LEX LOCI 2016

LEX LOCI 2016 The UKSLSS Annual Legal Journal

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PRESIDENT ’S MESSAGE

Dear Readers, It is my absolute privilege to be the President writing the President’s Message for the 11th Edition of Lex Loci, the annual law review of the United Kingdom Singapore Law Students’ Society. With more than a decade of top-notch student writing behind us, the 11th Edition of Lex Loci promises to be another feather in the Society’s cap.

Lex Loci occupies a unique position in the field of academic commentary. For 11 years now, our Society’s army of Chief Editors, Managing Editors, Feature Editors and Writers have been analysing, scrutinising and furthering Singapore jurisprudence from the grounding of a UK legal education. They infiltrate unfamiliar territory but like Army Rangers are somehow able to mysteriously provide an excellent snapshot of undulating legal terrain.

I cannot stress how difficult their job is. It is nothing like running a University Law Review, for the Editorial Committee hails from different universities, scattered across the United Kingdom. They hardly meet face to face. For the first time, they even had to work across time zones, for one of them was in Texas on exchange! Yet, the team behind this year’s Lex Loci

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has done even better than usual. Led ably by our Editor-in-Chief, David Lui, the Editorial Committee has definitely risen to the occasion. The articles are 100% student written, and top-notch. As President, I am extremely proud of the effort.

The most recent domestic and international issues have been put under the microscope. Chng Luey Chi, for example, in Role of International Law in Combating Transboundary Haze considers whether international environmental law in any form could potentially be an effective modality in regulating and mitigating the South East Asian transboundary haze issue. Familiar legal conundrums and arguments are also reconsidered in light of new developments. Hillary Chua’s re-examination of tortious ‘loss of chance’ liability in light of the notorious ‘IVF mix-up’ case of ACB v Thomson Medical Pte Ltd and others [2015] SGHC 9 comes highly recommended in this regard. Volunteering to assist with Lex Loci, thus, as you can see, is a serious commitment. An English law trained and UK-based student first forces himself to delve deep into a legal topic. He then considers that topic from a perspective 6000 miles away.

That is very good practice. I am certain internationalism remains the name of the game, at least in the

legal industry. It is true that consequences of the recent ‘Brexit’ vote remain unclear. District Judge Chay Yuen Fatt made the same point when sentencing Yang Kaiheng (founder of socio-political site The Real Singapore) for sedition, reminding us of how ‘Brexit’ brought with it uncertain and unpredictable ramifications. Nonetheless, cross-borders deals continue to define transactional legal practice and will continue to do so with the launch of the ASEAN Economic Community. Furthermore, Singapore continues to entrench itself as a premier regional and global dispute resolution hub with the success of the Singapore International Commercial Court and Singapore International Arbitration Centre. The skills that our Editorial Committee has honed while working on Lex Loci is the very same that are soon going to be pre-requisites for legal practice. I am glad that the Editorial Committee has a head start.

The Society is still responding to change. As is well known, our family took a hit last year, with 8 of our Member Universities being delisted as Overseas Scheduled Universities. Arguably, the words used against us were even more hurtful, for we were seen as contributing to a ‘glut’ or ‘oversupply’ and thus causing ‘problems’. Our argument remains simple. In school, we remain as diligent purveyors of the law. The legal profession will continue to require individuals to analyse and provide good counsel, and we will keep supplying the profession with excellent future solicitors and advocates.

Nonetheless, we have also had to act. For example, we are aware that Singapore continues to see a shortage of community lawyers. That is, family and criminal lawyers. We decided to attempt to kill two birds with one stone. This year, we launched an initiative that partnered with the Community Justice Centre, based in the Singaporean State Courts. The CJC-UKSLSS Court Friends Programme will give our members a solid introduction to both the State and Family Courts, where they will get to see the workings of our Justice System from the inside. We hope the programme encourages plugging the ‘community lawyer shortage’ while mitigating potential access to justice concerns.

The response to the Programme was highly encouraging, with there being five applications for each place on the Programme. Competition was fierce and I have much optimism for the future of our joint effort with

the Community Justice Centre.

The above three paragraphs can essentially sum up what this Society is about. We are all based in the United Kingdom, during which our ties to home do not cease but instead strengthen. Being in a dynamic legal tradition in the United Kingdom also encourages our staunch internationalism and infectious optimism. Even with us being in difficult and undulating times, I remain confident that each of us has a bright future ahead.

With that, I want to wish all readers a happy read.

Read in Lex Loci what interests you, but if you are anything like me, you are likely to read this wonderful publication from cover to cover. I also hope that after reading the quality of these articles, you would consider contributing to the 12th Edition of Lex Loci. That is certainly what I have in mind after my term of office as President ends.

It is also time for me to show my appreciation. I would like to thank Sunil Sudheesan, Diana Ngiam and Sarjit Singh Gill for contributing their time and thoughts to Lex Loci by giving interviews. Your work has allowed readers to gain insight into various aspects of the profession, something not often available within the four walls of law school. I also wish to extend my heartfelt appreciation to Senior Judge and former Chief Justice Chan Sek Keong, who as the Society’s Patron continues in retirement to provide sharp advice and magnanimous guidance. Additionally, I would like to thank Justice Quentin Loh for taking the time to share his experience, insight and wisdom with us at this year’s Singapore Legal Forum. Lastly, thanks are in order for you, the reader. The Society has been supported wholeheartedly for the last 18 years of its existence by people like you. It has been my absolute honour and privilege serving you as President, and I wish you all the best in your legal education and future journey.

Yours sincerely, Aakash Sardana President of the United Kingdom Singapore Law Students’ Society

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EDITORIAL FOREWORD

It is with great pleasure that the editorial committee and I present to you Lex Loci 2016. This year’s publication marks the 11th edition of our society’s annual legal journal, and I have never been prouder of how far we have come.

