bonds (sukuk) were the first to be offered in a local currency by a non-Muslim- majority country. Mr Heng was quoted as saying that ‘this sukuk is the sharia-compliant equivalent of Singapore government securities and is of the highest credit standing….they are to be treated and regulated like the government securities and are to be issued according to the demand received from investors’.

In the last 2 financial years, ending March 2011 and March 2012, the Singapore Sukuk Pte Ltd, a subsidiary of the MAS, issued $105 million and $80 million Singapore sukuk respectively. From the subscription, it can be deduced that there is a demand from investors. But is the demand widespread? Could it be that the good response is primarily because it is the MAS who are the issuer? Otherwise, why do we hear that the sukuk situation after 2010 is ‘barren’?

In the minds of investors, investing in sukuk issued by MAS could hardly go wrong. This is so especially in light of the fact that the underlying assets are the office units of MAS’ head office building. It is not an unknown asset. The units are already tenanted out and therefore the Sukuk structure of forward leasing is not likely to overly worry risk-averse investors.

While the MAS have shown itself to be supportive of the development of Sukuk in Singapore, there should not be too much expectations on MAS initiating the issuance of Sukuk. Other players must come in. Big names like Capitaland seem to be unsure whether to commit or not and they are not alone. This reticence, in my opinion, is based on a lack of motivation in entering the industry and this is one of the reasons why Sukuk is not developing fast enough. To be fair, why would a company like Capitaland immerse itself in the world of sukuk if there are so familiar with the conventional market? More should be done to entice them. The fact that Sabana REIT (Syariahcompliant real estate investment trust) successfully raised more than $600million through its initial public offer ought to give an indication that there is real potential for development of sukuk in Singapore.

 

According to the list of wakaf properties on the MUIS website, there are several wakaf properties which could still be redeveloped .These include residential properties in Telok Kurau (wakaf Kassim), the Chancery Residence (wakaf Shia Dawoodi Bohra) and commercial properties in the central and eastern parts of the island. There is high-yield potential in these properties.  According to MUIS Annual Report 2011, the market value of wakaf assets was about $500 million, which could increase exponentially upon redevelopment.

The Bencoolen Mosque Project is an important learning experience that ought to be shared. In fact, MUIS has been sharing this story at various seminars and forum, and it can be assumed that its intended target is the international investor. The Middle Eastern investors are  the one of the groups with the potential. The real challenge is how to make these Middle Eastern investors invest in sukuk issued in Singapore. As mentioned earlier in this paper , MUIS was awarded the Sheikh Makhtoum award for its innovation but there must be a greater concerted effort to enhance the image of Singapore in the sukuk world . Malaysia has been more aggressive in its marketing to the world and that could be something Singapore can emulate.

 

For sukuk to grow, MUIS should consider teaming up with international players who have the experience and expertise. If there is a dearth of experts here in Singapore, then MUIS should set up an international panel of advisers.  There are two sets of panels I am thinking about. One is the team that consists of experts in international finance, law, real estate, taxation and related fields. The other is the Syariah expert. The fatwa issued by MUIS is made up of local religious scholars and with due respect, could be enhanced with a broader international outlook. Unlike Malaysia where the Bank Negara (Central Bank) has its own Syariah Advisory Council, our MAS here do not. Individual banks create their own advisory panels. Dr Shamsiah Karim, in her paper sharing the challenges that MUIS faced in the work leading to the sukuk in the Bencoolen mosque project, lamented how onerous it was for MUIS to empanel a board of Syariah scholars who possessed the necessary knowledge and background to advice on the Syariah issues in the course of the project.

If a statutory board like MUIS were to create a separate Syariah Advisory Board made up of highly reputable scholars with impeccable track record, this will boost the standing of Islamic Finance in Singapore and consequently, the issuance of more sukuk. While banks can and do set own individual panels or boards, the influence on the industry by having a statutory board’s own set of experts can be far-reaching. Big names like the Capitaland of Singapore may be more motivated. As can be seen by the subscription of the MAS issued sukuk, the reputation of the issuer is hugely influential. By extension, the perception of the issuers by the investors will also be enhanced upon knowing who the Syariah experts are.  By way of illustration, the Sabana Reits issuers made it a well-known fact that they had eminent experts on their independent syariah committee, including Dr Mohamed Ali Elgari.

 

More innovation  

While MUIS has received international recognition for its innovation in the asset migration of assets (Beach Road project), there can still be more creativity and imagination, subject to Syariah principles not being compromised. The manner in which the Sabana REIT was crystallized could be studied and adapted as and where necessary. Sabana REIT has 21 buildings all over Singapore and this can be categorized in 4 areas – high tech industrial. Chemical warehousing and logistics, warehouse and logistics and general industrial. The asset migration exercise MUIS had embarked upon mainly consisted of commercial /residential shophouses, an area quite familiar to MUIS and Warees. It may be time to be bolder and consider asset migration involving industrial buildings in the future instead of sticking with the ultra-safe areas.

I do note that in her paper, Dr Samish Abdul Karim had described the Beach Road asset migration exercise as an ‘internal reits for wakaf purposes’. I cannot help but sense a hesitation in exploring beyond an ‘internal reits’, which is an ambiguous term anyway. I suspect that MUIS may be held back by the lack of a clear definitive expert opinion on the Syariah aspects as regards asset migration. I understand that there diverging views on whether waqf can be being ‘exchanged’, and if so, what type of assets could the waqf be exchanged with. The issue of the type of ‘hall’ activities carried out in these assets is another sensitive area.  These are areas in which the Syariah experts can and should play an influential role.

It is a given that a key consideration for Syariah-compliance in real estate is the usage of the property. While the ‘haram’ activities such as casino are clear-cut, the debate is usually over properties where the non-halal activities form only a part of the overall space. Most scholars take the position that Islamic financing can be used for multi-purpose buildings where the non-halal activities constitute less than 5 per cent. The income from such activities must however be cleansed by donating to charity.

MUIS may not be willing to partake in any asset which has even a scent of impurity as it has to take into account its status and standing as the Islamic authority in Singapore. Under section 3 of AMLA, its statutory duties include giving advice to the President of Singapore in matters relating to the Muslim religion in Singapore and to administer matters relating to the Muslim religion and Muslims in Singapore. With such an imposition, it is conceivable that there will be serious implications on its credibility if the public perceives that MUIS is not living up to its role and standing. This is somewhat ironical as one can also take the view that if most scholars worldwide have agreed that it is allowable to have less than 5% of non-halal activities, then MUIS can educate the public of this leeway. I understand that in the case of Sabana Reits, the issuers were mindful of this and went well below the 5% threshold. But then again, MUIS does have other sensitivities to be mindful of.

 

The banks that operate in Singapore are likely to have their own corporate stance with regard to Islamic finance. CIMB appears eager to widen its reach in Islamic finance here and has positioned itself as the go-to bank for SMEs. The HSBC however has announced that it will no longer be involved in Islamic finance. Its future role could be limited to merely promoting sukuk issued by HSBC Saudi Arabia.

According to media reports , some banks have been trying to bring issuers and investors together, especially from the Middle East.  OCBC’s co-head of capital markets Sim Buck Kim was quoted in a BT report that the additional cost of time and education for Islamic products are factors that hinder the attractiveness of Islamic finance to issuers and investors. He added however that ‘with continual efforts by banks and other stakeholders such as central banks , rating agencies and law firms  to raise awareness , market receptiveness will grow , and consequently we may see more issuances in the future “. I would certainly hope that banks put their money where their mouth is and do more to promote and support the development of sukuk industry in Singapore. Instead of using a mass approach and reach out to unknown investors, they could target their own database of existing investors in the conventional bond and then move to the new investors. It need not be a mutually exclusive situation.  I would also like to see MUIS being more proactive in working with banks.

 

I do not agree with the view that the Islamic finance industry in Singapore is barren. The time span of just 2 years between the Sabena REIT and that negative comment is way too short a period to make any judgement .

Many industry players and academics have remarked that the root of the problem lies in the lack of awareness and knowledge, both by issues and investors. If this is the problem, then more can be done. Has the public education been so esoteric that many do not understand and that deters them form coming on board. If Islamic bonds ( and Islamic finance in general ) is so complicated and confusing to many, then should not the solution be to simplify it, not necessarily to a lowest common denominator level , but at least so that even the average investor can understand . Has the reach to nonMuslims been exploited enough? By way of analogy, halal food is consumed by not just Muslims but non-Muslims too. Similar acceptance in mindsets could be worked towards. Are the Arabic terms intimidating to the would-be investors? Even students of Islamic finance struggle to master the foreign terms, so one can imagine the public’s apprehension in buying or holding bonds that they cannot even pronounce. Marketing and communication efforts must be revamped. At the moment, it seems that issuers are mainly preaching to the converted.

Finally, for sukuk to develop, the investors need to be assured that the dispute resolution or Court adjudication mechanisms are in place and reliable. Recourse to justice is a comfort that any investor must have. There is a lack of information on this in Singapore and these unknown factor only fuels the caution an investor may feel. Likewise, the potential issuer may prefer to hold back until it has studied more actual cases. This is where the Bencoolen mosque, Beach Road and Sabana REIT projects stand as good case studies. There ought to be more discussion and academic writings on such developments. Information could be shared through the relevant institutions’ websites or publications.

Knowledge is a powerful tool. Unfortunately, there is not enough of this in field of sukuk in Singapore at the moment. Knowledge is held by too few.  Hopefully, more practitioners and observers of the Sukuk industry in Singapore can share their knowledge and help bring out more vigour and dynamism to this un-barren field. MUIS should tap the knowledge out there and match it with their aim of being more innovative and creative.

 

27 November 2012.

 

By

Ahmad Nizam Abbas
Straits Law Practice LLC

Islamic Banking in the Singapore Civil Courts – Back to the Future

Legal Updates

 
Amr Mohamed El Tilby, in his book ‘Islamic Banking: How To Manage Risk And Improve Profitability’ cite that the two main issues that affect the enforceability of Shariah based contracts are (1) the documentation involved in Islamic finance transactions are still not well developed and makes the interpretation to the terms and conditions not transparent and (2) the ambiguous relationship between Islamic banks and the conventional financial and legal infrastructure.

