Legal Updates

Legal Updates for Feb - 2020

Improved Double Taxation Agreement Between Singapore and Indonesia
Since 1992, Singapore and Indonesia have had in place the existing Agreement for the Elimination of Double Taxation with respect to Taxes on Income and the Prevention of Tax Evasion and Avoidance ("DTA"). On 4 February 2020, Singapore and Indonesia signed an updated DTA with key changes targeted at lowering the withholding tax rates for royalties and branch profits, providing certain capital gains tax exemptions, and incorporating international standards for countering treaty abuse. The updated DTA represents the culmination of nearly five years of negotiations and indicates the commitment of both Singapore and Indonesia to strengthening their economic cooperation.

Upon ratification by both countries, the updated DTA will progressively enter into force. It is expected to boost bilateral trade and investment flows, which is welcome news to parties with business dealings in both countries both on an individual and corporate level.

The implications of a number of key changes are examined in this Client Update.
29 Feb 2020 | Singapore

Court of Appeal Determines When It Will Allow Testimony by Video Link
While the default position is that witnesses must be physically present before the court to testify, the court may also grant leave for a witness to testify in civil proceedings by video link. In Anil Singh Gurm v J S Yeh & Co and another [2019] SGCA 5, the Singapore Court of Appeal provided a guide as to how the court will approach an application to testify by video link, and the factors to be taken into account. Here, although the witness was merely unwilling and not "unable" to attend in person, the Court allowed the application The respondents in this case were represented by Chandra Mohan Rethnam and Ang Tze Phern of Rajah & Tann Singapore LLP.
28 Feb 2020 | Singapore

What Are the Rights of A Purchaser in An Uncompleted Development?
What happens to the purchasers of units in an uncompleted development where the developer is facing financial trouble and what are their rights vis-à-vis the mortgagee, developer and other creditors? These were some of the questions faced by the High Court in Jay Machinery Pte Ltd v Astoria Development Pte Ltd (unreported). Here, the receivers of the developer successfully submitted that the claims of the purchasers of the units in an uncompleted development, ranked above the claims of the other general unsecured creditors in the event of the developers’ insolvency, and that the purchasers may potentially acquire an equitable proprietary interest in their respective units in the development notwithstanding that separate strata titles to each of the units have not been issued. The receivers were represented by Lee Eng Beng SC, assisted by Sheila Ng, Elsa Chai, Ho Zi Wei and Chow Jie Ying of Rajah & Tann Singapore LLP.
27 Feb 2020 | Singapore

Recordal of License Contracts over Mark and Franchise Contracts

Before the Law on Commercial Contract takes effect, contracts for the licensing of marks in Cambodia are governed by the existing laws, including the Law on Marks, Trade Names and Acts of Unfair Competition of 2002 ("Trademark Law"). The Trademark Law mandates that a license contract must be recorded with the register of the Department of Intellectual Property of the Ministry of Commerce ("MOC"), so that it can be used to assert against unauthorised use of a mark by a third party. However, the Trademark Law is silent on franchise contracts of the same nature.

On 12 March 2015, MOC issued Notification No. 0738 on the Recordal of License Contract and Franchise Contract ("Notification") to fill in the gap of the Trademark Law. The Notification mandates the registration and recordal of both license contracts and franchise contracts with the register of MOC. On 13 January 2020, MOC issued Prakas No. 036 MOC.IP.PR on the Recordal of License Contract over Mark and Franchise Contract with 27 clauses dealing with the requirements and procedures for the recordal of license contracts, sub-license contracts, franchise contracts, and sub-franchise contracts. These provisions are more comprehensive than the ones provided in the Notification.

26 Feb 2020 | Cambodia

Singapore Court of Appeal Delivers Landmark Judgment on Doctrine of Mistake in Cryptocurrency-Related Contract Claim
Rajah & Tann Singapore's financial services disputes team secured a win for one of the world’s leading cryptocurrency trading companies, B2C2 Ltd ("B2C2"), before the Singapore Court of Appeal. In a ground-breaking decision (Quoine Pte Ltd v B2C2 Ltd [2020] SGCA(I) 02), Singapore's apex court addressed novel legal issues arising in the unregulated and “not for the faint hearted” world of cryptocurrency algorithmic trading. The ruling affirms the first instance decision of the Singapore International Commercial Court, in which cryptocurrency exchange operator, Quoine Pte Ltd was found liable for breach of contract in unilaterally reversing completed trades in Bitcoin and Ethereum. B2C2 was represented by lead counsel, Danny Ong, along with Rajah & Tann’s Sheila Ng, Zhuang Wenxiong and Jason Teo.
26 Feb 2020 | Singapore

