We had previously written on the COVID-19 (Temporary Measures) Act 2020 and its upcoming impact on secured lending by banks to SMEs here. On 20 April 2020, the provisions in the COVID-19 (Temporary Measures) Act 2020 (the “Act”) relating to temporary relief from contractual obligations and temporary relief for financially distressed firms and individuals officially came into effect. Concurrently, subsidiary legislation was also passed to clarify the operation of these provisions, including the COVID-19 (Temporary Measures) (Prescribed Period) Order 2020 (“PPO”) and the COVID-19 (Temporary Measures) (Temporary Relief for Inability to Perform Contracts) Regulations 2020 (“Temporary Contractual Relief Regulations”).
The prescribed period for which the reliefs provided under the Act will be in force is a period of 6 months commencing from 20 April 2020 and ending on 19 October 2020 (“Prescribed Period”) unless otherwise extended or shortened.
TEMPORARY CONTRACTUAL RELIEF REGULATIONS
Notification for relief
Where a contractual party is eligible for relief from its contractual obligations under the Act, it must notify the other contractual parties that it is relying on the Act for relief. Upon notification, the protective relief under the Act kicks in. Under the Temporary Contractual Relief Regulations, the Notification for Relief must:
- be in Form 1 (as set out at http://www.mlaw.gov.sg/covid19-relief);
- contain such particulars, comply with such requirements and accompanied by such documents as may be specified in Form 1, by the Registrar and/or the Assessor;
- contain the name, address, telephone number and email address (if any) of:
- the person seeking relief (“Party A”);
- the other party or parties to the contract;
- any guarantor or surety for the subject obligation;
- the issuer of a related performance bond, if applicable;
(each a “Party B”)
- contain a description of the scheduled contract, and the date of the contract;
- contain details of the subject obligation, including:
- the date the obligation was or is to be performed;
- a brief explanation of how a COVID-19 event had caused to a material extent the inability to perform the obligation;
- any proposal by Party A to perform the subject obligation in another manner; and
- a declaration by Party A to the effect that all information provided in the notification for relief is true and correct.
The completed Notification for Relief must be served on each Party B in one of the following ways:
- via the electronic system at https://www.mlaw.gov.sg/covid19-relief/notification-for-relief using either SingPass (if the party seeking relief is an individual) or CorpPass (if the party seeking relief is a business entity);
- (where the option in sub-paragraph (a) above is unavailable) by sending the notification to the prescribed recipients’ last email address;
- (where the options in sub-paragraphs (a) and (b) above are unavailable) by either:
- using an internet-based messaging service which allows Party B to receive electronic communications in that account; or
- by electronic communications on an Internet website, blog or page on any social media or social networking Internet website that is owned or operated by Party B which allows Party B to receive electronic communications on that website, blog or page;
- and the mechanisms described in sub-paragraph (c)(i) and (c)(ii) above is the means or one of the means by which Party A corresponds with Party B on matters concerning the scheduled contract in question;
- (where the options in sub-paragraphs (a), (b) and (c) above are unavailable) by way of registered post to Party B’s last postal address.
Adjudication by Assessors
The parties are expected at first instance to negotiate any disagreement or dispute arising out of the Notification for Relief and to seek an amicable resolution acceptable to parties. In the event of any unresolved dispute arising out of the Notification for Relief, an application for assessment may be submitted by either party to an assessor within the Prescribed Period. While assessment of any such dispute remains pending, the moratorium on prohibited actions triggered by service of the Notification for Relief will remain in place.
The application must be submitted to the Registrar of the Registry of Assessors in Form 6 (as set out at http://www.mlaw.gov.sg/covid19-relief) and accompanied by a copy of the Notification for Relief as well as a copy of the scheduled contract in question. If the Registrar is satisfied that the application is in order, the Registrar will provide the applicant with an acknowledgement of receipt of the application and a form for the counterparty to furnish a response. The applicant must, within 2 working days, serve a copy of the application and the form of response to the counterparty, every other party to the contract, guarantors and sureties for the subject obligations and issuers of related performance bonds.
The respondent will then have 5 working days to submit a response to the Registrar in the form furnished to it, and serve a copy of its response on the applicant, the other contractual parties, any guarantors or sureties for the contractual obligations and issuers of related performance bonds.
Once the application and response have been duly served and are in order, the Registrar may notify parties of the appointment of an assessor as well as a notice of the date and place for the hearing (if applicable). The assessors will be either be legal practitioners or accountants with at least 3 years of working experience in their respective fields of expertise, or individuals with at least 3 years of working experience in or relating to law, accountancy, finance, business management, building and construction, or architecture (depending on the nature of the scheduled contract). The assessment will generally be carried out via e-mail; however, the assessor may direct for a video-conference or tele-conference to be held.
The assessor’s determination will be binding on all parties to the application and there will be no avenue of appeal from an assessor’s determination. A failure to comply with a determination made by an assessor will be found guilty of an offence and liable upon conviction to a fine not exceeding S$1,000.