In a brief note under the heading ‘The Regulation of Islamic Banking and Finance in Singapore’ which appears in the June 2012 issue of the Stamford Law Chronicle, the writer asks ‘ To what extent, if at all, would Singapore’s secular common law courts be able or willing to give effect to Shariah, given Shariah consist of Islamic precepts which are religious by nature and beyond the common law corpus?’

In his article ‘ Islamic Banking and Finance-Regulatory Regimes in Malaysia and Singapore ‘, published in 2011 Singapore Law Review, a local academic Raj Joshua Thomas had also raised the issue as to ‘how the secular common law courts should consider Islamic precepts given that, first, they are of religious nature, and second, they are not part of the common law corpus?’

Judging from the above comments, there exists amongst the legal, banking and academic community a significant doubt as to how our Singapore civil courts would approach a dispute involving Islamic finance. This doubt is understandable given that there is to date no reported decision or judgment in the civil courts of case involving an Islamic finance transaction.

In order for us to predict how the civil courts would approach such a case if ever one appears before them, a brief background on how Muslim Law is applicable and, how it has been applied, is critical. An appreciation of Singapore’s demographic and history is also important, as laws do not operate in a vacuum. Through this paper, I will show that the most likely approach that will be taken is not one entirely similar with either the United Kingdom or with Malaysia, but an approach that will be unique to Singapore with only some similarities with the

United Kingdom and Malaysia, reflecting its secular system that is religiousneutral as opposed to non-religious.

 

Muslim Law in Singapore

In Singapore, no study of the applicability of Muslim Law  is complete without reference to the Administration of Muslim Law Act (AMLA) which is the primary statute that provides the framework for the applicability of Islamic law. Introduced in 1966, it was a piece of legislation that largely continued the former British system of governance whereby the Muslims in Singapore came under a dual jurisdictional system – a Muslim Law system when it came to personal affairs (marriage, divorce, inheritance) and the common law rule of the United Kingdom.

The Syariah Court of Singapore is the forum for the adjudication of Muslim personal law and  ‘is a creature of statute .It derives its jurisdiction and power under the AMLA. Any jurisdiction or power that it purports to possess must be expressly provided in AMLA ‘. If the Syariah Court has jurisdiction, no other court in Singapore does and a decision of the Syariah Court cannot be challenged in the civil courts.

Under the Supreme Court of Judicature Act, it is the civil courts that have jurisdiction over all matters in Singapore except where specifically stated otherwise, as in the case of Syariah Court’s jurisdiction over marriage and divorces. The jurisdiction of the civil court as the forum for an Islamic finance case to be heard is thus not expected to be seriously challenged, if at all. It is for Parliament to make changes to the AMLA if it thinks fit and in this regard, I do not see this happening any time in the future.

Unfortunately, not much research has been done on the treatment of Islamic Law in the Singapore civil courts and therefore there is still much ignorance of this in the legal community. Some lawyers react with wonderment therefore when informed that our civil courts are not entirely without experience in dealing with issues of Islamic law. There appears to be a general perception, fuelled largely by media reports whenever the civil courts declines to adopt a Fatwa of the MUIS Legal Committee, that Fatwas are ineffective in our civil courts. As will be elaborated later, our civil courts have accepted a number of Fatwas.

At this stage, I will introduce 3 cases as indicators on how the Singapore civil courts will probably approach a dispute involving an Islamic finance transaction between parties. From these cases, the common thread that arises is that our civil courts do consider Muslim Law very seriously albeit by placing it in the context of other laws of the land.

In LS Investment Pte Ltd v Majlis Ugama Islam Singapura [1998] 3 SLR 754  (‘LS Investment’), the Court of Appeal, on the issue of validity of wakaf  (or waqf) proclaimed that ‘Muslim law need not be proved like foreign law. Muslim law is part of the law of the land which the Court would take cognizance of ‘.

In Mohammad Ismail Bin Ibrahim & Another v Mohammad Taha Bin Ibrahim [2004] 4 SLR 756 (‘Ibrahim case’), Justice MPH Rubin embarked on a detailed scrutiny of a Will based on Islamic Law authorities and held that the Nuzriah (vow) portion of the Will was not valid as it did not comply with Muslim law.

In Shafeeq bin Salim Talib v Fatimah Bte Abud Bin Talib [2010] SGCA 11 (‘Shafeeq’s case’), the Court of Appeal, in dealing with the issue of the jointproperty of a Muslim deceased clarified that ‘the question as to what assets constitute the estate and effects of a deceased Muslim has first to be determined according to his personal law, where applicable to the circumstances, and not according to the common law.’

The above cases reflect the carefully calibrated approach of the Singapore civil courts. It would appear, at first blush, that there is a different complexion between those three cases and with potential cases in Islamic finance and banking. Firstly, it is obviously not about a personal status. Secondly, while the contract in dispute may have been executed in Singapore, the performance could be elsewhere and may involve parties in multiple jurisdictions. There thus appears to be a far wider dimension therefore than the 3 types of cases I had brought up. It is thus incumbent that we examine the experiences of other jurisdictions which are somewhat connected to ours, by way of common legal history.

 

The United Kingdom experience 

In Shamil Bank of Bahrain EC v Beximco Pharmaceuticals Ltd [2004] 1 WLR 1784 (‘Shamil’s case), parties litigated all the way to the Court of Appeal over the governing law clause in a Murabaha agreement which read as follows “Subject to the principles of the Glorious Shariah law, this agreement shall be governed by and construed in accordance with the laws of England’. The High Court judge below, Justice Morrison, had ruled that on the proper construction of the clause, the Sharia law was not applicable at all.

The Court of Appeal upheld the decision of the High Court. In its judgment, it held, inter alia, that the reference to the Shariah law was intended merely to reflect the Islamic legal principles according to which Shamil Bank held itself out as doing business and this, this was insufficient to incorporate the principles of Shariah law or any part of Shariah law into the agreements.

It must be noted that the Court of Appeal did not hold that the UK courts could never apply Shariah law The Court of Appeal pointed out that the incorporation clause in this contract was too vaguely worded and did not specify or make reference to those particular aspects of Sharia law that were to be applicable. My view is reinforced by Justice Potter’s statement  that ‘ the fact that there may be general consensus upon the prescriptions of riba and the essentials of a valid Morabaha agreement does no more than indicate that, if the Shariah law proviso were sufficient to incorporate the principles of Sharia law into the parties’ agreements, the defendants would have been likely to succeed.” It is interesting to see the court’s approach if another case comes before it on a contract with very specific and detailed references on the applicability of Shariah law.       

In Musawi v R.E. International (UK) Ltd and Others  [2007] EWHC 2981 (Ch), the High Court in the United Kingdom maintained that at common law, the proper law of a contract had to be either English law or the law of another country, and not any other system of to a contract. This was so even though in all the agreements between the parties, it was written that the governing law would be the Shia Sharia law. Ironically, the matter was brought before the High Court as an enforcement of an arbitration award.  The parties had entered into an arbitration agreement appointing Sheikh Mohsen Araki as ‘Arbitrator and Islamic legal judge in settlement of the dispute according to Islamic legal standards and to accept is as a final judgment and submit to its findings’. In my view, the decision of the High Court, in upholding the arbitration award, was born out of convenience one as they skirted around any difficult Islamic principles by simply finding that the arbitration agreement was effective in English law. The Court did acknowledge that the arbitrator was entitled to apply Shia Sharia law as required by the arbitration agreement.  7

 

The Malaysia experience 

In Malaysia, prior to Justice Abdul Wahab Patail’s decision in Arab – Malaysian Finance Bhd v Taman Ihsan Jaya Sdn Bhd & Others [2008] 5 MLJ 631, the civil courts had diligently applied contractual law in disputes involving Islamic banking transactions, more concerned with the civil aspects and not actually tackling the Shariah issues.  holding that there was no defence if the debtor had knowingly entered into the agreement.   Justice Patail created shockwaves when he ruled that the Al-Bai Bithaman Ajil (‘BBA’) contract in the cases before him was not a bona fide sale but a financing transaction. He found that the profit portion rendered the transaction contrary to the Islamic Banking Act 1983 on the ground that it made the contract far more onerous than the conventional with riba.

In reaching his decision, Justice Patail held that the civil court is not a mere rubber stamp and that it’s function included the examination of the application of the Islamic concepts and ensure that the transactions do not involve any element not approved in Islam. Justice Patail further stated that ‘whether the court is a Syariah Court or not, that Allah is Omniscient must also be assumed where that court is required, in this case by law, to take cognizance of elements in the religion of Islam.’  In emphasizing that form could not override substance, even the website of the Bank Negara Malaysia on BBA Financing was not spared his scalpel. Justice Patail went so far as to hold the words ‘ not approved by the religion of Islam ‘ in the Islamic Banking Act 1983 mean that ‘unless the financing facility is plainly stated to be offered as specific to a particular mazhab, then the fact it is offered generally to all Muslims means that it must not contain any element not approved by any of the recognised mazhabs’. 

Justice Patail’s decision was eventually  overturned by the Court of Appeal in Bank Islam Malaysia Bhd v Lim Kok Hoe & Anor and other appeals [2009] 6 MLJ 839. In overturning Justice Patail’s decision, the Court of Appeal did not mince its words that Justice Patail should not have rewritten the terms of the BBA contract between the parties and unequivocally stated that he had misinterpreted the meaning of ‘Islamic banking business’ under section 2 of the Islamic Banking Act 1983. The Court of Appeal disagreed with his interpretation of the meaning and import of  ‘Islamic banking business’ under section 2 of the Act and explicitly stated that that the aims and operations of the business need not be approved by all the four mazhabs. They also issued a reminder that there are other secondary sources of law in addition to the four schools of jurisprudence (Hanafi, Shafii, Maliki, Hambali).

The resounding message from the Court of Appeal was that the judges in the civil courts ‘should not take it upon themselves to declare whether a matter is in accordance to the religion of Islam or otherwise ‘. Besides stating the obvious that not every judge in the civil courts is a Muslim, the Court of Appeal also made it plain that even if a civil court judge were a Muslim, he cannot assume that he is sufficiently equipped to ‘deal with matters which ulama take years to comprehend’. Clearly, in the learned view of the Court of Appeal, Justice Patail had crossed the line between the jurisdiction of the civil court and the ascertainment of the Muslim law in the subject matter.