FAQs for Employers: Practical Tips on Dealing with the COVID-19 Outbreak
The COVID-19 outbreak across the world has had a major impact on the economy in many countries, with the Ministry of Trade and Industry downgrading Singapore's 2020 GDP growth forecast to -0.5% to 1.5% on 17 February 2020. With the economy and businesses taking a beating, all quarters in Singapore are holding on to the hope that the situation in Singapore will stabilise soon. The Singapore Government has taken a practical approach to contain the spread of the virus while urging the public to continue business as usual where possible.

As businesses adapt to the evolving situation, we address some frequently asked questions on an employer's obligation to comply with the Singapore Government's defensive measures and to provide a safe workplace for their employees while maintaining business continuity.
25 Feb 2020 | Singapore

Indonesia Ratifies the Beijing Treaty

On 28 January 2020, Indonesia ratified the WIPO (World Intellectual Property Organisation) Beijing Treaty on Audiovisual Performances ("Beijing Treaty"). The Treaty provides the legal basis to implement the protection of audiovisual performance works shown through electronic media.

The Beijing Treaty’s official website states that it is a multilateral treaty that acknowledges the intellectual property rights of performers with regard to their audiovisual performances. It provides the global standards in recognising the right of audiovisual performers to be compensated fairly for the use of their creative contributions. The Beijing Treaty grants economic rights as well as moral rights to the performers, allowing them to capitalise on their performances, improve their livelihoods, and better protect their images.

24 Feb 2020 | Indonesia

Budget Speech 2020 – A Masterclass
The Singapore Budget 2020 extended a helping hand to steady the ship in times of uncertainty in the global economy, and to chart the journey for the future. The Budget Speech included tax measures and changes announced across a number of areas.

This Update discusses selected tax measures announced in the Singapore Budget 2020, including temporary measures to provide support for enterprises under the Stabilisation and Support Package and measures to ensure the resilience and competitiveness of our tax system.
21 Feb 2020 | Singapore

FAQ on COVID-19 and its Potential Impact on Contracts
The COVID-19 outbreak has been a jarring development across the globe, bringing about much uncertainty in the commercial world. In this Update, we look at some of the common questions regarding the potential legal impact of the COVID-19 outbreak on contracts and agreements. This includes a focus on force majeure, frustration and the obstructions which may arise in specific industries such as Shipping & International Trade, Construction & Projects, and Hospitality and Tourism.
20 Feb 2020 | Singapore

After Push from the Industry, Government Relaxes Foreign Ownership Restrictions on Insurance Companies

Recognising the role of foreign insurance companies and foreign investors with their capital, experience and technology, the Indonesian government in 2018 issued Government Regulation No. 14 of 2018 ("Regulation 14/2018") to allow up to 80% of foreign ownership in a non-publicly listed insurance company. This allowance has been relaxed even further through Government Regulation No. 3 of 2020 ("Regulation 3/2020"), which allows a foreign investor to hold more than 80% of the shares of a non-publicly listed insurance company in Indonesia.

Pursuant to Regulation 14/2018, foreign citizens and entities were precluded from owning more than 80% ("Foreign Ownership Limit") of the paid-up capital of an insurance company (i.e. non-publicly listed insurance company, Sharia insurance company, reinsurance company, Sharia reinsurance company, insurance brokerage company, reinsurance brokerage company and insurance loss adjuster company). If an insurance company wishes to increase its paid-up capital, at least 20% of the additional paid-up capital must be obtained from an Indonesian entity and/or citizen, or through an initial public offering (IPO) in Indonesia.

Regulation 3/2020 has clarified that a non-publicly listed insurance company whose foreign ownership has exceeded the 80% threshold will be exempted from the Foreign Ownership Limit. This means that foreign investors can increase their shareholding in proportion to their existing ownership percentage.

18 Feb 2020 | Indonesia

Salvaging the Salvor: The Decision of the Malaysian Apex Court in Fordeco Sdn Bhd v PK Fertilizers Sdn Bhd

In a unanimous decision delivered by a five-man panel, the Malaysian apex court shed light on important aspects of the law on salvage. The judgment of the Federal Court was delivered by Malaysia’s first Admiralty Court Judge, Nallini Pathmanathan FCJ.

