Colin Ng & Partners LLP
Singapore
Singapore
Bill Jamieson, Subramanian Pillai and Liviu Petrina
Colin Ng & Partners LLP
1 Collateral
2 Perfection and priority
What types of collateral are available?
In general, all forms of property (present and future, real or personal
property, tangible or intangible property) of a project company may
be used as collateral for secured lending in Singapore.
There are four or five basic forms of security interest: charges,
mortgages, assignments, pledges and liens. For project finance,
charges and mortgages are of more importance. Typically, a composite security document, referred to as a debenture, is used to take
security.
How is a security interest in each type of collateral perfected and
how is its priority established? Are any fees, taxes or other charges
payable to perfect a security interest and, if so, are there lawful
techniques to minimise them? May a corporate entity, in the capacity
of agent or trustee, hold collateral on behalf of the project lenders as
the secured party?
Perfection and priority of a security interest is dependent on the
nature of the collateral and the entity granting the security interest.
Perfection
Charges
A charge takes effect by way of an agreement between the creditor
and the debtor without the possession or title in the property passing
to the chargee. Fixed charges give the chargor control over the asset,
whereas floating charges allow the chargee to continue to deal with
the charged assets until crystallisation.
Mortgages
A mortgage provides not only rights of appropriation over the asset
but also entails a transfer of ownership of equitable or legal title to
the mortgagee. Most assets can be secured by way of a mortgage;
however, it is most commonly used for land and shares.
Assignments
A legal assignment must be in writing, signed by the assignor, absolute and notified in writing to any persons against whom the assignor
could enforce the assigned rights. This is the usual method of taking
security over contractual rights. If any of these formalities are not
complied with, it is an equitable assignment.
Pledges
The actual (or constructive) delivery of the subject matter is critical
to the creation of a pledge. The pledgee retains possession of the
pledged assets until the satisfaction of the secured debt.
In Singapore, this often involves either taking possession of the property, registration in a public register or the actual giving of notice
depending on the nature of the entity and the security.
Charges and Mortgages
A registrable charge created by a company has to be registered under
section 131 of the Companies Act (cap 50, 2006 Rev Ed) (the Companies Act) with the Accounting and Corporate Regulatory Authority of Singapore (ACRA) within 30 days from the date the instrument
of charge was created. A registrable charge that is not registered
within the time limit is void against the liquidator and other creditors
of the company. Notwithstanding the failure to register with ACRA,
the underlying debt due from the chargor company to the chargee
is generally not affected by the avoidance of the charge against the
liquidator and creditors of the company.
Apart from registration under the Companies Act, there may be
additional registration requirements depending on the nature of the
charged asset. For example, a charge over real property governed by
the Land Titles Act (cap 157, 2004 Rev Ed) must be in the prescribed
form and registered with the Singapore Land Authority. Security over
other assets requiring registration in a specialist register (such as intellectual property rights, ships and aircraft), must also be registered in
the relevant specialist register.
Priority
Liens
A lien confers a right to retain the lawful possession of a property
owned by another person until the claim by the person in possession
against the owner has been met. A lien may be created by common
law, contract or statute.
Certain types of property may be subject to legislation that
affects security over that type of asset, such as the Land Titles Act.
In such cases, a security interest may not be perfected or enforced to
the extent that the requirements for authorisation or registration by
the relevant law regulating such property are met.
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Singapore courts generally follow common law priority rules such
as the rules governing legal and equitable interests and questions of
constructive notice of an interest. A legal mortgage on securities will
rank ahead of previously created equitable interests, provided that
the mortgagee had no actual or constructive notice of such interests
at the time of creation of the mortgage.
Generally, registrable security interests that have been registered
will have the following priority:
•fixed charges, mortgages or pledges will have priority over
uncrystallised floating charges even if subsequently created;
•fixed charges and mortgages rank according to the date of creation although care needs to be taken regarding the priority of
further advances if subsequent security is taken; and
•floating charges rank according to the date of creation.
Singapore
Creditors often enter into subordination arrangements in order to
contractually modify the priority position that the law confers on
them.
No taxes are payable to perfect a security interest, although security over assets which attract stamp duty (eg, land and shares) is
chargeable up to a maximum of S$500. A person can hold security
as trustee on behalf of the project lenders as secured parties. On the
insolvency of the trustee the collateral would not form part of the
estate as beneficial ownership would remain with the project lenders.
The concept of parallel debt is not required in Singapore as trusts are
recognised in Singapore law.
3Existing liens
How can a creditor assure itself as to the absence of liens with priority
to the creditor’s lien?