Each academic year brings with it a new set of seemingly impossible challenges. I do not shy away from the view that it has been a gruelling year for the Editorial Committee – this year more so than others. Rather than simply pooling all our efforts for a singular publication every August, the committee has been stretched and pulled in a myriad of directions throughout the year; plugging away at bolstering our society’s online presence as well as augmenting the quality of weekly emails.

A distinct example would be the “UKSLSS Spyglass” initiative that was launched in January this year. As an augmentation to our society’s Weekly Legal Updates, Spyglass took the form of a two-page spread containing various links to legally related news articles from across the web. The spread included categories such as Politics and Law, Jurisprudence, The European Union, Family law, Regulation of Financial Markets, as well as Commercial Awareness. Admittedly, piecing together legal news in order to construct Spyglass every single

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week of the academic year was no small feat, and this is due in part to the commitment and dexterity of the Editorial Committee. I am heartened by the positive feedback we’ve received from our members as well as professionals in the legal industry who appreciate the breadth that Spyglass covers. The study of law is never about rote learning, it demands a mind that is constantly making connections with the world around us – Spyglass is therefore a platform that helps us to see legal issues and questions in the everyday news. As such, it is my hope that the incoming Editorial Committee will continue this stalwart initiative.

Another initiative that demanded our energies was lexloci.sg. The online branch of our committee, led adeptly by the Vice Chief Editor, Tan Ee Hsien, was kept busy producing legal content on a fortnightly basis for the website. Their content mostly took the form of insights into practice areas and general advice for law students. Indeed, rather than being a one-off production house that only prints during August, the entire committee has truly been the society’s workhorse in producing content for our members all year round.

Turning to the actual publication in print, it has always been a challenge to rise above the usual, run off the mill articles. I am proud that this year’s publica-

tion consists of a select number of articles, which yet again demonstrates the tenacity and brilliance of our members: Their willingness to step out of the customary legal education and into the fore of academic discourse, typifies the aspiration of law as an experiential journey. Jonathan Koh in “The Necessity of Empirical Data in Family Law-Making” exemplifies this quality.

There he contextualises the inevitability of empirical data in purposeful law-making, and advertently questions the validity of our law that is so often value-laden. Another article worth mentioning is “Contextualising Constitutions” by Mary-Rose Lin, a first year law student whose emphatic writing style may cause you to mistake her for a certain Public Law professor.

Only the best of us can take Public Law and make it pithily relevant. Mary-Rose Lin does just that as she locates our constitution within Singapore’s autochthonous jurisprudence.

Finally, I would like to extend my heartfelt appreciation to the editorial committee, without whom this legal journal would not have been possible. It has been a joy editing and pouring through pages of academic commentary with you.

As Aakash has already elucidated, the autodidactic demands of writing for Lex Loci cannot be overstated. Our writers have once again proven that the spirit of academia is alive and well; living 6000 miles away does not stop us from being passionate about the laws of our land.

David Lui Editor-in-Chief

We stand on the shoulders of giants; and like Esther Lim and Kok Weng Keong before us, it is now time for a new batch of editors to take over this special committee. I am confident that Lex Loci will continue to stay true to its roots as a liberal legal journal tempered with a healthy dose of Singaporean pragmatism.

Only through purposeful discourse can we experience law as the discipline that it should be.

MAN AGIN G EDITO R IA L C O M M IT T EE

Ho Sheng Yung (Managing Editor), David Lui (Editor-in-Chief ), Eva Teh (Managing Editor), Jonathan Tan (Managing Editor), [not in picture] Tan Ee Hsien (Vice Chief Editor)

[above, from left]

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EDITORIAL COMMITTEE

[top row from left] Mary-Rose Lin, Jonathan Koh, Ian Lam, Bryan Kuah, Tara Puri (Deputy Editors) [second row, from left] Kang Su-Lin, Chng Luey Chi, Mark Fok, Valerie Tan, Hazel Wong, Amanda Han (Deputy Editors) [third row, from left] Ho Sheng Yung (Managing Editor),

David Lui (Editor-in-Chief ), Eva Teh (Managing Editor), Jonathan Tan (Managing Editor) [not in picture] Tan

Ee Hsien (Vice Chief Editor), Charlotte Ng, Hazel Wong, Hillary Chua, Rishikeesh Wijaya, Joel Wong, Ammani Mathivanan (Deputy Editors)

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EXECUTIVE COMMITTEE

[top row from left] David

Lui (Editor-in-Chief ), Daniel Tan (Professional and Academic Director), Tan Yu Song (Public Relations Director), Danica Gan (Marketing Director), [botton row from left] Clara Yeo (General Secretary), Aakash Sardana (President), Koh Shang Hsuen (Vice President), Kristin Hoo (Finance Director)

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CONTENTS LAW AND SOCIETY - 14 Contextualising Constitutions: The Balance of Power in the UK and Singapore Mary-Rose Lin, University of Bristol - 22 Should the Singapore Constitution be Abolished Kang Su-Lin, University of Bristol

- 28 Role of International Law in Combating transboundary Haze Chng Luey Chi, London School of Economics and Political Science

- 34 Privilege against Self-Incrimination: A Comparative Assessment Chng Luey Chi, London School of Economics and Political Science

- 40 Re-examining Tortious ‘Loss of Chance’ in Light of ACB v Thomson Medical Pte Ltd and Others [2015 Hillary Chua, King’s College London

- 46 The Necessity of Empirical Data in Family Law-making Jonathan Koh, Univesity College London

- 52 ASEAN and the EU: Movement towards Greater Integration?

Ammani Mathivanan, University of Exeter

- 58 Can UNCLOS Save the Day? A Review of the Arbitration Decision on the South China Sea Jonathan Tan, University College London

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LAW AND COMMERCE - 66 Should Singapore Consider Regulating Corporate Social Responsibility following the 2008 Financial Crisis?

Eva Teh, University of Leeds

- 78 Investor-State Dispute Settlement in the Trans-Pacific Partnership: Parajudicial or Prejudicial Jonathan Koh, University of College London

- 86 Private Sector Corruption - A New Dawn in Sentencing?