The judgment re-stated the principles on general average and further discussed the following two key issues relating to the law of salvage:

  • When is a contract termed one for salvage rather than for towage or for carriage of goods; and
  • What is the standard of care in assessing whether a salvor was negligent in the course of salvage operations?
14 Feb 2020 | Malaysia

Shariah Banks Finally Enjoying the Benefits of Synergy

At the end of 2019, Indonesia's financial services authority,Otoritas Jasa Keuangan or “OJK”, issued Regulation No. 28 of 2019 on Synergy of Banks under One Ownership for the Development of Shariah Banking (“Regulation”). The Regulation aims to improve the efficiency of the national banking industry, and encourage cooperation between conventional banks and Shariah banks with an ownership relationship (through common controlling shareholder or where the conventional bank is the controlling shareholder of the Shariah bank).

Under the Regulation, the synergy between conventional and Shariah banks is to be reflected in resources sharing, including with respect to human resources, branch network and IT. While Shariah banking in Indonesia has grown steadily, their resources are still not on par with that of the conventional banking. By allowing Shariah banks to tap into the resources of their conventional counterparts, OJK hopes that Shariah banks would finally be able to compete on a level playing field.

12 Feb 2020 | Indonesia

Anti-Suit Injunctions – Novel Singapore Judgment on Third Party Reliance on Exclusive Forum Clauses
In Hai Jiang 1401 Pte. Ltd. v Singapore Technologies Marine Ltd. ("The Seven Champion") [2020] SGHC 20, the Singapore High Court determined several novel issues in granting an application for an anti-suit injunction against a contractual claim initiated by the Defendant in the United Arab Emirates. Notably, the Court considered whether an anti-suit injunction may be granted against foreign proceedings in breach of an arbitration or exclusive jurisdiction clause in the underlying contract, even if the anti-suit injunction applicant was not a contractual party to the arbitration or exclusive jurisdiction clause. The Court also clarified the applicable standard of proof for anti-suit injunction applications. The Plaintiff was successfully represented by Toh Kian Sing SC, V. Bala and Wu Junneng of Rajah & Tann Singapore LLP.
11 Feb 2020 | Singapore

Exemption from Qualifying Certificate Regime for Publicly Listed Housing Developers with Substantial Connection to Singapore
On 6 February 2020, the Ministry of Law and Singapore Land Authority, in a joint announcement, announced the introduction of an exemption from the existing Qualifying Certificate regime for publicly listed housing developers with substantial connection to Singapore when they acquire residential land from persons (other than the Singapore Government) for the purpose of development ("Exemption"). In this Update, we take a look at the effect of the Exemption, its criteria and relevant issues of applicability.
07 Feb 2020 | Singapore

Cambodia Labour Law Developments: 4th Quarter 2019

This Update provides a summary each of the following key labour law developments in Cambodia in the fourth quarter of 2019:

  • Deadline of Application for Foreign Manpower Quota for 2020 Moved to End of 2019
  • Law on Social Security Schemes
  • Paid Public Holidays in 2020
  • Lift of Ban on Occupations Performed by Self-employed Foreign Nationals
06 Feb 2020 | Cambodia

Developments in Dispute Resolution – A Review of 2019
In 2019, Singapore's legal framework has undergone further development as part of continuing efforts to keep apace with the modernisation and internationalisation of commercial disputes. Similarly, the Singapore courts have issued important decisions that reflect the continuing advancement of the law.

In this Client Update, we review the decisions and developments over the course of 2019, focusing on notable trends including the growing significance of Alternative Dispute Resolution, the facilitation of cross-border dispute resolution and adaptation to digitalisation. We also take a look at some of the decisions over the past year in the areas of Restructuring & Insolvency, Property Law, Contract Law, Shipping Law, Criminal Law and Construction Law.
05 Feb 2020 | Singapore

More Clarity Expected as OJK Issues New Rule on Bank's Corporate Actions

The Financial Services Authority (Otoritas Jasa Keuangan or "OJK") issued OJK Regulation No. 41/POJK.03/2019 on Merger, Consolidation, Acquisition, Integration and Conversion of Commercial Banks ("Regulation") at the end of last year. The Regulation revokes Bank Indonesia decrees No. 32/50/KEP/DIR on Requirements and Procedures to Purchase Shares of Banks and No. 32/51/KEP/DIR on Requirements and Procedures of the Merger, Consolidation and Acquisition of Banks.

The Regulation stipulates that OJK will govern the process and procedure of merger, consolidation, acquisition, integration and conversion (collectively, "corporate actions") of commercial banks.

04 Feb 2020 | Indonesia