The Court of Appeal saw it fit to highlight that the civil courts had to assume that the Syariah Advisory Council under the aegis of the Bank Negara Malaysia, which had endorsed the relevant BBA contract, had discharged its duty to ensure that the operation of the Islamic banks was within the ambit of Islam. The Court of Appeal held that whether or not the bank business is in accordance with the religion is within the purview of eminent Islamic jurists. They reiterated that there was already in place section 13A of the Islamic Banking Act 1983 whereby an Islamic bank could obtain the advice of the Syariah Advisory Council (of Central Bank of Malaysia) and the Islamic bank shall comply with the advice given.

The 2 BBA cases aforementioned, and the discussions they provoked, led to a change in the Central Banking Act (CBA) in Malaysia. Under section 169 (B)(8) of the repealed CBA, the Court or arbitrator who is faced with any question concerning a Syariah matter may take into consideration any written directives issued by he Central Bank (Bank Negara of Malaysia) or refer such question to the Syariah Advisory Council for its ruling. With the enactment of the new Central Banking Act on 25 November 2009, in particular sections 56 and 57, the Court (or arbitrator) no longer had discretion. The Court (or arbitrator) had to refer the Syariah matter to the Syariah Advisory Council and the latter’s ruling was binding on the court.

 

Lessons from Malaysia 

The situation in Malaysia today is the result of at least 2 decades of court litigation. Prior to the repeal of the old CBA and the introduction of the CBA 2009, academics and practitioners like Engku Rabiah Adawiah bt Engku Ali, law lecturer and a current member of Syariah Advisory Council and Fakihah Azahari, a practicing lawyer, had pointed out the complications in the manner the civil courts were tasked to determine disputes between Islamic banks and their clients. These are lessons worth remembering we in Singapore ponder about possible litigation.

Engku Rabiah Adawiah, in her article ‘Constraints and Opportunities in Harmonization of civil law and Shariah in the Islamic Financial Services Industry [2008] 4 MLJ ill, had warned about the possibility of decisions that may not be consistent with Shariah rules. In her words, even if the transactions may be Shariah compliant, ‘but upon enforcement of the contracts, the court may make orders and decisions that may sideline the Islamic legal principles ‘.

Fakihah Azahari, in ‘Islamic Banking: Perspective on Recent Case Development ‘ [2009] 1 MLJ xci, which was published after Justice Patail’s famous decision but before the Court of Appeal hearing, emphasized that Shariah issues could only be determined by experts in shariah, as it involved a wide realm of legal maxims and adherence to a rigid methodology for resolving complex questions.

While changes in legislation may appear to simplify and clarify the litigation process, the possibility of a legal challenge can never be wished away.

In the recent case of Tan Sri Khalid bin Ibrahim v Bank Islam Malaysia Bhd [2012] 7 MLJ 597, the Plaintiff challenged the legality of sections 56 and 57 of the CBA on the grounds that it purportedly contravened the Federal Constitution. Under Article 74 of the Federal Constitution of Malaysia, matters involving finance (which include banking and trade) are subject matters within the civil courts’ jurisdiction while matters relating to the religion of Islam are within the jurisdiction of each individual state’s Syariah Court. Justice Mohd Zawawi relied on an earlier case Mohd Alias bin Ibrahim v RHB Bank Bhd & Anor [2011] 3 MLJ 26 and held that the jurisdiction and power of the High Court (civil courts) are derived from Parliament under Federal law and sections 56 and 57 of the CBA are valid federal laws. Accordingly, the court had to invoke section 56 when there arise a question concerning a Shariah matter.

Justice Mohd Zawawi further clarified that the Syariah Advisory Council’s role is to ascertain the relevant Islamic law on the financial matter posed to them and it was not performing a judicial or quasi-judicial function. It was ultimately still the Court that had to decide on the issues pleaded.

While I do not foresee any reasonable challenge to the jurisdiction of the civil courts in Singapore, as it is unfathomable at the moment to insist that the Syariah Court be the forum for disputes on Islamic finance, challenges can come in other forms.

What is interesting about Justice Zawawi’s judgement is his open admission that the civil court judges may not be sufficiently equipped to deal with the issue whether a transaction under Islamic banking is valid or not under Islamic law. He candidly acknowledged that the rubrics of Fiqh Al-Muamalat might be beyond the grasp of the civil court judge. While one can easily appreciate a statement like this coming from a totally secular jurisdiction like the United Kingdom, as Shamil’s case has shown, it is startlingly frank coming from a Muslim judge in Malaysia, even if he is in a civil court jurisdiction. It is this admission which instinctively makes one assume, without going deeper into the past cases involving Islamic Law, that the civil court judges in Singapore will not wish to be entangled in complicated inquiries and scrutiny of any particular Islamic finance contract, especially if the defence is that it is void under Islamic law.

Justice Mohd Zawawi put it very aptly when he asked that if the issue is on validity of a contract under Islamic Law:

(a)  To what source would a judge refer to

(b)  Which madzhab should he adopt if there are differing opinions; and  (c) Would Islamic law of civil law be the applicable law?

In answer to his own questions, Justice Mohd Zawawi opined that it was for a body of eminent jurists, properly qualified in Islamic jurisprudence, to be the ones dealing with questions of validity under Islamic Law and thus in Malaysia, that special body would be the Syariah Advisory Council. Drawing an analogy with the dilemma of the English Court in Shamil’s case, judges in the civil courts should not be asked to determine principles of Islamic law.

Justice Zawawi also clarified that the use of expert evidence would not be helpful to a civil court judge as ultimately, the civil court judge would still have to make a decision and he would end up having to choose which expert opinion to rely upon, and this could be further complicated if each expert based his opinion on different schools of jurisprudence. The Singapore civil courts have had the experience of hearing expert evidence on matters involving issues of Islamic law, a point that I shall discuss later.

 

The Singapore experience 

With the benefit of the Malaysian experience and to a certain extent, the United Kingdom, I will now show how the Singapore courts is likely to handle a dispute involving Islamic Finance transactions. This is where the approach in each of the 3 Singapore cases I introduced earlier in this paper needs closer examination as they reveal the distinct and delicate manner in which the Singapore civil courts have consistently adopted when faced with a subject-matter involving Islamic Law.

In LS Investment, a Muslim lady who died in 1912, had made a will a year earlier directing her estate to be distributed ‘in accordance with Islamic law ‘. In that will, she directed her trustees to use part of her estate monies (up to 1/3 of her estate) to purchase a house or shop for certain specific purposes.  In 1913, the 2 trustees, in compliance with her wishes, bought a property at Temple Street. In 1993, the trustees entered into a sale and purchase agreement (SPA) to sell this Temple Street property to LS Investments. The SPA referred to the will of the testator (1911 will) and the directive that a part of the estate (1/3) were to be used to purchase a house or shop for the purposes set out in the will.

The trustees managed to obtain an order (ex-parte) sanctioning the sale of the Temple Street property. The sale to LS Investment was completed on 29 November 1993. On 2 December 1993, MUIS lodged a caveat against the property claiming as lawful owner of a wakafproperty under section 59 of AMLA. LS Investments challenged MUIS in court.

Justice Judith Prakash applied section 63(1)  of AMLA and held that there was a valid Muslim charitable trust or wakaf and in view of section 58 and 59 of AMLA, the property automatically vested in MUIS. The SPA between the trustees and LS Investments were thus void, notwithstanding the ex-parte order sanctioning the sale.

In coming to her finding that the said property was indeed a wakaf property, Justice Prakash analyzed various statements from Outlines of Mohammadan Law by AA Fyzee (4th Ed11 .She cautioned that a wakaf should not be equated with the English law concept of trusts.  She made a finding that none of the purposes set out in the will was bad under Muslim law. She also endorsed the relevant Fatwa of MUIS that the wakaf created was valid.

Besides relying heavily on Fyzee’s book, Justice Prakash also accepted other authorities on Islamic Law, Ameer Ali’s Mohammedan Law(5th Edn) and Baillie on Digest of Moohummadan Law, on issues dealing with the conditions of the creation of a wakaf including the concept of contingency.

The Court of Appeal, at the appeal hearing, articulated its approval of the manner in which Justice Prakash had taken into consideration the submission on Muslim law. The Court of Appeal dismissed the appellant’s arguments that Muslim Law had to be proved as if it were a foreign law, pronouncing that ‘Muslim Law is part of the law of the land’. 

For completeness, I would mention that MUIS had indicated to the Court of Appeal that they would not be seeking ‘interest’ on the monies from the sale of the Temple Street property which is a standard practice in civil litigation and the Court of Appeal duly made the final order accordingly.

In Ibrahim’s case, the Muslim testator made a Will leaving a third of his assets under a nuzriah (nazar as described in AMLA), a third to two mosques and the final third to his beneficiaries according to Faraid.  The Plaintiff, one of the Faraid beneficiaries, claimed that the Will was in contravention of Islamic Law and applied to the civil courts for a declaration that the nuzriah segment of the Will was void.

The judge hearing this case was then the only Muslim judge in the Singapore High Court, Justice MPH Rubin.    The Defendants relied on a ruling of the Fatwa Committee that had ratified the nuzriah and confirmed the Will as valid. The Plaintiff brought in an expert witness, Dr Ismail Bin Mohd @Abu Hassan, a Lecturer at the International Islamic University of Malaysia, who was of the opinion that the concept of nuzriah was not accepted by all the schools of jurisprudence of Islam  and should not be recognized. The Plaintiff’s expert witness was the then Mufti of Singapore, who held a different view in that the nuzriah was a long standing practice in some countries, in namely Yemen14. Both witnesses gave evidence in Court, where they were rigorously cross-examined by lawyers.

Justice Rubin accepted the opinion of the Malaysian expert witness over the then Mufti of Singapore and held that on the nuzriah was not valid. In so doing, Justice Rubin declined to follow the ruling of the Fatwa Committee. Justice Rubin adopted the stance taken by Justice L P Thean in a 1990 case involving monies in a Muslim deceased’s CPF accounts where the latter had stated that while the Court could consider a Fatwa ruling, it was merely an opinion, and the Court was not bound by the same.

Justice Rubin justified his finding that the nuzriah was not valid on grounds that it was not consistent with hukum faraid or the Muslim Law of inheritance.  Besides studying the various works relied upon by both expert witnesses, Justice Rubin referred to Abdullah Yusuf’sThe Glorious Quran -Translation and Commentary and cited extensively from various Surah, in particular Surah 76, Verse 6. Without saying as much, it is quite apparent that Justice Rubin was conducting a personal ijtihad .