Rishikeesh Wijaya, King’s College London

- 94 Promissory Estoppel in Singapore: Time to be used as a ‘Sword’?

Rishikeesh Wijaya, King’s College London

- 100 Prest v. Petrodel - The Way Forward for Veil Piercing?

Kang Su-Lin, University of Bristol

- 106 Keeping International Commercial Arbitration on top of its Game: Judicial Developments in Singapore Tara Puri, University of Bristol

FEATURES - 114 Criminal Law in Singapore: An Interview with two of Singapore’s Leading Criminal Lawyers Ho Sheng Yung, University College London

- 120 Singapore’s Legal Industry and Future: An Employer’s Perspective Joel Wong, University College London

- 126 Women in International Law Ammani Mathivanan, University of Exeter

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CONTEXTUALISING CONSTITUTIONS T H E B A L A N C E O F P OW E R I N T H E U K A N D S I N G A P O R E

by Mary-Rose Lin I. INTRODUCTION This article seeks to evaluate the balance of state power in the United Kingdom (UK) and Singapore and account for both the difference and, it will be argued, increasing convergence of the two state models. First, it is important to establish the spectrum that this article will utilise in evaluating the two states. At one end of the spectrum exists a legal constitution.

This is explained by Adam Tomkins as “one which imagines that the principal means, and the principal institution, through which the government is held to account is the law and the court-room”.1 This means that the balance of state

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power is shifted in favour of the judiciary. At the opposite end of the spectrum is the political constitution, where the government is held to constitutional account by Parliament and political processes.2 This, on the other hand, means that the balance of state power is such that the legislative branch has the ultimate say in the state. These distinctions exist due to the separation of powers doctrine that both states subscribe to— where the executive is responsible for implementing laws; the legislature is responsible for passing laws; and the judiciary is responsible for interpreting laws— which creates a structure where the different branches of 19

Adam Tomkins, Public Law (Oxford University Press 2003)

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ibid 18

is held to constitutional account via political means and political institutions. However, it has been argued that recent developments have seen the UK move toward a legal constitution— it will be argued that although the UK has indeed moved toward a more legal constitution in the past few decades, the extent to which it has moved is that of a small step rather than a large leap, such that its Constitution remains one that lies on the political end of our spectrum.

The UK has moved toward a ‘legal’ Constitution as domestic courts have become better equipped to keep the executive from infringing upon human rights through judicial review. Since 1984 after Lord Diplock put forward the three traditional grounds for judicial review,4 the courts expanded judicial review by developing common law rights.

For example, Leech5 established a common law right of unimpeded access to court. This draws further bounds to keep the executive within. The courts’ endeavours were bolstered by the Human Rights Act (HRA) 1998— the law became more certain as Convention rights are codified, and now UK courts could directly enforce them.6 Instead of Leech, the right to “a fair and public hearing” in Article 6(1) is enforceable against the executive. Thus, with more means available to the courts to hold the government to account, the UK has moved toward a ‘legal’ Constitution. However, the courts took two steps forward but one step back.

Source: Singapore Supreme Court

the state act as balances against one another. This article would utilise the said spectrum as the basis for evaluation of the UK and Singaporean constitutions. This is because constitutions are neither wholly legal nor political, and indeed Tomkins rightly argues that “the political and the legal of the constitution can and should be mixed”.3 II. THE UK’S POSITION Secondly, this article will now address the relative position of the UK Constitution on the abovementioned spectrum.

Prima facie, the doctrine of Parliamentary sovereignty and the uncodified nature of the UK Constitution renders it on the political end of the constitutional spectrum, as the executive’s exercise of state power is governed by constitutional conventions and Acts of Parliament (which are not entrenched in a single codified document and possess no higher legal status than regular Acts detailing speed limits on the highway), such that the government

3

A. Tomkins, ‘What’s Left of the Political Constitution?’

(2013) 14 German Law Journal 2275, 2292

This is clearly illustrated in Smith.7 Despite the Court of Appeal ruling that executive action will be afforded stricter scrutiny in human rights cases, dismissal of homosexual soldiers was still held reasonable;8 but the European Court of Human Rights (ECtHR) later ruled that Articles 8 and, more importantly, 13 (the right to an effective remedy) were infringed,9 essentially compelling UK courts to do a better job of holding the executive to account. The courts then incorporated the ECtHR’s proportionality ground into judicial review via Daly.10 Although the courts took this step on their own, it is undeniable that the ECtHR’s ruling, and the HRA requiring them to take into account ECtHR rulings,11 at least influenced their decision. Also, the courts later developed principles of deference to the executive based on reasons of lack of competence12 and democracy,13 leaving

4 5

ibid 172

R v Secretary of State for the Home Department, ex parte Leech [1994] QB 198 (CA)

6

J.A.G. Griffith, ‘The Brave New World of Sir John Laws’ [2000] 63(2) The Modern Law Review 159, 171

7 8 9 10

R v Ministry of Defence, ex parte Smith [1996] QB 517 (CA)

11 12

Human Rights Act 1998, s 2(1)(a)

ibid 518 Smith and Grady v United Kingdom (2000) 29 EHRR 493

R (Daly) v Secretary of State for the Home Department [2001] UKHL 26, [2001] 2 AC 532 R (Farrakhan) v Secretary of State for the Home Department [2002] EWCA Civ 606, [2002] QB 1391

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R (Hurley) v Secretary of State for Business, Innovation and Skills [2012] EWHC 201 (Admin), [2012] HRLR 13

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the job to Parliament instead. Additionally, the courts’ wider interpretation of standing in judicial review as “sufficient interest”,14 rather than the ECtHR’s “victim” requirement,15 allows claims from interest groups with associational16 and public interest17 standing. This allows courts to hear expert evidence18 and improves their “fault-line” of lack of competence19 (two steps forward). However, they then rely on a “pseudo-political”20 process to hold the executive to account (one step back toward a ‘political’ Constitution).

Therefore, the UK has inched rather than leaped toward a ‘legal’ Constitution, and it remains mainly ‘political’.