For securities that need registration for perfection a search may be
conducted at the relevant registries. Many security interests should
be registrable charges at ACRA. These registers can be searched by
any person.
There are, however, some security interests that are not registrable. In such cases, one may consider taking possession of the secured
property, giving notice to and obtaining acknowledgment from the
applicable third party or taking warranties from the security provider
to help establish that there is no existing security interest. Where
charges are perfected by the transfer or endorsement of a title, it
will be easier to identify a creditor that seeks to take security on that
same asset.
4Enforcement of collateral
Outside the context of a bankruptcy proceeding, what steps should a
project lender take to enforce its rights as a secured party over the
collateral?
The lender may choose to exercise its power to sell the property. This
power should normally be provided for in any well-drafted security
document. It may also be implied by statute. If the objective is to
protect the security and to collect profits yielded by the property
which may be applied towards discharging the debt, a receiver may
be appointed either pursuant to the provisions of the security document, statute, or a court order.
In enforcing the power of sale, the chargee has a duty to take
reasonable steps to obtain a proper price, such as holding a public
auction where appropriate. The chargee must inform itself of the
value and the price obtainable for the security before it agrees to sell
it to a buyer. When that is established, then the enquiry moves to
determine whether the price actually obtained is a reasonable price
in the circumstances. The onus is on the chargee to show that the
security was properly sold.
The principal procedure of enforcing a floating charge is through
the appointment of a receiver and manager. The receiver and manager is appointed by the security holder by virtue of a private power
of appointment in the terms of the security to be an agent of the
company for the purposes of realising the security. The receiver and
manager’s duty is to realise the security for the benefit of the security
holder, and he owes only limited duties to the company and its other
creditors. The receiver and manager has the advantage of disregarding any unsecured contractual rights other parties may have against
the company, yet, in his capacity as an agent of the company, he is
able to enforce the company’s rights.
A holder of a floating charge has the statutory power to block a
judicial management order, unless there are considerations of public
interest. Under these provisions, the courts are obliged to dismiss
an application for a judicial management order if the making of the
order is opposed by a holder secured by a floating charge.
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5 Bankruptcy proceeding
How does a bankruptcy proceeding in respect of the project company
affect the ability of a project lender to enforce its rights as a secured
party over the collateral? Are there any preference periods, clawback
rights or other preferential creditors’ rights (eg, tax debts, employees’
claims) with respect to the collateral? What entities are excluded from
bankruptcy proceedings and what legislation applies to them? What
processes other than court proceedings are available to seize the
assets of the project company in an enforcement?
Under the pari passu principle, creditors in an insolvency in Singapore that are similarly situated are treated equally in the distribution
of the assets of an insolvent company. The few exceptions to this
principle include, among others, proprietary securities (ie, mortgage
and charge) or possessory securities (ie, pledge and lien), and the use
of quasi-security devices such as retention of title or the right of set
off (under section 88 of the Bankruptcy Act, cap 88).
Under section 329 of the Companies Act read with section 99 of
the Bankruptcy Act (cap 20 of Singapore) a transfer of property or
other act relating to property amounts to an undue preference if a
creditor is put in a position that, on a company’s insolvency, is better than the position he would have been in, and the company was
influenced by a desire to achieve that effect. An undue preference
may be challenged if it was made six months before the application
or commencement of winding up of the company (or in the case
where the transaction is with an associate, two years).
Under section 329 of the Companies Act read with section 98
of the Bankruptcy Act an undervalue transaction is a transaction
entered into for a consideration which, in money or money’s worth,
is significantly less than the value, in money or money’s worth of
the consideration provided by a company. Such a transaction may
be challenged if it was made five years before the making of the
application or the commencement of winding up and the company
was insolvent at the time or becomes insolvent as a consequence of
the transaction.
Where a floating charge has been created within six months of
the commencement of the winding-up of a company, the floating
charge is void unless there is proof that the company was solvent at
the time the floating charge was created, under section 330 of the
Companies Act. The exception to this is the amount of any cash paid
to the company at the time of or subsequently to the creation of and
in consideration of the floating charge together with interest on that
amount at the prescribed rate.
Where a company is wound up (under section 328(5) of the
Companies Act) or where a receiver is appointed on behalf of the
holders of any floating charge (under section 226(1) of the CA),
certain statutorily preferred debt, for example employee’s claims in
respect of wages, are entitled to be paid in priority to the floating
chargee.
6 Foreign exchange
What are the restrictions, controls, fees, taxes or other charges on
foreign currency exchange?