The Ibrahim case was covered every single day of the hearing by the Malay language Berita Harian, and its outcome was met with great unease by a large segment of the Muslim community who viewed it as an undermining of the place of Muslim Law in Singapore. MUIS itself faced a barrage of criticism since the nuzriah was a practice sanctioned and encouraged by MUIS. This reaction could not have gone unnoticed by the civil courts.

There was no appeal from Justice Rubin’s decision. However, it is worth noting that MUIS has continued to recommend the practice of nuzriah in its official website. Debate over this decision has not completely abated and some confusion still exists as to whether Justice Rubin’s judgment is a general legal authority that a nuzriah is invalid in Singapore or a decision made purely on the facts of that case.   This paper will not go further into this but this case has ben highlighted to show the impact such a decision can have on a community. In a way, it is akin to the shockwaves of Justice Patail’s decision in the Malaysian BBA case.

In Shafeeq’s case, the issue was over a property held under a joint-tenancy between the deceased and his widow (both of Yemeni descent and Muslims of Shafii School). The deceased died intestate on 5 May 2005. The widow filed a notice of death on the 5 July 2005 at the Singapore Land Registry and had her name registered as a sole proprietor pursuant to the rights of survivorship. On 24 October 2005, she transferred the property to herself and her 2 children with the deceased (both non-Muslims).

The Plaintiffs, as the administrators to the estate, argued that they had an ‘obligation to uphold Muslim law’ and that under section 112 of AMLA, the estate had to be distributed in accordance with Muslim Law .The Plaintiffs relied on a Fatwa which ruled that the property should be distributed in accordance with Muslim law of inheritance. Justice Lee Sieu Kin duly dismissed the Plaintiffs’ claims, on the grounds that the property was not part of the estate and hence, it was outside the realm of Islamic Law.  Although the Court of Appeal upheld Justice Lee’s decision, the approach it took was markedly different.

At the Court of Appeal, the Plaintiffs’ main argument was that the common law of survivorship of a property held under joint-tenancy is repugnant to the fundamental tenets of Muslim law as it had resulted in the widow having an enhanced share. The approach of the Court of Appeal in Shafeeq’s case is extremely instructive in how the civil court is likely to deal with cases involving Islamic finance transactions. The Court of Appeal went to great lengths in explaining its understanding of the position of Muslims in Singapore under the general law.

The Court of Appeal acknowledged that although title to land in Singapore is determined by the common law and the applicable statutes, Muslims are also subject to their personal law when it came to land. The Court of Appeal explicitly stated that they recognized that Muslims may not will away more than one-third of his estate and cannot increase or reduce the share of any of his legal heirs determined according to Muslim Law, citing Justice Rubin’s decision in the Ibrahim case.

The Court of Appeal clarified that while they agreed with Justice Lee that the meaning of the ‘estate and effects’ of the Deceased is a matter of statutory construction under the general law, the court must still take into account Muslim law. The Court of Appeal stated unequivocally that ‘ the question as to what assets constitute the estate and effects of a deceased Muslim has first to be determined according to his personal law, where applicable to the circumstances, and not according to the common law ‘.

The Court of Appeal however held the Land Titles Act was also applicable for Muslims and section 112 of AMLA is only limited to distribution of a Muslim’s estate but cannot be used to override the determination of rights and interests of land in Singapore under the Land Titles Act. The Court of Appeal stated that if there were any repugnancy between LTA and Muslim personal law, the LTA would prevail, just as the CPF Act prevailed over Muslim Law in Saniah’s case.

The Court of Appeal, in dealing with the question as to whether the concept of a right of survivorship is repugnant to Muslim law, relied extensively on the works of Faiz Badruddin Tyabji in Muslim Law, The Personal Law of Muslims in India and Pakistan (4th Edition), Nawawi in Minhaj et Talibin, A Manual of Muhammaan Law according to the School of Shafii (1914), and Asaf A A Fyzee, Outlines of Muhammadan Law (Oxford University Press, 3rd edition, 1964).   The Court of Appeal also went on to state that while it was refraining from making an opinion on the issue of validity of a gift of personal property (hibah ruqba) as that was not the question for determination in this case, it had nevertheless set out the opinions of the different schools of Islam, thus again signaling that it was more than prepared to hear arguments on substantive Muslim Law principles and concepts if it had to.

 

Fatwa

The Court of Appeal in Shafeeq’s case is useful for the reiteration of a civil court’s position on a Fatwa of MUIS. It held that ‘no fatwa is binding on the party seeking it or to who it is directed, unlike a Judge on an issue in a case. For this reason, a Fatwa stands in the same position as an expert opinion on any matter before the Court and may be accepted in evidence on any issue of Muslim law on the same basis as an expert opinion on the civil law’.   The Court of Appeal’s concern was that the question of law put before the Fatwa Committee would invariably be skewed by the party seeking the Fatwa. This should be noted by anyone or any party if it intends to apply for, and subsequent rely upon, a Fatwa.

It must be highlighted that between the time Shafeeq’s hearing at the High Court and the Appeal, MUIS had issued an updated Fatwadirecting that ‘upon the death of one of the joint-owners, the property is not wholly owned by the surviving joint-tenant .The surviving joint-owner shall only be entitled to half of the value of the property.’ The same Fatwa however directed that joint-tenants could make agreements either through a ‘hibah ruqba’ or ‘nuzriah’ which expressly states that the entire property shall vest on the surviving joint tenant.’

It is obvious that the said Fatwa was intended to harmonize the position between the land law and Muslim personal law but as its position on the rights of survivorship was blatantly contrary to the Land Title Act, the Court of Appeal felt it necessary to emphasize that notwithstanding this Fatwa, the general law will prevail over Muslim Law on the issue of ownership of land and openly commented that it was a point that MUIS should observe.  Practitioners of

Islamic finance would do well to heed this observation of the Court of Appeal too.

With those 3 main cases establishing how Islamic Law is applied in the civil courts in Singapore, it is thus likely that we can expect a similar approach in Islamic finance cases, if ever such an occasion arises.

 

The Applicable Law 

In the event of an action in the civil court on an Islamic finance matter, the approach of the court must first be to determine the applicable law.  Unlike Malaysia, which has enacted specific statutes, bearing names as Islamic Banking Act, Singapore, in keeping with its secular stance, has strategically positioned the governance of Islamic banking in line with conventional banking.

The Banking Act will therefore be the starting point for any judge as it is the main legislation for all banks here . In this sense, the approach can be compared with that used by the Court of Appeal in Shafeeq’s case, that is, to identify whether there are any specific exclusion or provision pertaining to Islamic banking while under the umbrella of the general laws.

The body which oversees all banking activities in Singapore is the Monetary Authority of Singapore (MAS). MAS utilized its power under section 78(1) of the Banking Act to make to accommodate and facilitate Islamic banking business in Singapore. They thus issued the MAS Guidelines on the Application of Banking Regulations to Islamic Banking in Singapore (‘ MAS Guidelines  ‘). A perusal of the MAS Guidelines will show the various transactions, for example the borrower’s credit risk exposure in ijara wa iqtina, which have to be in compliance with both the general notices and directions of MAS and the specific regulations on Islamic Banking.

What would be the legal effect of the MAS Guidelines in Court? What if there was a challenge on a particular guideline that goes so far as to question the validity of a particular Islamic finance transaction? What would be the weight given to a general guideline on a transaction not covered specifically?

 

Legal effect of ruling of Syariah Advisory Council (Malaysia) and Syariah Advisory Boards (Singapore)

In Malaysia, the position of the Central Bank of Malaysia (or Bank Negara) is clearer. Under the Islamic Banking Act 1983, resolutions passed by the Syariah Advisory Council within the Bank Negara are binding on all Islamic banks and other financial institutions offering Islamic banking and financial products.  This has been reinforced by sections 55 to 57 of the Central Bank of Malaysia Act 2009 which makes it a requirement for Islamic financial institutions, the court or an arbitrator to refer matters that involve ascertainment of Islamic law to the Syariah Advisory Council whose ruling shall be final and binding. The legal history behind the 2009 enactment has already been discussed in an earlier part of this research paper. There are differing opinions as to whether the ascertainment of the Islamic law amounts to determination and usurp the power of the civil courts, but as that is beyond the scope of this paper, I will refrain from going further into this area.

In Singapore, there is no equivalent to section 56 or 56 of the Central Bank of Malaysia Act. There is no body comparable with the Syariah Advisory Council of the Bank Negara. The Syariah Advisory Board within the banks in Malaysia and the bank in Singapore each act as the body that certifies the compliance of products with Islamic Law but that as is far as the similarity goes. In Malaysia, the Syariah Advisory Board’s role in ensuring that the bank’s financial products do not violate Islamic principles is subject to the overriding opinions of the Syariah Advisory Council. In Singapore, no such Council exists.

 

MAS Guidelines 

In Singapore, it is up to individual banks to appoint the members of these Syariah Advisory Board and the bank’s appointments usually reflect its sensitivity to consumers and reputation of the bank itself. Ultimately, the financial product that is rolled out must thus be certified compliant under Muslim Law by the Syariah Advisory Board as well as within the MAS Guidelines. Academics such as Raj Thomas have commented somewhat forebodingly  that ‘ the system adopted by Singapore may not be recognized as Islamic, especially if the financial products are required to comply with technical stipulations couched in secular terms.’ 

Raj Thomas has hinted that the Singapore approach of using extremely technical descriptions of particular transactions in the MAS Guidelines (for example, murabaha and musharaka mutanaqisah ), setting them out in great detail and couched in secular language, is one way to achieve certainty in the event that these regulations are challenged in a civil court. It may be an overstatement but the fact that these regulations are issued by MAS and not an Islamic body (MUIS) should kill off any intention by anyone who dares to propose that it is not the civil court but the Syariah Court that should have jurisdiction.

It can be argued that the duty of the civil court in determining whether or not the particular Islamic financial transaction is valid is made easier by having detailed MAS Guidelines. It can then be simply a question of compliance as the civil courts can confine themselves to strictly assessing whether or not the transactions offend the MAS Guidelines in any material way and adopt the remedies stated if they are not spelt out in the transactions. A close look at the MAS Guidelines reveal that not only are there detailed descriptions of the product itself, they even extend to the remedies. Under Regulation 23B of the Banking Regulations , in an Ijara wa iqtina transaction, it is provided that ‘in the event of an early termination of the lease , the customer or a third party , shall purchase the asset from the bank, or the bank’s agent, at a price determined at the start of the lease ‘. 