Laws LJ distinguished ‘constitutional’ statutes, such as the HRA, from ‘ordinary’ statutes,21 ruling that without express language stating otherwise, courts will assume it is Parliament’s will that Convention rights are not infringed, and interpret statutes accordingly to hold the government’s actions unlawful.22 For example, in Evans,23 Lord Neuberger ruled the statute in question24 as “fall[ing] far short of being “crystal clear” in saying… the executive can override the decision of a court because he disagrees with it”,25 and so held the Attorney-General’s actions unlawful.

However, although these rulings carry the force of the rule of law, the executive is not restrained by the courts, but rather refrained from going against them due to potential political backlash.26 A “fault-line” of courts is their rulings’ lack of potency,27 as “rights without affordable remedies are empty”.28 In Belmarsh,29 Parliament repealed the

14 15 16

Senior Courts Act 1981, s 31(3)(a) European Convention on Human Rights, art 34

R v HM Inspectorate of Pollution, ex parte Greenpeace (No 2) [1994] 4 All ER 329

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R v Secretary of State for Foreign and Commonwealth Affairs, ex parte World Development Movement Ltd [1995] 1 WLR 386

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Joanna Miles, ‘Standing in a Multi-Layered Constitution’ in Nicholas Bamforth and Peter Leyland (eds), Public Law in a MultiLayered Constitution (Hart Publishing 2003) 417

The UK has also moved toward a ‘legal’ Constitution as domestic courts now hold the executive to their obligations under international law to a greater degree. For example, as a member, the UK is obliged to enforce European Union (EU) law supremacy.39 In 1991, Factortame II40 demonstrated that UK courts could temporarily disapply statutes incompatible with EU law, and EOC41 later showed that they could even permanently disregard incompatible statutes. Thus, the courts have become empowered to ensure that government complies with EU law.42 However, the significance of this should not be overstated as academics disagree over how this empowerment occurred.

Wade43 attributes it to a judicial revolution— the courts

30 31

Anti-terrorism, Crime and Security Act 2001, pt 4

Mark Elliott, ‘An introduction to public law – by way of the Belmarsh Prison case’ (Public Law for Everyone, 10 May 2013) <http:// publiclawforeveryone.com/2013/05/10/an-introduction-to-public-lawby-way-of-the-belmarsh-prison-case/> accessed 19 December 2015

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32

20

33 34 35

Chester and McGeoch [42] (Lord Mance SCJ)

36 37 38

Human Rights Act, s 4(2)

39 40

Case 6/64 Flaminio Costa v ENEL [1964] ECR 585

J.A.G. Griffith, ‘The Common Law and the Political Constitution’ (2001) 117 LQR 65 Mark Elliott and Robert Thomas, ‘Judicial Review—Scope, Procedures, and Remedies’ in Public Law (Oxford University Press 2014) 230

21

Thoburn v Sunderland City Council [2002] EWHC 195 (Admin), [2003] QB 151 [62] (Laws LJ)

22 23

ibid [63] (Laws LJ)

24 25 26

Freedom of Information Act 2000, s 53

27

Adam Tomkins, Public Law (Oxford University Press 2003)

ER 395

R (Evans) v Attorney General [2015] UKSC 21, [2015] 4 All

Evans [58] (Lord Neuberger)

J.A.G. Griffith, The Politics of the Judiciary (5th edn, Fontana Press 1997) 342 208

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R (Chester) v Secretary of State for Justice; McGeoch v The Lord President of the Council [2013] UKSC 63, [2014] AC 271 Hirst v the United Kingdom (No 2) (2006) 42 EHHR 41

Alexander Horne and Isobel White, ‘Prisoners’ Voting Rights (2005 to May 2015)’ (House of Commons Library, Parliament and Constitution Centre, SN/PC/01764, 2015) 50

AC 262

ibid s 4(6)(a) R (Jackson) v Attorney-General [2005] UKHL 56, [2006] 1

R v Secretary of State for Transport, ex parte Factortame Ltd (No 2) [1991] 1 AC 603 (HL)

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R v Secretary of State for Employment, ex parte Equal Opportunities Commission [1995] 1 AC 1 (HL)

J.A.G. Griffith, ‘The Brave New World of Sir John Laws’ [2000] 63(2) The Modern Law Review 159, 172

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A and X v Secretary of State for the Home Department [2004] UKHL 56, [2005] 2 AC 68

H.W.R. Wade, ‘Sovereignty: Revolution or Evolution?’

(1996) 117 Law Quarterly Review 568

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offending section30 after the House of Lords’ declaration of incompatibility, but did so in response to political pressure, stemming from public opinion and the probability of ECtHR intervention.31 Similarly, in Chester and McGeoch,32 Lord Mance concluded that “it [was] now therefore for Parliament as the democratically elected legislature to complete its consideration of the position”33 following Hirst,34 and indeed the executive was ultimately kept in check by Parliament, who caved under the ECtHR’s political pressure and is currently debating the Convicted Prisoners Voting Bill 2015-16.35 It should be noted that the HRA only allows courts to issue declarations,36 rather than disapply, primary legislation incompatible with the Convention, which would remain enforceable.37 The question of whether courts can overrule incompatible primary legislation if Parliament uses express language will be discussed later with regards to dicta in Jackson,38 but whilst the UK has moved toward a ‘legal’ Constitution, it has inched its way.