Foreign currency exchange in Singapore is overseen by the Monetary
Authority of Singapore (MAS).
There are no significant restrictions on foreign exchange transactions and capital movements. Buying or selling Singapore dollars
on the foreign exchange market is also unrestricted. Subject to any
current political sanctions, remittances can be made in any currency
and to any country without the need for prior approval. However,
banks may impose various commission fees and goods and services
tax (GST) in respect of currency exchange and banking services.
The government lays down certain restrictions on the borrowing of Singapore dollars for use offshore. This policy is intended to
prevent the borrowing of Singapore dollars for currency speculation.
Beyond that, non-residents may freely borrow Singapore dollars for
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trade and investment in Singapore; as well as for their activities outside Singapore as long as the Singapore dollar proceeds are swapped
into foreign currency.
Entering into a foreign exchange contract may be a supply for GST
purposes. Foreign exchange gains and losses are generally brought
into charge or may be relievable for Singapore tax purposes.
7Remittances
What are the restrictions, controls, fees and taxes on remittances of
investment returns or payments of principal, interest or premiums on
loans or bonds to parties in other jurisdictions?
Subject to any political sanctions, there are no controls on remittances or investment returns or loan payments to parties in other
jurisdictions. Banks charge for remittances of investment returns but
these are not material. Withholding taxes may apply on certain crossborder payments, which may be reduced (including to zero) under
applicable double taxation treaties. There is currently no Singapore
withholding tax on dividends. Transfer-pricing tax legislation could
be applied to impose a tax charge or deny a relief if transactions
between associated entities are not entered into on arm’s-length
terms.
8Repatriation
Must project companies repatriate foreign earnings? If so, must they
be converted to local currency and what further restrictions exist over
their use?
There is no requirement for project companies to repatriate foreign
earnings or to convert repatriated funds to local currency.
Foreign income remittances in the form of foreign dividends,
branch profits and services income are exempt from tax provided
that the income is received from a foreign jurisdiction with a tax
rate of at least 15 per cent and are considered as ‘subject to tax’.
The Inland Revenue Authority of Singapore (IRAS) requires proper
documentation or certification that such foreign tax has been paid.
Further, the government is introducing foreign tax credit pooling
to facilitate remittance of foreign income to Singapore.
9Offshore and foreign currency accounts
May project companies establish and maintain foreign currency
accounts in other jurisdictions and locally?
In general, there are no specific legal restrictions on project companies establishing and maintaining foreign currency accounts in foreign jurisdictions or foreign currency accounts in Singapore.
However, residents are only allowed to maintain a foreign currency account with an Asian Currency Unit (ACU)-licensed bank in
Singapore. Nearly all commercial and merchant banks in Singapore
operate as ACUs, which may accept deposits from, and lend to, other
banks and non-bank customers in foreign currency.
10 Foreign investment and ownership restrictions
What restrictions, fees and taxes exist on foreign investment in or
ownership of a project and related companies? Do the restrictions
also apply to foreign investors or creditors in the event of foreclosure
on the project and related companies? Are there any bilateral
investment treaties with key nation states or other international
treaties that may afford relief from such restrictions? Would such
activities require registration with any government authority?
The Singapore government’s approach to foreign investment policy
is to encourage foreign investment consistent with its national interest. In general, all industries are open to foreign investment although
there are restrictions in some industries such as airport, banking,
media, ports and telecommunications.
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Mergers in Singapore may be subject to merger control under
the Competition Act of Singapore (chapter 50B). Although there is
no mandatory requirement for merger parties to notify their merger
situations to the Competition Commission of Singapore (the CCS),
it is for the parties to ensure that their agreements are lawful and
decide whether it is appropriate to make a notification for guidance
or decision.
A merger may infringe the law if it has resulted or may result
in a substantial lessening of competition in Singapore. The CCS is
generally of the view that competition concerns are unlikely to arise
in a merger situation unless: the merged entity will have a market
share of 40 per cent or more; or the merged entity will have a market share of between 20 per cent to 40 per cent and post-merger the
combined market share of the three largest firms in Singapore is 70
per cent or more.
The CCS adopts a two-phase approach in evaluating applications. In general, upon receipt of a complete application, the CCS
will carry out a preliminary assessment which takes about 30 days
to conclude that the merger situation does not raise competition concerns under section 54 of the Competition Act. A Phase II review is
followed if the CCS is unable to conclude that the merger does not
raise competition issues.