 

MAS Guidelines – can they be challenged? 

What if the agreements between parties do not fit adequately with the financial products laid out under the MAS regulations? What if there is a challenge on the validity then? It is also not beyond a lawyer’s imagination (‘hiyal’ or legal devices) to contest any of the specific MAS regulations as being against the principles of Islam. By its own admission in the Introduction to the MAS Guidelines, it is stated that ‘the types and descriptions of Islamic financial structures set out in these guidelines are not intended to be exhaustive, nor do they prescribe a uniform structure for all products named in the guidelines. ……However, financial institutions should seek their own legal advice when structuring the transactions and applying the Banking Regulations.’ 

At paragraph 2.7 under the section “MAS’ approach to Islamic banking’, MAS clarifies that  ‘as a prudential regulator, MAS does not prescribe what constitutes Shariah compliance nor endorse specific Shariah rulings. Nevertheless, MAS expects Islamic banks to take into account Shariah compliance matters and to manage this compliance risk as part of their overall risk management process. Nothing in these guidelines should be construed as expressing an opinion on Shariah acceptability’.   

If ever there was a red flag waved invitingly to a bullish lawyer, the above statements surely must be it. Further, at paragraph 4.7 of MAS Guidelines, it is stated that these regulations are only the commonly used Islamic financing structures, to provide greater clarity on the regulatory treatment of such structures.   The regulations are thus clearly not exhaustive and the words ‘for greater clarity’ can certainly be interpreted as just that. The possibility therefore that the MAS Guidelines can be challenged or simply ignored as inapplicable on a particular transaction cannot therefore be ruled out.

It would also not be inconceivable that a party may latch on the use of the treatment by tax to argue that there is ‘interest ‘ and by extension, ‘riba’ as a defence. In the 2006 Budget Speech in Parliament, the Minister for Finance (also the Prime Minister) had stated that the mark-up or profit comprised in a murabaha transaction (cost-plus) would be economically equivalent to the interest element in a conventional financing transaction. ‘Any gains or profits accrued and any expenses incurred, in lieu of interest, will be regarded as interest’. Based on the BBA cases in Malaysia, it would not be that surprising if a Singaporean lawyer were to argue that this brings it within the realm of Riba.

Based on the loopholes I have highlighted above, the defence, if it comes, will be mounted on the product’s non-compliance with Islamic law, either by it incorporating riba in another guise, for being Gharar (uncertainty) or maybe, on a larger level, that the business of the relevant bank contains activities that are forbidden in Islam such as maisir (gambling activities).

In his article, Raj Thomas opined that if a case like Shamil were to be heard in a Singapore civil court, ‘its approach is likely to be akin to that of the English courts – apply Singapore law and decline to apply Sharia law ‘. As I have explained and shown earlier, I do not quite agree with this proposition as it is too sweeping a statement. I have already shown through the earlier Singapore cases that the Singapore civil courts have not shied away from ascertaining for itself the Islamic law position on the relevant subject matter. Either through their own analysis of the recognized authorities of Muslim Law or opinions of expert witnesses, the Court has undertaken the responsibility of deciding on a subject matter which fundamentally turns on an interpretation of a Muslim law position.

 

Ascertainment of Islamic Law position 

In Abidally’s case  the High Court directed the opposing lawyers to come up with an agreed position on the Muslim law and the judge focused only on the facts in dispute. This was an inheritance case where the sons of the deceased had signed an agreement to accept equal shares  (resulting in the sons receiving much less than they would under Islamic law of inheritance) as the daughters and the issue was whether they knew what they were agreeing to  .The Court of Appeal found that the sons did know what they were doing when they signed the agreement and held that ‘such an agreement was not inconsistent with Muslim law and was binding ‘.

Personally I am not quite comfortable with this approach of both lawyers coming to an agreement on the Islamic Law position as it is not clear what will the methodology adopted and whether it will be based on sound Islamic jurisprudence principles. To expect our civil-trained to exercise usul al -fiqh is exceedingly optimistic. In an Islamic finance case, it may end up in a situation where each lawyer will simply push the position instructed to him by his clients (the bank), which may or may not be in line with the bank’s Syariah Advisory Board.

With the limited pool of persons who qualify to sit on Syariah Advisory Boards in Singapore, there may be situations of conflict of interests as the same person could be in several boards. What if the opposing litigants are a bank and an individual? Will it end up as the bank submitting an opinion from their Shariah Advisory Board while the customer seeks his own Islamic Law expert? At the end of the day, it would be impossible for a Judge to simply leave it to parties. That is why in the Abidally case, while the Court of Appeal did not criticize the approach of the High Court Judge who had made parties submit an agreed position on the Islamic Law, they made it clear that in reaching the same decision as him, they themselves had looked into whether or not the agreement was indeed in compliance with Islamic Law.

It is foreseeable that the civil court will also be relying on the endorsement, and reasons behind it, by the Syariah Advisory Board within each bank on a particular Islamic financial product. However, it is likely that the defence will oppose this on the ground that the Syariah Advisory Board, being appointed by the bank itself, would be beholden to the bank. As has been discussed earlier, there is no overriding authority like the Syariah Advisory Council in Malaysia where the civil court judge can (or more accurately, has to) follow. It is up to the respective Syariah Advisory Boards to maintain high standards of objectivity and professionalism. I am optimistic that the civil courts would be open enough to accept their rulings and opinions, if rigorous reasoning processes support these. Then, the only occasions, which would merit the civil courts not accepting a Fatwa would be where there are other state laws that prevent them, doing so.

While it has always maintained that the final decision lies with the Court, and it has rejected Fatwas issued by MUIS in some cases, the civil courts have accepted Fatwas where appropriate (LS Investments). MUIS should strive to continuously ensure that the Fatwa Committee is well equipped with the necessary expertise and resources to keep up with developments in the Islamic finance industry.

 

The Fatwa Committee 

While it is a given that the Fatwa Committee must have as its members, scholars steeped in Islamic jurisprudence, the inputs and advice of those learned in the practical aspects of the Islamic finance world should also be sought. To this, Fatwa Committee should be open to receiving views and opinions from different schools of law. Under section 33(1) of AMLA, the Fatwa Committee will ordinarily follow the tenets of the Shafii school of law but under section 33(2), it is provided that if the Fatwa Committee considers that following the tenets of the Shafii school of law will be opposed to the public interest, the other schools of law may be followed as may be considered appropriate.

MUIS should take heed of the Court of Appeal’s words in the Shafeeq’s case where they had commented that the position taken by MUIS as regards the right to survivorship was not correct. If the civil courts were to rely on fatwas of MUIS, it is absolutely critical that the Fatwa committee understands the issues not only from a Muslim jurisprudence angle but also the legal position from a secular sense. In the words of Muhammad Hashim Kamali , ‘ijtihad must continue at all times so as to keep the law abreast with the need and changing conditions of society’.  Fatwas must take into account developments in both Islamic and civil laws. This must be so as at the end of the day, the civil courts have no choice but to ensure that its decision is consistent with the Banking Act, which is secular.

It will also be interesting how the civil courts will deal with the remedies or damages in actions of Islamic finance transactions. What if there are disputes on the damages to be paid and in the manner they are to be paid? As was seen in the LS Investment case, MUIS waived their right to interest, which they were entitled to under a civil claim. What if a party refuses to waive that interest, could the other party oppose since it is an entitlement under civil law? These are all hypothetical questions for now but for how long.

 

CONCLUSION 

The civil courts’ approach in maintaining the secular nature of this country while respecting the Islamic law principles is borne out of pragmatism. It reflects a country that understands that the potential growth in Islamic finance is dependent on a system of law that the industry will be able to have confidence in. Ignoring Islamic law principles, or making brazen statements as the Judge in Shamil case, will only harm the many who have been tasked or have undertaken to propel the growth of this industry.

On the other hand, Singapore’s reputation as a reliable financial hub is already strongly entrenched. The knowledge that Islamic banking comes within this behemoth umbrella would provide the comfort and peace of mind for financial players to undertake even more ambitious projects. The fact that there is recourse to the Courts would surely be one of the factors that would attract a non-Muslim to enter into this area. While there can be alternative dispute resolutions, faith in the judicial system is of the utmost importance in the eyes and minds of the players involved, especially if the parties are based in various jurisdictions and their transactions are cross-border in nature.

In order for the Islamic Finance to develop as an area of law in Singapore, it is thus vital that both the Islamic principles and the civil laws are well understood. It is not a mutually exclusive situation.

 

 

4 July 2012  

By

Ahmad Nizam Abbas

Straits Law Practice Year 2013 Profile

SOUND FUNDAMENTALS

Straits Law was incorporated in 2001 from the merged practices of Derrick Ravi Partnership and Raja Loo & Chandra. In 2006, Straits Law incorporated the practice of Choo & Lim LLC. Having been built on a solid foundation of experience and expertise in wide-ranging legal issues, Straits Law provides a broader and more comprehensive service which is personalised to meet our clients’ needs.

Our “long arm of the law” extends into areas of Litigation, Banking, Conveyancing and Corporate practice. Within our team of lawyers we have practitioners with South Asia and East Asia expertise. The firm has established links and effective working relationships with law firms in India, China, Australia, Indonesia, Malaysia and the United Kingdom.

STRENGTH IN DIVERSITY

Straits Law Practice LLC (“Straits”) is a limited law corporation registered as a company under the laws of the Republic of Singapore.

Its shareholders, by law, are Advocates & Solicitors admitted as officers of the Supreme Court of Singapore. Given the numerous high value work that it carries out, Straits backs its services with an 83 million dollar professional indemnity arrangement.

Straits’ lawyers are from various backgrounds and walks of life, and are equipped to deal with and address legal issues on a multi-dimensional level. Straits provide practical and commercially viable solutions without being overtly legalistic.

Straits is driven by its 35 lawyers (including foreign lawyers) and support staff strength of 32 employees including legal executives with legal qualifications from various jurisdictions, paralegals and qualified secretaries.