Hilaire Barnett, Constitutional and Administrative Law (9th edn, Routledge 2011) 175

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renounced Parliament and pledged themselves to the Court of Justice of the EU, creating a new legal order where the courts are supreme (‘legal’ Constitution). This is unlikely44 as the courts themselves, and Laws LJ, explain it as a product of the ‘new view’ of Parliamentary sovereignty— the courts assume Parliament’s will is to hold the executive to their international law obligations, referencing the European Communities Act 1972, unless it expressly legislates otherwise. This was Lord Bridge’s reasoning in Factortame II itself.45 Laws argues that “the limits which for the time being it sets to the power of Parliament are at the grace of Parliament itself ”46 and Parliament remains supreme (‘political’ Constitution). However, this is rather artificial and Craig’s,47 and Allan’s,48 third model of “regard[ing] decisions about supremacy as being based on arguments of legal principle the content of which can and will vary across time”49 is a more accurate explanation of the current state of the Constitution. Although still largely ‘political’, the UK has moved toward a ‘legal’ Constitution via a “principled legal revolution”50 as the courts have shifted towards a substantive conception of the rule of law— preventing human rights infringement51 by the executive, and ensuring compliance with international law.52 This is significant because just as the courts acknowledge Parliamentary sovereignty, the rule of law carries weight in politics53— it is recognised,54 and the independence of the judiciary55 and tribunals56 reinforced. The uncodified nature of the UK Constitution renders it flexible and moulded by both the courts and Parliament,57 albeit recent developments have inched the UK toward a ‘legal’ Constitution. Thus,

44

Keith Syrett, The Foundations of Public Law (Palgrave Macmillan 2011) 121

45 46 47

Factortame (No 2) 658-659 John Laws, ‘Law and Democracy’ [1995] Public Law 72, 89

Paul Craig, ‘Britain in the European Union’ in Jeffrey Jowell, Dawn Oliver and Colm O’Cinneide (eds), The Changing Constitution (8th end, Oxford University Press 2015) 123

48

T.R.S. Allan, ‘Parliamentary Sovereignty: Law, Politics, and Revolution’ (1997) 113 LQR 443

49

Paul Craig, ‘Britain in the European Union’ in Jeffrey Jowell, Dawn Oliver and Colm O’Cinneide (eds), The Changing Constitution (8th end, Oxford University Press 2015) 123

50 51

ibid

Paul P. Craig, ‘Formal and Substantive Conceptions of the Rule of Law: An Analytical Framework’ [1997] Public Law 467, 478

52

Lord Bingham, ‘The Rule of Law’ [2007] Cambridge Law Journal 67, 81

53

Martin Loughlin, ‘Constitutional Law: the Third Order of the Political’ in Nicholas Bamforth and Peter Leyland (eds), Public Law in a MultiLayered Constitution (Hart Publishing 2003) 51

54 55 56 57

Constitutional Reform Act 2005, s 1 ibid s 3 Tribunals, Courts and Enforcement Act 2007, s 1 and pt 2

Graham Gee and Gregoire C.N. Webber, ‘What is a political constitution?’ (2010) 30(2) Oxford Journal of Legal Studies 273, 292

“clashes” between the two are only indicative of a healthy Constitution58 as it evolves in response to changes such as the UK’s EU membership. Referring back to Jackson, Lady Hale commented that “the courts… might even reject any attempt to subvert the rule of law by removing governmental action affecting the rights of the individual from all judicial scrutiny”.59 It is this dialogue between the courts and Parliament when keeping the executive in check that is crucial, such that the courts can overrule primary legislation, if ever Parliament expressly legislates to abolish judicial review60— not unlike Parliament protecting its legislative supremacy in Section 18 of the EU Act. Barring this exception, the UK Constitution remains largely political.

Over the past three decades, Parliament has also expanded its hold over the executive through new legislation and consultations. For example, Parliament’s EU Act 2011 prevents ministers from ratifying treaties increasing EU competences without Parliamentary approval or a referendum.61 The Parliamentary Ombudsman published Principles of Good Administration in 2007 as guidelines for the executive to avoid maladministration in the first place; the courts only react to cases brought before them.62 Parliament also reformed the select committee system to render it independent of executive control.63 Parliament eradicated its “fault-line” of lack of ownership of the rules determining individual ministerial responsibility by passing the Resolutions of March 1997,64 instead of leaving it purely up to the Prime Minister to draft his Ministerial Code. Implementation of Code of Practice on Access to Government Information 1994 required government to be more forthcoming when Parliament requests information for scrutiny65 (alleviated Parliament’s “fault-line” of the government’s lack of openness).66 The UK merely inched toward a ‘legal’ Constitution but “the political constitution is alive and well”.67 If we had to describe the position of the UK constitution on our constitutional spectrum, it would be described as still occupying a position on the political end of the spectrum, albeit its position has shifted towards the legal end such that it is now closer to the mid-point of

58

J.A.G. Griffith, ‘The Political Constitution’ [1979] 42(1) The Modern Law Review 1, 20

59 60

Jackson [159] (Baroness Hale)

61 62

European Union Act 2011, ss 2-4 and 6

63

Adam Tomkins, Public Law (Oxford University Press 2003)

64 65 66 67

ibid 158

Alison Young, ‘R (Evans) v Attorney General [2015] UKSC 21 – the Anisminic of the 21st Century?’ (UK Constitutional Law Association, 31 Mar 2015) <http://ukconstitutionallaw. org/2015/03/31/alison-young-r-evans-v-attorney-general-2015-uksc21-the-anisminic-of-the-21st-century/> accessed 21 December 2015 J.A.G. Griffith, ‘The Common Law and the Political Constitution’ (2001) 117 LQR 42, 64-65 167-168

ibid 156 ibid 152 ibid 169

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the spectrum.

III. SINGAPORE’S POSITION Thirdly, this article will now address the relative position of the Singapore Constitution on the abovementioned spectrum. Unlike the UK, the starting point that needs to be noted about the Singapore Constitution is that it is codified in a single document, the Constitution of the Republic of Singapore. This Constitution is supreme,68 with the judiciary acting as the guardian of the Constitution. Thus, the courts have the ultimate say on whether laws passed by Parliament or their execution by the executive is unconstitutional and hence void in any way. At the outset, Singapore lies on the legal end of our constitutional spectrum. However, it will be argued that on a finer analysis, Singapore, whilst generally lying on the legal end of the constitutional spectrum, specifically occupies a position rather close to the mid-point of this spectrum— the executive can ultimately be held to constitutional account via judicial review, only more often than not its actions are kept in check by political means and institutions and the courts are reluctant to conduct a proportionality assessment.