Bilateral investment treaties exist with countries such as Cambodia, China, France, Germany, Indonesia, Switzerland, Vietnam and
the United Kingdom.
11 Documentation formalities
Must any of the financing or project documents be registered or
filed with any government authority or otherwise comply with legal
formalities to be valid or enforceable?
In general, there are no other documentation formalities within
project finance, beyond those mentioned above in respect of security
registration requirements.
However, in relation to government procurement in Singapore
there are additional regulations such as the Government Procurement Act (chapter 120) as well as three decrees: the Government
Procurement Regulations; the Government Procurement (Challenge
Proceedings) Regulations; and the Government Procurement (Application) Order. In addition, the Ministry of Finance may also establish
regulations with regards to the scope of procurement, such as the
awarding procedures or specifications for procurement. In general,
government procurement activities in Singapore have been decentralised to individual ministries, departments and statutory boards.
Procurement operations, beginning with the announcement of a
tender to the awarding of a contract, are made through an online
business centre for government electronic business. The content of
tender documents is prescribed by law. The documents must set out
all evaluation criteria but these are not prescribed by law.
12Government approvals
What government approvals are required for typical project finance
transactions? What fees and other charges apply?
Depending on the project sector, transactions may be subject to government approvals. The necessary permits are dependent on a range
of factors such as the location, sector and size of the project.
Approvals, licences, permits and consents may be required from
various authorities and agencies for activities which may be subject
to environmental law, urban planning, health and safety regulations
or management standards.
As many projects are carried out on state-owned land, consent
is often required for the use of the property for a project. The main
authority for the regulation of land in Singapore is the Singapore
Land Authority.
Importers, exporters and trans-shippers must either be companies (incorporated under the Companies Act) or businesses registered
Singapore
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under the Business Registration Act. They must also obtain a Central
Registration Number from Singapore customs and obtain an import
permit through TradeNet before any goods can be imported into
Singapore.
Singapore has a comprehensive environmental regulation policy
overseen by the Ministry of the Environment and Water Resources,
and implemented by the National Environmental Agency. This is particularly so in her management of water resources, which is overseen
by the Public Utilities Board (the PUB).
The fees and charges that apply to obtain approvals vary.
13 Foreign insurance
What restrictions, fees and taxes exist on insurance policies
over project assets provided or guaranteed by foreign insurance
companies? May such policies be payable to foreign secured
creditors?
must also be paid at the prevailing rate at the time of importation.
Certain products may require additional documentation. For
example, importers of motor vehicles must first obtain a duty and
GST payment permit.
The Price Control Act empowers the Ministry of Trade and
Industry to impose controls on the import and export of any items
as it deems necessary. However, extensive use of this statutory power
is unlikely.
16 Nationalisation and expropriation
What laws exist regarding the nationalisation or expropriation of
project companies and assets? Are any forms of investment specially
protected?
The insurance sector is regulated by the Monetary Authority of Singapore under the Insurance Act of 2002 (chapter 42). Reinsurers
without an operating presence in Singapore can conduct reinsurance
business in Singapore as authorised reinsurers under section 8A of
the Act. Foreign insurers that have been approved under the law of
another territory to carry on insurance business in that country may
operate in Singapore under a foreign insurer scheme in accordance
with Part II of the Act. Presently, the Lloyd’s Asia scheme is the only
foreign insurer scheme in Singapore.
Singapore has not expropriated property owned by foreign investors
and has no laws that force foreign investors to transfer ownership
to local interests.
Singapore has signed investment promotion and protection
agreements with a wide range of countries. These agreements mutually protect nationals or companies of either country against war
and non-commercial risks of expropriation and nationalisation for
an initial period of 15 years and continue thereafter unless otherwise
terminated.
In certain specific sectors there are obligations for the project
to be run in accordance with the instructions of the relevant state
authority agency in the case of emergency.
14 Foreign employee restrictions
17 Fiscal treatment of foreign investment
What restrictions exist on bringing in foreign workers, technicians or
executives to work on a project?
Singapore has a relatively open immigration policy. Nevertheless,
foreigners intending to work in Singapore still require an appropriate visa.