INTRODUCTION

Straits is a dynamic full service law corporation, built on a solid foundation of experience and expertise in wide-ranging legal issues. We provide a broader and more comprehensive service which is personalised to meet our client’s needs. Our expertise extends to Litigation, Conveyancing, Banking and Corporate practices. We have established links and effective working relationships with law firms in India, China, Australia, Indonesia, Malaysia and the United Kingdom.

Our key philosophy is to put forth an ideal game plan for optimum results, helping our clients deal with legal issues in order to further their legitimate interests. Our outlook and expertise ensures that we provide our clients with crucial advice, taking a holistic view that considers matters of principle, commercial interest and cost effectiveness. We believe in building successful partnerships and customer centric relationships with our clients and legal partners.

As cost management is crucial to our clients, we are always conscious that the recommended solutions must make economic and not just legal sense. Our practice makes it a point to give as full an analysis of the possibilities to our clients so that they can make informed decisions.

Straits has a Professional Indemnity Coverage of about $70 Million on a renewable basis. We will be happy to provide you with copies of the annually renewed PI policies.

Straits has been recognised by the following organisations:

A)    LEGAL 500


Straits has been listed for the 3rd consecutive year in Legal 500 and this year under the following headings.


Projects and energy

Within Local firms, Straits Law Practice LLC is a second tier firm,
co
Special Mention and Recommendation to
“At Straits Law Practice LLC, M Rajaram acts for lenders, borrowers and sponsors in the financing of power plants, and mining and other major infrastructure projects.”

Dispute resolution

Within Local firms: Other recommended firms

B)    INTERNATIONAL FINANCIAL LAW REVIEW 1000

We have also been recognized in the International Financial Law Review 1000 – The Guide to the world’s leading Financial Law Firms as “other notable” firms for the first time in the following categories

(a)    Banking – Local Firms;
(b)    Capital Markets – Local Firms; and
(c)    Mergers & Acquisitions – Local Firms

The Following was said on the Website (http://www.iflr1000.com/Jurisdiction/104/Singapore.html) about the firm and it mentioned in particular, Mr. Rajaram, Mr. Robert Wong & Mr. Sreeni.


Though Straits Law Practice is primarily known as a litigation boutique, its financial law practice has made inroads in Singapore’s competitive legal market. The firm is popular as Singapore counsel to international law firms or as a strong alternative to Singapore’s big firms. Since the beginning of 2011, the firm has hired corporate director Steven Lo and dispute resolution and restructuring and insolvency specialist and director Suresh Nair, both from Allen & Gledhill.


In restructuring and insolvency, the firm leverages on its strong litigation capabilities. Managing director garners glowing comments from clients: “N Sreenivasan’s contentious work in the restructuring and insolvency space is very impressive and is someone to watch out for.”
On the corporate front, senior director M Rajaram wins accolades. A client says, “Mr. Rajaram is extremely helpful. When we need an immediate opinion or response, they’re easily the fastest firm we’ve worked with. The bigger firms need more time; as a smaller firm, Straits Law Practice is much more nimble.”


Clients also appreciate director Robert Wong’s amiable approach. “Robert is very senior and very experienced. He’s also very friendly, even when it’s hard for clients to understand law,” says a client. “He’s great at breaking things down in very straightforward terms and pointing out key critical points so that we know the risks and our options on transactions. Though any lawyer should be able to do this, Robert does it particularly well.”


Deals
The firm frequently acts as Singapore law counsel for international law firms in large cross-border transactions. Partner Steven Lo acted as Singapore counsel to Honeywell in its S$430 million ($338.6 million) acquisition of Safe Step Holdings, the holding company of King’s Safetywear.
Partner Robert Wong also advised Singapore-listed See Hup Sung in entering a conditional sale and purchase agreement with GEP Asia Holdings to acquire a 51% stake in Eastern Tankshore for S$4.08 million. The acquisition strengthens the company’s presence in the refined petroleum industry.


PRACTICE STRUCTURE

The Corporate and Corporate Finance practice. The areas of practice include initial public offers, rights issue, issue of debentures, takeovers, mergers and acquisition and joint ventures corporate financing, joint ventures and acquisitions of businesses, debentures and other asset based financing, insolvency practice, corporate re-structuring, corporate secretarial work.

The Real Estate Conveyancing, Banking and Transaction practice. The areas of practice include sale and purchase of commercial, industrial and residential properties, asset financing and refinancing. The lawyers are assisted by experienced conveyancing clerks. The Firm is on the panel of lawyers for several major local banks and all the Indian Banks operating in Singapore, and is capable of undertaking all manner of banking and transactional documentations including the taking of lead for syndicated loans.

The Litigation practice. The areas of practice include international arbitration, commercial litigation, corporate dispute resolution, tax law, mediation and arbitration, construction law, conveyancing related litigation, insurance law, personal injury and torts and criminal law. The lawyers are assisted by an experienced and qualified team of legal executives, paralegals, litigation secretaries and court clerks.


CLIENTS’ PROFILE

The clients of Straits includes Banks and other Financial institutions, quasi-government bodies and large corporations, such as CISCO, Singapore Science Centre, Building and Control Authority, Singapore Medical Council, Exxon-Mobil Singapore, the NatSteel group of companies, TCM Practitioners Board, Yayasan Mendaki, Standard Chartered Bank, NTUC Income, India International Insurance Pte Ltd, Allied Irish Bank and CGEA, small and medium enterprises as well as individuals. Many of our clients have grown and become established in their fields, with some achieving listing and we are proud to have assisted them on this journey.

Straits also assists other law firms with complex matters where the expertise and specialized knowledge of the lawyers is called upon.

LAWYERS 

1.    M Rajaram, P.B.M. (Admission No. 27 of 1980), Senior Director

Rajaram graduated from the University of Singapore in 1978.  He holds an MBA from Maastricht  He has been in active practice since 1980. He started his professional career as a litigator in criminal and civil proceedings. He now actively practices in the areas of Banking and Transactional Work, Merger and Acquisitions, Cross Border Work, particularly India related transactions, Real Estate, insolvency and corporate restructuring. Raja is a Fellow of the Singapore Institute of Arbitrators (FSIArb) as well as a Fellow of the Chartered Institute of Arbitrators (FCIArb).

Rajaram is actively in social and community work. He is a  Past Chairman of the Singapore Indian Chamber of Commerce and was the Vice-Chairman of the Singapore Business Federation, and council member of ASEAN Chamber of Commerce and Industry.  He is the Honorary Consul of the Republic of Mali for Singapore . Rajaram is actively involved in social work at the grassroots level and is a Patron of the Taman Jurong Citizenship Consultative Committee, having served as a member of the Taman Jurong CCC for many years.

For his contributions to Society and to the business community, during his tenure as Chairman of the Singapore Indian Chamber of Commerce and Industry, Rajaram was bestowed the PBM (Pingkat Bakti Masyarakat — The Public Service Medal) by the President of the Republic of Singapore.

2.    N Sreenivasan, SC (Admission No. 67 of 1988), Managing Director

Sreeni graduated from the National University of Singapore in 1985. A PSC scholar and former Legal Service officer, he is a former member of the Executive Committee and Council of the Law Society of Singapore.  Sreeni is a Fellow of the Singapore Institute of Arbitrators (FSIArb) as well as a Fellow of the Chartered Institute of Arbitrators (FCIArb). In recognition of his litigation skills,  Sreeni  was appointed a Senior Counsel at the Opening of the Legal Year 2013.  His area of practice is litigation.

3.    Robert Wong Kwan Seng  (Admission No. 51 of 1983), Director

Robert graduated form the National University of Singapore and commenced practice in Khattar Wong and Partners in 1984. He practises mainly corporate law with emphasis on corporate finance. He has acted as solicitor in initial public offers, rights issue, issue of debentures, takeovers, mergers and acquisition and joint ventures.

4.    Palmer Stuart Andrew (Admission No. 126 of 1988), Director

Stuart graduated from the National University of Singapore in 1988 and has been in legal practice since 1989 after serving 1½ years as Deputy Public Prosecutor and State Counsel.  His area of practice is litigation.

5.    Palaniappan Sundararaj (Admission No. 5 of 1994), Director

Raj graduated in 1988 from the National University of Singapore and subsequently obtained his Master’s degree in 1994.  He was a former PSC Merit Bursary Award holder and served for 5 years as Deputy Public Prosecutor and State Counsel.   His area of practice is litigation.

6.    Liow Wang Wu Joseph (Admission No. 160 of 1992), Director

Joseph graduated from the National University of Singapore in 1992.  He was a PSC ASEAN Scholar Pre-University from 1986 to 1987.  He has been in legal practice since 1993.  He is an active member of various committees of the Law Society of Singapore. He is a Lead Trainer and Committee member of the Advocacy Committee, a former Vice Chairman of the Criminal Legal Aid Scheme Committee and a member of the Inquiry Panel.  Outside the Law Society of Singapore, Joseph also acts as a Legal Assessor to the Singapore Medical Council and has previously served as the Honorary Secretary to the Society of Construction Law (Singapore).

His area of practice is principally commercial, civil and building and construction litigation. He is a qualified Arbitrator and an accredited Adjudicator with the Singapore Mediation Centre.

7.    Choo Si Sen, Justice of the Peace, B.B.M (Admission No 16/1970), Consultant

A former Deputy Public Prosecutor and State Counsel, he is active in social cultural and trade organisations to which he is also Honorary Legal Adviser, (in particular, the Singapore Federation of Merchants’ Association and its affiliates). He has been an Honorary Council Member of the Singapore Chinese Chamber of Commerce & Industry for many years.

He served on the Criminal Law Advisory Committee as member and   Chairman of the Criminal Law Advisory Committee I, as well as a member of the Criminal Law Review Board appointed by the Minister for Home Affairs from 1974 to 2010. He was a member in the Economic Review Committee, Sub-Committee on Domestic Enterprises. Presently he is the Chairman of Retail Promotion Centre Pte Ltd

8.    Tan Jee Ming (Admission No. 131 of 1985), Director

Jee Ming graduated from the University of Singapore in 1985 and was called to the Singapore Bar in 1986. Thereafter he commenced practice and became a partner with Messrs Derrick Ravi & Partners. In 1996, he started his own boutique practice Messrs Tan Jee Ming & Partners. The firm merged with Straits Law Practice LLC in 2010. Jee Ming currently sits as both Chairman and member in the various review Committees and Inquiry Committees constituted by the Law Society. He is also a member of the Disciplinary Tribunal appointed by the Honourable Chief Justice.