It has often been said that the mere number of judicial review cases in Singapore illustrates the judiciary’s failure in actively holding the government to constitutional account and that thus the constitution is shifted in favour of Parliament and the executive having the final say over state matters (political constitution). This has been described as part of a “dual state construct”,69 where Singapore “matches the ‘law’ of the liberal ‘West’ in the commercial arena while repressing civil and political individual rights”.70 Singapore’s legal system is extremely well-regarded, but also equally criticised in terms of its human rights records. In 2015, Singapore ranked 9th globally in the World Justice Project Rule of Law Index but only 28th for the protection of fundamental rights.71 However, the whole point of this article is to contextualise and account for the fundamental differences between, specifically, the UK and Singapore, and it is arguably unhelpful to utilise the same benchmark of a Western conception of the rule of law across different states. The small number of judicial review cases in Singapore could also be said to be indicative of good governance, such that judicial review is hardly necessary at all, but that when necessary, the judiciary has the final say, and the constitution

68 69

Art 4 Constitution of the Republic of Singapore

Cameron Sim, ‘The Singapore Chill: Political Defamation and the Normalisation of a Static Rule of Law’ (2011) 20 Pac. Rim L. and Pol’y J. 319, 322

70

Jothie Rajah, Authoritarian Rule of Law: Legislation, Discourse and Legitimacy in Singapore (Cambridge University Press 2012) 23

71

Mark D. Agrast, Juan Carlos Botero and Alejandro Ponce, ‘World Justice Project Rule of Law Index 2015’ (World Justice Project) <http://worldjusticeproject.org/sites/default/files/roli_2015_0.pdf> accessed 19 December 2015

18

is still on the legal end of our spectrum. This point will be further elaborated on when we compare and account for the fundamental differences between the UK and Singaporean Constitution in Part IV. Nonetheless, the Singapore Constitution admittedly tilts toward the political end of our constitutional spectrum as the courts often presume the constitutionality of executive action— it is assumed that cost-benefit analysis and policy considerations have already been debated in Parliament and within the executive before the political branches decided to act in the way that they did, thus the judiciary defers to Parliament as to the constitutionality of most executive decisions.

Some academics have gone so far as to say that in practice, elements of the parliamentary sovereignty doctrine may hold sway.72 This view has arisen from the courts’ rulings on cases involving sensitive issues such as national security and freedom of speech. Chan Hiang Leng Colin73 involved the Minister for Information and the Arts deregistering the Singapore Congregation of Jehovah’s Witnesses as a government-recognised society and banning works published by the Watch Tower Bible and Tract Society after Jehovah’s Witnesses refused, inter alia, to perform national service. Article 15(4) of the Constitution prescribes limits to the right to freedom of religion, such that it “does not authorise any act contrary to any general law relating to public order, public health or morality”. The courts presumed the constitutionality of government measures and the burden of proof lay on the claimants to establish that the government acted ultra vires by infringing upon their right to freedom of religion. The High Court ruled that the claimants’ actions prejudiced national security and hence public order, and as such they left it to the government’s discretion on what measures would be appropriate to remedy this matter. This is because subjecting executive decisions to a proportionality assessment risks that the outcome of the decision “hinges on the court’s view of the reasonableness of the law in question, and requires the court to intrude into the legislative sphere of Parliament as well as engage in policy making”,74 breaching the separation of powers. The Court ruled that it was not necessary for them to rule on the proportionality of the government’s response and that as the executive’s response was not entirely irrational, it did not infringe upon the Constitution. Dow Jones Publishing75 reinforced this, arguing in the alternative that even if the right to freedom of expression included the right to receive

72

Jaclyn Ling-Chien Neo and Yvonne C L Lee, ‘Constitutional Supremacy: Still a Little Dicey?’ in Li-ann Thio and Kevin Y L Tan (eds), Evolution of a Revolution: Forty Years of the Singapore Constitution (Routledge-Cavendish 2009)

73

Chan Hiang Leng Colin v Minister for Information and the Arts [1994] SGHC 207

74

v PP [2009] SGCA 64 [80]

75

1308

Yong Vui Kong

Dow Jones Publishing Co (Asia) Inc v A-G [1989] 1 WLR

information, the Minister did not impose a blanket ban on the Asian Wall Street Journal, and the claimant had failed to establish his ground of proportionality for judicial review as the 400 copies allowed to be distributed was an arbitrary figure which could not be deemed disproportionate.

The courts’ approach is to presume the constitutionality of executive action, and the burden of proof lies on the claimant to adduce compelling evidence to the contrary. This is because the courts have read the Constitution literally76 so as to preclude a strict requirement to perform proportionality assessments in judicial review. For example, Article 14(2) states that “Parliament may by law impose... such restrictions as it considers necessary or [even just] expedient in the interest of... public order” (emphasis my own). The courts’ interpretation is such that as long as the executive’s action falls within the wide remit of public order interest, then the action is presumed, and in most cases, concluded to be constitutional— it might be noted this approach bears resemblance to the UK’s traditional ground of Wednesbury unreasonableness, which has been largely discredited by the ECtHR in Smith. This contributes to the allusion that once a decision can be classified as an issue involving the interest of public order, and that the claimant fails to prove that the measure was “Wednesbury unreasonable” (which sets a very high threshold), the matter is non-justiciable and the courts are powerless in the face of executive discretion. It has been said that the courts’ deference to the executive once the issue for judicial review is in the scope of the power conferred on the Executive by the Legislature makes for a lack of substantive review. However, this is a mistaken belief.