An overview of the various visas is as follows:
Work visa type
Applicable for
Employment Pass
Foreign professionals employed by
companies operating in Singapore
Entrepreneur Pass (EntrePass)
Foreign entrepreneurs who may lack the
appropriate specialist skills qualification,
but have proven track records of successful
business ventures
S Pass
Mid-level skilled foreign workers employed by
companies operating in Singapore
Personalised Employment Pass
(PEP) application
Not tied to an employer for it is granted
based on the applicant’s individual merits
Miscellaneous Work Pass
Foreigners working in Singapore on shortterm assignments of up to 60 days
Training Employment Pass
Foreigners who are on practical training
attachments for professional, managerial,
executive or specialist jobs in Singapore
Multiple-Journey Business Visa
Facilitates the frequent entry of business
executives from visa-requiring countries into
Singapore
The government charges the employer a levy, the rate of which
depends on the sector in which the worker is employed and the level
of their skills.
15Equipment import restrictions
What restrictions exist on the importation of project equipment?
In general, there are no specific restrictions existing on the importation of project equipment, apart from that the import of all goods
into Singapore must comply with the requirements of the Singapore
Customs. An IN Permit through TradeNet is required for the importation of all goods before they are imported into Singapore whether
they are controlled or non-controlled items. Import duty or GST
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What tax incentives or other incentives are provided preferentially
to foreign investors or creditors? What taxes apply to foreign
investments, loans, mortgages or other security documents, either for
the purposes of effectiveness or registration?
The Singapore Economic Development Board is the leading government agency for the planning and execution of strategies to attract
foreign investment and business opportunities.
Generally speaking, tax incentives are specific to the industry
rather than the residency of the investor or of the creditor involved.
The general principle of corporate taxation in Singapore also applies
to foreign business entities. However, there are certain schemes
directed to the foreign investors or creditors. For example, the Global Investor Programme Scheme or GIP Scheme is designed to attract
foreign entrepreneurs and investors who are keen in becoming a permanent resident in Singapore. Also, international and regional headquarters located in Singapore may benefit from a reduced corporate
income tax rate.
Beyond that, incentives are largely industry-specific. Tax Incentives include the Pioneer (Manufacturing) scheme that provides tax
exemption on income for qualifying activities in the manufacturing
industry. Financial incentives include the Initiatives in New Technology (INTECH) scheme available for Singapore-registered businesses
to develop new technologies and industrial R&D.
Singapore does provide certain financial sector incentives to
encourage use of the Singapore capital markets to finance infrastructure and in respect of infrastructure financings overseas.
18Government authorities
What are the relevant government agencies or departments with
authority over projects in the typical project sectors? What is the
nature and extent of their authority? What is the history of state
ownership in these sectors?
The relevant government agencies or departments with authority
over various aspects of a project are as follows:
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Government Agency Name
Project type
Building and Construction
Authority of Singapore
Issues standards and licences for building
engineering, building works, plans and
management
Economic Development Board
Leading government agency for planning of
strategies to enhance Singapore’s position
as a global business centre
Responsible for attracting investors and
companies to Singapore
Energy Market Authority, a
Responsible for regulating power generation
statutory board under the Ministry and its distribution and gas supply in
of Trade and Industry
Singapore
Infocomm Development Authority
Regulates, licenses and administers the
telecoms sector
Inland Revenue Authority of
Singapore (IRAS)
Oversees tax collection and tax treatment
of public-private partnership arrangements,
corporations and other businesses
JTC Corporation
Developer and manager of industrial estates
and their related facilities
Land Transport Authority
Oversees the land transport system in
Singapore. Public transport is owned by
private companies which are controlled by
the Singapore government
Maritime and Port Authority of
Singapore
Regulates and manages port and marine
services and activities within the Singapore
waters
Ministry of Finance
Singapore’s Central Bank and financial sector
regulatory authority and relevant authority in
relation to project finance
Ministry of Manpower (Workplace
Safety & Health Council)
Issues work permits and regulates standards
for safe working environments
National Environmental Agency
Issues standards for the protection of the
air, land, water resources and public health
in Singapore
Public Utilities Board
Oversees the supply of water to Singapore
Singapore Land Authority
Oversees the management of state land and
buildings, land sales, leases, acquisitions
and allocation
It is also the national land registration
authority
Singapore Sports Council
Relevant for projects related to sports
development such as the building of the
Singapore Sports Hub PPP
SPRING Singapore
Main agency for enterprise development.
It is also the national standards and
conformance body
Urban Redevelopment Authority
Responsible for their evaluation and granting
of approvals for development projects from
the public and private sectors
The electricity sector in Singapore is largely run by private companies,
however, the main company that provides electricity and gas transmission in Singapore, Singapore Power Ltd, is owned by Temasek
Holdings, the investment arm of the Singapore government.
The operation of public transport in Singapore is largely run
by private operators. The main public transport operators in the
public transport industry are SBS Transport Limited and SMRT
Corporation.