9.    Ahmad Khalis Bin Abdul Ghani (Admission No. 104 of 1985), Consultant

Khalis graduated from the National University of Singapore in 1985 and has been in legal practice from 1986 to 2005. He was an in-house counsel from 2006 to 2011 for Meinhardt (Singapore) and Mubadala Capitaland Real Estate (Abu Dhabi). His area of practice is corporate, property and litigation.

10.   Ms Lim Lay Choo Jennifer (Admission No 373 of 1991), Director

Jennifer graduated from the University of East Anglia in 1990 and was called to the Bar of England and Wales (Lincoln’s Inn) in 1991. She was called to the Singapore Bar in January 1993 and is a Commissioner for Oaths.  She is actively involved in social, cultural and trade organisations such as the merchants’/trade associations, martial arts’ institutions, lion and dragon, clans/ associations and others. She is also very active at various grassroots organisations.

She sits as Legal Advisor to these organisations and is also the Legal Adviser to the Federation of Merchants Association. She sits in the Councils of the Singapore Hokkien Huay Kuan and the Singapore Chinese Chamber of Commerce and Industry. She also sits in the Criminal Law Advisory Committee as appointed by the Ministry of Home Affairs. She is a volunteer lawyer with the Criminal Legal Aid Scheme of the Law Society of Singapore. Jennifer practices Conveyancing and Property, Civil/Criminal Law, Matrimonial, Landlord and Tenant Law, Probate/Administration of Estate and general solicitors work.

11.    Suresh Sukumaran Nair (Admission No.293 of 1993), Director

Suresh graduated from the National University of Singapore in 1993 and was called to the Singapore Bar in 1994. He has also been admitted to the roll of solicitors of the Supreme Court of England and Wales. Upon graduating, Suresh joined the law firm of Allen & Gledhill, where he was made Partner in 2000. In 2002 – 2003, Suresh spent a year as a Legal Officer with the United Nations Compensation Commission in Geneva, where he reviewed war reparations claims against Iraq arising from the 1st Gulf War. He returned to Singapore in 2003 and rejoined Allen & Gledhill.  Suresh made the move to Straits Law in 2010, and is focussed on growing the firm’s litigation and dispute resolution practices. Suresh has appeared as Counsel in numerous international arbitrations and at all levels of the Singapore Courts. Suresh’s main areas of practice are banking and commercial disputes, shareholders’ disputes, Fund-related litigation, construction, employment and insolvency – related litigation.

Important cases in which Suresh appeared as Counsel include the cases of Orient Centre Investments Ltd & Anor v Societe Generale [2007] 3 SLR(R) 566, a landmark decision of the Singapore Court of Appeal on banking documentation, and the case of Animal Concerns Research & Education Society v Tan Boon Kwee [2011] SGCA 2, which is a landmark decision on the duty of care in construction cases.

12.    Ang Mei-Ling Valerie Freda (Admission No. 47 of 1995), Director

Valerie graduated from the University of Hull, United Kingdom in 1993. She has been with the firm since her pupilage days except for a short one (1) year stint in the private sector in 2001. Valerie is a Member of the Singapore Institute of Arbitrators (MSIArb). Her area of practice is litigation.

13.    Chan Lai Foong (Admission No. 163 of 1992), Associate Director

Lai Foong graduated from the University of Hull, United Kingdom in 1989 and was called to the Singapore Bar in 1993. Since then, she has been in private practice and started her career handling conveyancing, corporate and general litigation work. Her main practice now is Real Estate Conveyancing, Banking and Transaction work.

14.    Ahmad Nizam Abbas (Admission No.  31 of 1993), Associate Director

Ahmad graduated from University Of Keele, United Kingdom, in 1991.In 2013, he obtained a Masters of Law in Islamic Law and Finance fromthe Singapore Management University. He served on the Council of the Law Society from 1996 to 2000 and is the current Chairman of the Muslim Law Practice Committee. His main area of practice is litigation.

In 2009, he was appointed a member of the Panel of Advisors to the Juvenile Court. He is an Associate Mediator with the Singapore Mediation Centre. He is also a Teaching Fellow at the Singapore Institute of Legal Education. His article ‘The Islamic Legal System in Singapore’ was published in the Pacific Rim Law and Policy Journal in its January 2012 issue.

He is active in several committees of ministries and statutory boards, including MUIS , Mendaki , National Youth Council and the Civil Aviation Authority of Singapore . He currently sits on the Board of Mediacorp Group where he serves in the Audit and Review Committee.

15.    Shankar (Admission No. 58 of 1997),  Associate Director

Shankar’s area of practice is in international arbitration work and commercial litigation. He has handled various international arbitration cases where different arbitration rules such as the Uncitral Rules, Singapore International Arbitration Centre Rules and International Chamber of Commerce rules have been applied.  He has gained much experience in international arbitration where disputes involved commodities such as agricultural products, coal, fertilisers, iron, steel and petroleum and petrochemical products.  Shankar also advices and represents one of the Singapore casino in their casino related matters.

16.    Selvarajan Balamurugan (Admission No. 267 of 1998), Associate Director

Bala graduated from the University of Wolverhampton, United Kingdom in 1996. He was admitted as an Advocate and Solicitor of the Supreme Court of Singapore in 1999. Bala’s areas of practice include criminal litigation, matrimonial as well as other general solicitors work.

17.    Ramesh Bharani (Admission No. 104 of 2006), Senior Associate

Ramesh graduated from the University of Liverpool in 2005. He was admitted as an Advocate and Solicitor of the Supreme Court of Singapore in 2007. Ramesh is also a qualified accountant. He was an auditor with a local accounting firm from 1999 to 2002 before leaving the accounting profession to read law. Ramesh is an associate member of CPA Australia. Ramesh’s areas of legal practice include civil and criminal litigation, matrimonial as well as other general solicitor’s work.

18.    Rajaram Muralli Raja (Admission No. 180/2006), Senior Associate

Muralli went into the law as a default option, because his father and uncle were lawyers. But he knew that he made the right choice when he was defending officer for one of his men in a court martial, when as a 19 year old Second Lieutenant, he made a difference. Muralli underwent pupillage and three demanding years at Allen & Gledhill. This early training has made him tough and a glutton for hard work, responding to client’s requirements thoroughly and at short notice.

Muralli was recruited as part of Straits’ infusion of fresh blood.  He is part of the litigation team and handles both civil and criminal litigation. In his first month, he has already become involved in a large and complex commercial disputed between two listed companies and in a Court of Appeal matter. In the longer term Muralli hopes to contribute significantly to Straits Law’s litigation department’s stature as a leading mid-sized practice.

Most Significant Legal Cases to Date

Acting for an Asian government in an ICC international arbitration of a dispute on a joint investment and management agreement with a multi-national transport company.  Issues relating to breaches of the arbitration agreement, stay of proceedings and anti-suit injunctions arose during the course of the arbitration when parallel proceedings were commenced in another jurisdiction.

Advising an Asian government in relation to a regulatory authority’s power to halt trading of the shares of a listed government company so that several suspicious transactions could be investigated.

Acting for an investment company and several of its related entities and officers in a High Court suit commenced by one of its customers for breaches of fiduciary duties and conspiracy.

Acting for a bank in a High Court suit against one of its former customers for the recovery of monies owed to the bank under various facilities.

Acting for a bank in a High Court suit initiated by one of the bank’s former customers in which allegations were raised that the relationship manager had given wrong advice on the nature of a certain instrument purchased by that customer.

19.    Benjamin Szeto (Admission No. 385 of 1997), Senior Associate

Benjamin graduated from the University of Birmingham in 1996 and was subsequently admitted to the Honourable Society of Lincoln’s Inn as a Barrister-at-Law.  He was called to the Singapore Bar in 1998.  He also holds a Master of Science (Real Estate) from the National University of Singapore and a Diploma in Financial Management from the Association of Chartered Certified Accountants.  His legal experience covers the property, retail, IT, services and manufacturing industries.  Benjamin’s focus is on real estate, banking and general corporate work.

20.    Yeo Li Chiun Christine (Admission No. 600196 of 2001), Senior Associate

Li Chiun graduated from the National University of Singapore in 2001. She was admitted as an Advocate and Solicitor in 2002. Li Chiun’s core areas of practice include Banking Law and Real Property Law. She has handled a wide range of conveyancing matters including drafting of credit and loan documentations, development work and, en bloc property transactions. Prior to specialising in banking and property, she also had commercial and litigation experience in acting for major banks and financial institutions in areas of credit recovery and financial disputes. Li Chiun had previously advised and represented various local financial institutions, offshore financial institutions, representative offices and branches of foreign institutions and investment funds.

21.    Cai Lijun Christabel (Admission No. 189/2009/F), Associate

Christabel graduated from the National University of Singapore in 2009. She was admitted as an Advocate and Solicitor of the Supreme Court of Singapore in 2010. Christabel’s areas of legal practice include civil litigation as well as other general solicitor’s work.

22.    Phua Xubin Audrey (Admission Number. 48/2010), Associate

Audrey graduated from the University of Canterbury, New Zealand and was admitted as a Barrister and Solicitor of the High Court of New Zealand in 2007. She was admitted as an Advocate and Solicitor of the Supreme Court of Singapore in 2010. Audrey’s areas of legal practice include general corporate and banking work.

23.    Sujatha Selvakumar (Admission No: 27/2010/A), Associate

Sujatha read law at the University of Manchester, United Kingdom following which she completed her Masters in Law (Corporate Governance). She was admitted as an Advocate and Solicitor of the Supreme Court of Singapore in 2011. Sujatha’s areas of practice include civil and commercial litigation, arbitration and matrimonial matters.

24.    Zhu Zhihao Daniel (Admission No: 180/2011/K), Associate

Daniel graduated from the National University of Singapore in 2010. He was admitted as an Advocate and Solicitor of the Supreme Court of Singapore in 2011. Daniel’s areas of legal practice include civil and criminal litigation as well as other general solicitor’s work.

25.    Vithyashree (Admission No: 170/2011/E), Associate

Vithya graduated from the University of Southampton in 2009. She was admitted as an Advocate and Solicitor of the Supreme Court of Singapore in 2011. Vithya’s areas of legal practice include civil and commercial litigation as well as other general solicitor’s work.