It must be conceded that the courts’ approach has conferred on Parliament “an extremely wide discretionary power and remit that permits a multifarious and multifaceted approach towards achieving any of the purposes specified in Art 14(2) of the Constitution… [This is such that t] he presumption of legislative constitutionality will not be lightly displaced”.77 However, this approach is not inherently problematic, as “should judges defer to the executive, they must do so for properly considered reasons, rather than a blanket preclusion of review just because the decision falls within a certain sphere of public law” such as that of national security.78 Judicial deference to Parliament and the executive is also often appropriate in most cases involving sensitive matters such as that of national security as courts recognise the political branches of the state as having both

76

Jack Tsen-Ta Lee, ‘According to the Spirit and not to the Letter: Proportionality and the Singapore Constitution’ (2014) 8(3) Vienna Journal on International Constitutional Law 276–304 <http:// ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=3268&context=sol_ research> accessed 27 December 2015

77

216 [49]

78

Chee Siok Chin v Minister for Home Affairs [2005] SGHC

Daniel Tan, ‘An Analysis of Substantive Review in Singaporean Administrative Law’ (2013) 25 SAcLJ 296 <http://www. sal.org.sg/digitallibrary/Lists/SAL%20Journal/Attachments/631/ (2013)%2025%20SAcLJ%20296-324%20(Daniel%20Tan).pdf> accessed 27 December 2015 [70]

the necessary expertise and overarching view of the big picture as well as the democratic mandate of the electorate.

This is the judiciary’s “fault-line” of competence as alluded to earlier in the context of the UK. The recent Tan Seet Eng79 case saw the Court rule that the appellant’s 2-year detention without trial on allegations of match-fixing overseas was unconstitutional, as his alleged offences did not fall into the remit of prejudicing “public safety, peace and good order in Singapore” as in the Criminal Law (Temporary Provisions) Act. This was such that the Court did not attempt a proportionality review as to whether Tan’s detention without trial was a necessary and least intrusive measure which the executive could have implemented to protect the public safety, peace and good order in Singapore, instead ruling that the executive’s actions were simply ultra vires. In that case, the Court also emphasised that “the question of the scope of the power conferred on the Executive by the Legislature is centrally one for the Judiciary”. Furthermore, in Chan Hiang Leng Colin, whilst the Court of Appeal rejected proportionality as a ground for judicial review per se, the court explained that it did so because proportionality as a ground was “not well established”— this did not preclude the courts from ever assessing the proportionality of government actions, and the option remains open for the courts to adopt a proportionality test. Therefore, the courts do have the final say when it comes to the constitutionality of executive action, however, it merely tilts towards the political end of our spectrum as more often than not, the courts recognise their lack of democratic legitimacy and accountability, and hence defer to Parliament and the executive when it comes to sensitive issues such as national security.

The key question that needs to be considered at this point is whether there exists a basic structure of the Singaporean state implicit in the Constitution such that even the courts cannot compromise on this. This would put Singapore more towards the legal end of the spectrum. Calvin Liang and Sarah Shi have suggested that the basic structure doctrine consists of both the legality principle and the separation of powers principle, following the line of cases from Chng Suan Tze and Yong Vui Kong to Vellama in 2013.80 However, observing the ambiguity regarding cases involving sensitive issues and the presumption of the courts, it will be observed that the rule of law in Singapore can only be agreed to have a procedural rather than substantive conception at this point.

This article now considers the separation of powers doctrine. Here ambiguity besets it as well. Examples such as the adaptation of the Presidential role to one of an elected rather than Ceremonial nature as well as the implementation of the NCMP scheme via amending the Constitution illustrate that a certain extent of change to the structure

79 80

Tan Seet Eng v Attorney-General [2015] SGCA 59

Calvin Liang and Sarah Shi, ’The Constitution of Our Constitution: Vindication of the Basic Structure Doctrine’ (Law Gazette) <http://www.lawgazette.com.sg/2014-08/1104.htm> accessed 23 December 2015

19

and organisation of the branches of state is allowed for.

Only fundamental changes such as the exclusion of judicial review, which is protected by Art 93 of the Constitution, would be deemed as going too far, as was rightly argued

by Oliver with respect to the UK. Further, it needs to be pointed out that as with the changing context of society, there may be entrenched features of the Constitution that could be potentially amended to avoid “elevating our constitution drafters to the status of demigods”.81 This links to the observation that our Constitution is also subject to the political climate at a particular time, and this introduces some flexibility to Singapore’s codified constitution, such that we see a convergence with the UK model whose uncodified constitution allows it to be more flexible in order to evolve to the current needs and moods of society. This point will be further discussed below.

However, this demonstrates that the separation of powers doctrine is of little substantive guidance in judicial review.

Thus, the existence of the basic structure doctrine is pragmatically speaking of limited usefulness due to its ambiguity,82 thus often courts presume the constitutionality of executive decisions unless such doctrines are fundamentally breached. “In short, the authors have rightly identified the Legality Principle and the separation of powers as key constitutional principles, but these principles may well play out in such a way as to suggest that the Singapore Constitution is not only a legal document, but also a political one.”83 Therefore, Singapore, although lying on the legal end of our constitutional spectrum, lies close to the mid-point as the courts’ rulings are heavily influenced by political institutions and processes as, unlike the UK, the courts adopt only a narrow conception of the rule of law.

IV. COMPARISONS AND EXPLANATIONS OF THE TWO MODELS This article now moves on to consider the similarities and differences between the UK and Singaporean Constitutions and their corresponding balances of state power struck.

It will be observed that, particularly in light of the UK Constitution moving even closer towards the mid-point of our spectrum, both the UK and Singapore constitutions find themselves not too far off from the mid-point, albeit on opposite ends on our spectrum. Indeed, there is an increasing convergence between the two models. However, they still lie on opposite ends of our constitutional spectrum and this article will now address the reasons for the fundamental difference.