SBS Transport Limited operates bus, rail, taxi and other transport services. Its parent company is ComfortDelGro Corporation.
SMRT Corporation is the second-largest public transport company
in Singapore after ComfortDelGro. It operates bus, rail, taxi and
other public transport services.
The government also collaborates with private sector companies
on certain projects. For example, the SembCorp NEWater Plant was
a public-private partnership (PPP) between Sembcorp Industries and
the national water agency, the PUB.
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19International arbitration
How are international arbitration contractual provisions and awards
recognised by local courts? Is the jurisdiction a member of the ICSID
Convention or other prominent dispute resolution conventions? Are
any types of disputes not arbitrable? Are any types of disputes subject
to automatic domestic arbitration?
The International Arbitration Act
There are two legal regimes governing the arbitration process in
Singapore – the Arbitration Act (cap 10) and the International Arbitration Act (cap 143A)(IAA). The operation of this dual track arbitration regime allows parties to opt in or out of a particular regime
as agreed by them.
The IAA shall apply in the case of international arbitration.
Under section 5(2) of the IAA, an arbitration is considered international if:
•at least one of the parties to an arbitration agreement, at the time
of the conclusion of the agreement, has its place of business in
any state other than Singapore; or
•one of the following places is situated outside the state in which
the parties have their places of business:
•the place of arbitration if determined in, or pursuant to, the
arbitration agreement;
•any place where a substantial part of the obligations of the
commercial relationship is to be performed or the place with
which the subject-matter of the dispute is most closely connected; or
•the parties have expressly agreed that the subject matter of the
arbitration agreement relates to more than one country.
In some cases, a party to a contract containing an arbitration agreement may wish to enforce the terms of the contract by instituting
legal proceedings in the courts of Singapore despite the existence
of the arbitration agreement. Such action may be motivated by factors such as legal costs and the speed with which a dispute could be
resolved in the courts as compared to arbitration. In such cases, Singapore law requires that the parties adhere to and honour the arbitration agreement contained in the contract. In this respect, section 6(1)
of the IAA provides that in the event a party to an arbitration agreement institutes any legal proceeding in the court against the other
party to the agreement in respect of any matter which is the subject
of the agreement, the other party may apply to that court to stay the
proceedings in favour of arbitration as agreed by the parties.
As regards the enforcement of a foreign award, sections 19 and
29 of the IAA state that a foreign award may be enforced, with leave
of court, by execution proceedings. An application for leave of court
may be made ex parte and must be supported by an affidavit setting
out, among others, the arbitration agreement and the details of how
the foreign award has not been complied with.
Under section 31(2) of the IAA, the court may refuse enforcement of a foreign award in any of the following cases:
•a party to the arbitration agreement in pursuance of which the
award was made was, under the law applicable to him, under
some incapacity at the time when the agreement was made;
•the arbitration agreement is not valid under the law to which the
parties have subjected it or, in the absence of any indication in
that respect, under the law of the country where the award was
made;
•a party was not given proper notice of the appointment of the
arbitrator or of the arbitration proceedings or was otherwise
unable to present his case in the arbitration proceedings;
•subject to subsection (3), the award deals with a difference not
contemplated by, or not falling within the terms of, the submission to arbitration or contains a decision on the matter beyond
the scope of the submission to arbitration;
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•the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties or,
failing such agreement, was not in accordance with the law of
the country where the arbitration took place; or
•the award has not yet become binding on the parties to the arbitral award or has been set aside or suspended by a competent
authority of the country in which, or under the law of which,
the award was made.
International Conventions
Singapore has ratified and is a party to the New York Convention
on the Recognition and Enforcement of Foreign Arbitral Awards and
the International Centre for the Settlement of Investment Disputes
Convention on the settlement of international investment disputes.
Types of Disputes
Under section 31(4) of the IAA, the court may also refuse to enforce
a foreign award in the following instances:
•the subject matter of the difference between the parties to the
award is not capable of settlement by arbitration under the law
of Singapore; or
•enforcement of the award would be contrary to the public policy
of Singapore.
Certain types of disputes are not arbitrable on the ground that under
the laws of Singapore, these disputes fall within the jurisdiction of
the local courts. These may involve issues of family law, criminal
law or both.
20Applicable law
Which jurisdiction’s law typically governs project agreements? Which
jurisdiction’s law typically governs financing agreements? Which
matters are governed by domestic law?
Generally, parties are free to decide on their choice of governing
law. However, the parties’ choice of governing law for project and
financing agreements may be dictated by, among others, the type of
agreement, the commercial requirements of the parties and issues of
enforcement.