 

26.    Judy Ang Pei Xia (Admission No: 160/2010/Y), Associate

Judy graduated from the London School of Economics in 2009. She was admitted as an Advocate and Solicitor of the Supreme Court of Singapore in 2011. Judy’s areas of legal practice include civil litigation and family law as well as other general solicitor’s work.

27.    Jeremy Choo Joon Haw (Admission No: 293/2011/K), Associate

Jeremy read Economics and Sociology at the National University of Singapore and law at the University of Durham. He was admitted as an Advocate and Solicitor of the Supreme Court of Singapore in 2012.  Jeremy’s areas of legal practice include mergers and acquisitions, and banking work.

28.    Lisa Chong  (Admission No. 166/2012 ), Associate

Lisa graduated from the National University of Singapore in 2011 and was admitted as an Advocate and Solicitor of the Supreme Court in 2012. Her areas of practice include civil and commercial litigation.

29.    Joanne Poh  (Admission No. 112/2012 ), Associate

Joanne graduated from the University of Melbourne in 2009. In 2007, she was awarded the University of Melbourne Jessie Leggatt Scholarship for being the top student in Public Law and Legal Theory. She was admitted as an Advocate and Solicitor of the Supreme Court in 2012.  Joanne’s main areas of legal practice are Real Estate and Conveyancing.

FOREIGN LAWYERS

30.    Leela  Velayuthan, Foreign Lawyer

Leela graduated from the University of London in 1998 and was admitted to the Malaysian Bar in 2000. She was registered to practice foreign law as a Foreign Lawyer by the Attorney General’s Chambers, Singapore in 2010.  Leela’s main areas of work now involves cross border corporate finance documentation and Mergers & Acquisition.

31.    Shiny VR, Foreign Lawyer

Shiny graduated from the University of Mysore (India) in 2002. She also holds a Master of Laws (Business Law) from University of Pondicherry (India). Shiny was admitted to Bar Council of India in 2003. She has also been admitted to the rolls of solicitors of the Supreme Court of England and Wales. Shiny was registered to practice foreign law as a Foreign Lawyer by the Attorney General’s Chambers, Singapore in 2010.  Her main stay of work involves mainly cross border corporate finance documentation and Mergers & Acquisition.

32.    Apriliana Lim Yuqing, Foreign Lawyer

April graduated from the Thomas M Cooley Law School, Michigan, USA in 2006 and was admitted to the California Bar in January 2009 and the District of Columbia Bar in March 2010. She was registered to practice foreign law as a Foreign Lawyer by the Attorney General’s Chambers, Singapore in April 2011.  April’s main areas of work now involves cross border corporate finance documentation and Mergers & Acquisition.

Further details are available at our website at www.straitslaw.com.sg.  Please visit our website.

Building and Construction Law – Early Notice of Intention to apply for Adjudication not invalid

LEGAL UPDATE – A EARLY NOTICE OF INTENTION TO APPLY FOR ADJUDICATION EVEN BEFORE A RIGHT TO ADJUDICATE ARISES IS NOT INVALID

Section 13(2) of the Building and Construction Industry Security of Payment Act (“SOPA”) provides that an adjudication application shall not be made unless the claimant has, by notice in writing containing the prescribed particulars, notified the respondent of his intention to apply for an adjudication of a payment claim dispute. The practice and understanding of the industry has been that that a Notice of Intention to Apply for an Adjudication (“NIAA”) is to be served after the entitlement to make an adjudication application arises under s.12 of SOPA. In view of the wording of s.13(2), the failure to give a NIAA is fatal to any adjudication application.

The case of JFC Builders Pte Ltd v Lion City Construction Co Pte Ltd [2012] SGHC 243, which was a decision of Justice Woo Bih Li, on appeal from the decision of an Assistant Registrar, considered the issue of the validity of a NIAA that is served prior to the entitlement to apply for an adjudication arises. The arguments were raised by the appellant in that case to assert that a NIAA served before the entitlement to adjudication arises is invalid. Counsel for the appellant relied on Security of Payments and Construction Adjudication by Chow Kok Fong, LexisNexis, 2005 Ed at pp 264-265 and a flowchart in the Building and Construction Authority’s SOPA 2004 Information Kit to support his contention that an NIAA can only be issued after the claimant is entitled to apply for adjudication under s 12(2).

Although Woo J formed the view that SOPA envisages that the NIAA will be given after the Defendant is entitled to apply for adjudication, ie, after the expiry of the dispute settlement period, neither the flowchart nor the textbook went so far as to say that an NIAA may only be issued after the Defendant is entitled to apply for adjudication. He was of the view that whilst it is true that there is an express deadline by which the adjudication application must be made (and consequently an NIAA must be given before that deadline), there is no express stipulation that the NIAA may only be issued after the right to apply for adjudication has arisen.  Woo J declined to hold that such a stipulation should be implied.

In coming to his decision that an NIAA is valid even if served before the dispute settlement period (i.e. before the entitlement to apply for an adjudication arises) Woo J. took into account that (a) there is an absence of any express prohibition against an early NIAA, (b) that an early NIAA is held invalid would be fatal to any adjudication application, (c) the absence of any prejudice to the appellant if an NIAA was served early and (d) the absence of any policy argument in favouring the contention that a NIAA must be served only after the entitlement to apply for an adjudication application arises.

No blanket NIAA

However, it should also be noted that Woo J. formed the view that there would be no danger of a ‘blanket NIAA’ i.e. a NIAA which could be served, for example, from the very first payment claim is issued since s.13(2) of SOPA requires the NIAA to contain the prescribed particulars which Woo J held to must mean the particulars of a particular claim.

Impact on Industry

This case corrects the perception held by many legal practitioners that a NIAA must be served only after the right to make an adjudication application arises. Clients should be advised that an NIAA served at the same time as a payment claim may be a valid NIAA and respond accordingly.

Prepared by Joseph WW Liow,
Director

Building and Construction Law Update: Court of Appeal rules no inherent time bar for inclusion of previous payment claim amounts

The Singapore Court of Appeal has recently decided that the payment claims may include sums claimed for in earlier payment claims and that there is no time-bar of one month contemplated in the provisions of the Building and Construction Industry Security of Payment Act (BCISOPA). This recent decision overturns the decision of Justice Tay Yong Kwang, a High Court level decision, where the learned Judge adopted the academic view of Prof Philip Chan i.e. that the provisions of the Act had an implicit time bar and that if a claimant does not proceed with adjudication when the right arises under any payment claim, he is precluded from bringing an adjudication application for that sum based on any later payment claim. The High Court appeared, in our view, to have tried to extend the restriction on parties relying on ‘repeat claims’ as a backdoor to adjudication actions where the time to take such adjudication applications may have already expired.

You may view the decision here

Prepared by Joseph WW Liow,
Director

Employment Law Update – Cascading clauses may save restraint of trade clauses from being unenforceable

The Singapore Court of Appeal recently commented on ‘cascading clauses’ that has sometimes found its way into employment contracts. An example of a cascading clause would be a restraint covenant that states that an employee would be restrained from competing for a period of X months; but if the same is not enforceable to a shorter period of Y months; or if not enforceable to an even shorter period of Z months.

In the Court of Appeal case of Smile Inc Dental Surgeons Pte Ltd v Lui Andrew Steward (copy attached) at paragraph 31, the Court referred to the Australian case of Hanna  v OMPS Insurance Brokers. Whilst the Court of Appeal made no definitive pronouncement as to whether such cascading clause would find favour, the decision of the Court of Appeal does indicate that, in the appropriate circumstances, where parties have intended any clause of the contract to be severable, the Singapore court may considering severing unenforceable clauses in the contract (using the ‘blue pencil’) rule to give effect to the parties’ intention.

The relevant paragraph of the judgment, para [31] reads,

Whether the court can read down the Restrictive Covenants

DOCTRINES OF SEVERANCE

31 In Man Financial, it was confirmed that the law in Singapore recognizes two forms of severance of contractual terms: (a) severance of entire or whole clauses in a contract; and (b) severance via the “blue pencil test” (see Man Financial at [126]-[131]). It was accepted by counsel for the Appellant, Mr Aqbal Singh (“Mr Singh”), that severance via the “blue pencil test” could not be effected for the Restrictive Covenants, since there was no time limit expressed in the contractual terms at all; in other words, there was nothing to strike out in the first place. We pause to observe that the phenomenon of “cascading clauses”, ie, restrictive covenants that provide for a variety of durations or geographical scopes, has taken root in Australia, and such clauses have been held to be valid by the New South Wales Court of Appeal decision in Hanna v OAMPS Insurance Brokers Ltd [2010] NSWCA 267 (affirming the New South Wales Supreme Court decision in OAMPS Insurance Brokers Ltd v Peter Hanna [2010] NSWSC 781). Such cascading clauses are engineered specifically to accommodate the “blue pencil” test, in order that the court may strike out provisions for, for example, unreasonably long durations of restraint, whilst preserving the restrictive covenant concerned if at least one of the durations passes the tests of reasonableness ….”

This recent Court of Appeal case suggests that a cascading clause, if properly worded and if the intention of the parties is that the various period of restraint are severable, does not necessarily cause uncertainty in the contractual terms and would be a valid and binding term of the contract.

 

Prepared by Joseph WW Liow,
Director

Straits Law Practice LLC Involved in Application to Wind Up Hiap Hoe Holdings

Mr Teo Guan Seng, founder and patriarch of Hiap Hoe Holdings is seeking to wind up the investment company and distribute the assets to the shareholders.

Hiap Hoe Holdings owns about 70 per cent of each of its two subsidiaries, Hiap Hoe Limited and Superbowl holdings, valued at approximately S$246 million and S$101 million respectively.

Mr Teo’s application is defended by Hiap Hoe Holdings itself and two of his sons. Representing Mr Teo in the suit are Straits Law Practice LLC’s Mr. N Sreenivasan, Managing Director & Mr. Muralli Raja Rajaram, Senior Associate.

Straits Law Practice LLC Represents Resorts World Sentosa in Casino Debt Recovery Claims

To signal that casino high-rollers who do not pay their debts would not be tolerated, Resorts World Sentosa engaged Straits Law Practice LLC’s Mr. N. Sreenivasan, Managing Director and Mr. Shankar A. S., Associate Director to commence legal proceedings against five debtors.

These debtors have a combined gambling debts of about S$8.5 million comprising of one Singaporean, one Hong Kong SAR resident and three Malaysians.