It is also important to note that certain contractual provisions
may be overridden by specific statutory provisions in areas where
public policy dictates that domestic law should apply. Furthermore,
questions of arbitral procedure and the enforcement of judgments or
awards in Singapore will be governed by domestic law.
21 Jurisdiction and waiver of immunity
Is a submission to a foreign jurisdiction and a waiver of immunity
effective and enforceable?
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Waiver of Immunity
The general rule is that a foreign state is immune from the jurisdiction of the Singapore courts. Section 3 of the State Immunity Act
(cap 185) provides that:
• a foreign state is immune from the jurisdiction of the courts of
Singapore except as provided in the following provisions of this
Part; and
• a court shall give effect to the immunity conferred by this section
even though the foreign state does not appear in the proceedings
in question.
However, under section 4(1) of the State Immunity Act, a foreign
state will no longer have immunity in proceedings in respect of which
it has submitted to the jurisdiction of the courts of Singapore.
Further, section 5(1) of the State Immunity Act provides that,
generally, a foreign state does not have immunity in respect of commercial transactions and contracts which are to be performed in
Singapore.
22 Title to natural resources
Who has title to natural resources? What rights may private parties
acquire to these resources and what obligations does the holder
have? May foreign parties acquire such rights?
Water
The Public Utilities (Water Supply) Regulations stipulate that ‘No
supply of water, except with the consent of the Board, be given otherwise than through a meter’. To that end, it may be noted that the
title to water in Singapore is regulated strictly by the government
regulatory body, the PUB.
Land
In Singapore, private and public land may be leased or bought by foreign companies. However, some restrictions are laid down on foreign
ownership of property due to the scarcity of land in Singapore.
The main regulatory body in charge of the regulation of land
ownership is the Singapore Land Authority.
23Royalties on the extraction of natural resources
What royalties and taxes are payable on the extraction of natural
resources, and are they revenue- or profit-based?
In general, Singapore does not engage in the export of its natural
resources. Most of its activities deal with the import of natural
resources due to a scarcity of natural resources in Singapore.
Singapore’s principal exports include processed petroleum
products, electronic components, telecommunications apparatus,
industrial machinery and transport equipment, food and beverages,
chemicals and pharmaceuticals.
Foreign Jurisdiction
In general, a foreign judgment may be recognised in Singapore or
enforced by action at common law in Singapore subject to certain
conditions. These include the condition that the judgment is a matter
of substance, is final and conclusive under the laws of that country
and that the party is bound to obey the said judgment. Also, the
foreign judgment must be for an ascertainable sum of money.
Further, a foreign judgment will not be enforced in Singapore
under certain specific circumstances. For example, if its enforcement
will contravene a fundamental public policy constituting an essential
moral, social or economic value of the forum.
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24Export of natural resources
What restrictions, fees or taxes exist on the export of natural
resources?
In general, there are no restrictions, fees or taxes on the export of
natural resources.
However, it should be noted that strict regulations apply to the
management of water resources in Singapore. This is overseen by the
governmental agency, the PUB, which is overseen by the Ministry of
the Environment and Water Resources. Export restrictions may also
apply to goods that may be used for military purposes.
Getting the Deal Through – Project Finance 2012
Colin Ng & Partners LLP
Singapore
25Environmental, health and safety laws
What laws or regulations apply to typical project sectors? What
regulatory bodies administer those laws?
The typical project sectors in Singapore range from public sector
infrastructural projects such as the building and operation of the
Sports Hub, to industrial-related projects such as the building and
operation of desalination plants. As such, the laws and regulatory
bodies of each project varies from sector to sector. For example, the
Sports Hub PPP was procured by the Singapore Sports Council.
Singapore has a comprehensive environmental legislative system
and strict implementation. A key governmental regulatory body is
the National Environment Agency. Particular emphasis is placed in
the management of water resources in Singapore. Important water
resource-related regulations include the Environmental Pollution
Control Act (cap 94) (2000), Environmental Public Health (Toxic
Industrial Waste) Regulations, the Sewerage and Drainage Act (cap
294) (2001), the Public Utilities Act (2002) and the Public Utilities
(Water Supply) Regulations.
Also, the Ministry of Manpower places considerable emphasis
on ensuring safety and health in workplaces to maintain a reasonable standard of safety management. This is largely governed by the
Workplace Safety and Health Act.
Power generation and distribution and telecoms are regulated
through licensing, administered by regulatory bodies independent
of government, the Electricity Market Authority and the Infocomm
Development Authority.
26 Project companies
What are the principal business structures of project companies?
What are the principal sources of financing available to project
companies?
The principal business structures for project companies are limited
liability companies.
The sources of financing are generally quite varied. The main
source of credit in Singapore is the commercial bank. For example, the S$1.8 billion project financing of the Sports Hub involved a
syndicate of 11 banks – the main equity sponsor was HSBC Infrastructure Fund; DBS Bank was the arranger and underwriter for the
desalination plant project undertaken by Hyflux Ltd.
Update and trends
There is increasing demand for the project financing skills and
capital available in Singapore in other countries in the region,
which, with their larger populations, less-developed economies,
growing middle classes and greater need for infrastructure and
public services, represent potentially huge opportunities for
project finance.
27 Public-private partnership legislation
Has PPP-enabling legislation been enacted and, if so, at what level of
government and is the legislation industry-specific?
There is no specific legislation authorising PPPs, and the general view
seems to be that the powers of the state agencies that have been
involved so far in PPPs are sufficient. The Ministry of Finance is
the central coordinating agency, but there is no separate PPP body
as of 2011.
28 PPP – limitations
What, if any, are the practical and legal limitations on PPP
transactions?
As noted in a report by KPMG in 2007: ‘Unlike many countries
undertaking PPP, the government of Singapore does not need private funds to improve its social and other infrastructure. It has large
reserves and typically a budget surplus.’ Thus, the rationale for introducing PPPs into Singapore is mainly focused on the need to achieve
value for money. The public sector entities in Singapore such as the
PUB, which is in charge of most water utilities, the Land Transport
Authority, which is in charge of the road network, and the Housing
Development Board, which is in charge of public housing, to name
the more obvious, provide efficient services to the public and have the
necessary funds for development of the infrastructure through direct
contracting. In June 2009, the government announced its decision
to take over the development and ownership of the Singapore LNG
terminal. The EMA formed the Singapore LNG Corporation Pte Ltd
to develop, build, own and operate the LNG terminal.
Thus the need for PPPs is limited. The absence of a centralised
body within the government to promote the use of PPPs may have
Bill Jamieson Subramanian Pillai
Liviu Petrina
billjamieson@cnplaw.com
spillai@cnplaw.com
ldpetrina@cnplaw.com
36 Carpenter Street
059915
Singapore
Tel: +65 63 23 8383
Fax: +65 6323 8282
www.cnplaw.com
www.gettingthedealthrough.com
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Singapore
also worked as a barrier and introduction of such a ‘one-stop shop’
might help encourage their use.
29 PPP – transactions
What have been the most significant PPP transactions completed to
date in your jurisdiction?
Notable PPP transactions in Singapore:
Colin Ng & Partners LLP
Operate (DBFO) PPP model. Contract was to design, build, maintain
and operate the education facility for a period of 27 years. Officially
opened in July 2010.
Basic Wings Course
A 20-year PPP to acquire and maintain a fleet of trainer aircraft and
ground-based training systems to meet the hardware requirements
for the Republic of Singapore Air Force’s basic wings flying training.
Tender awarded on 3 Nov 2006.
2nd Tuas Desalination Plant (Public Utilities Board)
Awarded to SingSpring on a Design, Build, Own and Operate
(DBOO) PPP model to supply 318,500 cubic metres (70 million gallons) of water per day for a 25-year period from 2013 to 2038.
Tender awarded on 7 March 2011
Next Generation National Broadband Network
A PPP project for the design and construction of the passive infrastructure of the Next Generation National Infocomm Infrastructure
which seeks to transform Singapore into an intelligent nation and
global city, powered by Infocomm. Tender awarded in April 2009.
Ulu Pandan NEWater Plant (Public Utilities Board)
Awarded to Keppel Engineering Pte Ltd on a DBOO PPP model to
supply 148,000 cubic metres (32 million gallons) of NEWater (treated
wastewater) per day for a 20-year period from 2007 to 2027.
ITE College West (Institute of Technical Education)
The first social infrastructure PPP project in Singapore. Awarded to
Gamon Capital in November 2007 on a Design, Build, Finance and
14
Sports Hub
A 25-year concession for the world’s largest sports hub awarded
to Singapore Sports Hub Consortium (SSHC) led by Dragages
Singapore and HSBC Infrastructure Fund on a DBFO PPP Model.
Achieved S$1.8 billion Financial Close in August 2010 and expected
to be ready by April 2014.
Getting the Deal Through – Project Finance 2012