81

Jaclyn L Neo, ’Should Constitutional Principles be Eternal?’ (Singapore Public Law, 6 October 2014) < https:// singaporepubliclaw.com/2014/10/06/should-constitutional-principlesbe-eternal/#more-330> accessed 28 December 2015

82

Benjamin Joshua Ong, ‘The Basic Structure Doctrine in Singapore: A Reply’ (Law Gazette) <http://www.lawgazette.com. sg/2014-11/1179.htm> accessed 30 December 2015

83 20

ibid

Firstly, as it has already been alluded to, the UK courts have now adopted a more substantive conception of the rule of law whilst Singaporean courts have adopted a procedural conception of the rule of law. This means that in Singapore, unlike the UK which has subscribed to and actively enforced their EU and ECHR obligations, especially with the lack of specific content in the basic structure doctrine, courts have fewer standards to hold the government to and thus fewer judicial review cases arise in the first place. The responsibility for encouraging good government originates from within the executive themselves and the courts defer to government, who is accountable to the public, particularly on matters of sensitive nature which the executive would be better placed to deal with.

Secondly, this derives from the fact that UK courts, as part of the welfare state which organises common provision of services to citizens such as healthcare through the publiclyfunded National Health Service and legal aid (such that more regulation and protection of citizens’ rights against the state is needed and hence a more active public law scene), and which has adopted specific legislation in order to give effect to the likes of the ECHR, are more willing to hold the executive to account, especially in human rights cases, because the balance of values in the UK is such that individual autonomy and human rights are valued over communal rights. This could be attributed to the fact that Europe and Great Britain emerged scarred by the horrors of the Second World War. On the other hand, Singapore courts are aware that as a society constructed on Confucian values, communal rights are valued over individual rights. Again, part of this is attributed to history as Singapore emerged as a newly-independent state following the Second World War and the tense atmosphere in the region was exacerbated by the threat of communism and the resulting superpower involvement during the Cold War, such that young states had to demonstrate the strength of national leadership and individual rights were left in the corner somewhat whilst the state worked to ensure national security and economic growth in light of their uncertain futures.

Thirdly, this links to why the UK courts are more active in judicial review. The UK courts recognise the doctrine of parliamentary sovereignty. Thus they are more willing to push boundaries because Parliament can always legislate otherwise in order to overturn the effects of a particularly unsatisfactory ruling. Conversely, Singapore courts are aware of the balance of state power being overwhelmingly in their favour. Hence whilst they are not restrained

by Parliament, they refrain from exercising their power too widely84 as, it has been noted, the executive and Parliament have both increased expertise and a strong democratic mandate as compared to the legally trained and unelected judges. Whilst they have the ultimate say over the constitutionality of executive action, they choose to presume the constitutionality of executive decisions. The

84

cf Jack Tsen-Ta Lee (n 76) 302

fact that the Singapore courts do not exercise their power against the other branches of state does not allude that they do not possess such powers— the reality is often that they recognise the extent of state power vested in themselves by the constitution, and are thus cautious in its use. This article focuses on placing the two countries on the established spectrum— whether or not they are too cautious, or the UK courts too bold, is outside of this article’s discussion, but it will be said that there are risks in both (and dissatisfaction with the HRA 1998 has fuelled many Brexit debates). Thus this article only seeks to contextualise the current balances and to account for their similarities and differences.

V. CONCLUSION In conclusion, this article aims to evaluate where the UK and Singapore constitutions stand on our constitutional spectrum, not where they should stand- that would be decided by the public and the political parties whose manifestos and values they vote into Parliament and thus the executive. This article has argued that there has been a convergence between the two state models, and that they find themselves at the opposite ends of the spectrum by virtue of the fundamental difference in the balances of societal values which each state subscribes to. This can be summed up with reference to the ‘red light’ and ‘green light’ approach put forward by Chan CJ. The “red-light” approach of the courts would be such that they are more combative and at odds with the executive, functioning as a rigorous check and balance of the use of state power. The “greenlight” approach, on the other hand, would be such that the courts and the other two branches of the state operate at greater distance and with greater independence from each other, where each is left to fulfil its function without excessive checks, and this lends to expediency. The UK as a welfare state is inclined more towards the former, and Singapore, as a small state with a constant pressure to punch above its weight, finds itself more inclined toward the latter as its benefits of efficiency accords with the state’s priorities of constant adaptation to the changing dynamics of the international arena and economic growth. Singapore finds itself leaning rather far towards a political constitution in practice, but “this is… not a bad thing: while enduringness is a strength of a constitution, inflexibility can be just as much a weakness”.85

85

cf Benjamin Joshua Ong (n 82)

21

SHOULD THE SINGAPORE CONSTITUTION BE ABOLISHED?

by Kang Su-Lin

Source: Simon Rozner

22

A constitution is often said to be the heart of a nation.

Usually written after great political change,1 it codifies the fundamental principles that the state is founded on and henceforth governed by. Its core purpose of “(channelling) and (constraining) power and to help realise the fundamental values of a polity »2 is thus achieved by being the source and limit of government power, as well as the protection of fundamental liberties.

The role of a constitution within a state is varied. In the United States (US), for example, the courts hold the constitution in high regard – taking a more active, almost zealous, role in striking down legislation and decisions that pose a threat to the principles of the constitution. Recent cases such as Obergefell v. Hodges3 and King v. Burwell4 are examples of the important role of the US constitution. In the former case, the Supreme Court legalised gay marriage, ruling that a ban on gay marriage was an infringement of the fundamental rights protected in the constitution; in the latter case, the Court was given the power to decide if Obamacare was constitutional. The constitution is thus central to the US judiciary, and the courts see themselves as guardians of the rights and principles that the constitution confers.

At the other end of the spectrum, the United Kingdom (UK) lacks a codified constitution. However, it is accepted that there are a range of sources that constitute the UK’s uncodified constitution. While these include some written documents such as the Magna Carta, the Bill of Rights 1689, and more recently the Human Rights Act 1998 (HRA), it also takes into account political conventions and constitutional principles like the rule of law, parliamentary supremacy and the separation of powers. With government proposals for a British Bill of Rights – which would arguably have a function similar to that of a constitution – it seems as though the age-old debate as to whether the UK needs a written constitution is gaining prominence again.

Against this global backdrop, it is apt that the role of Singapore Constitution should be re-examined. Compared to other constitutional countries, the constitution does not seem to play as active a role in Singapore, with the courts hesitant to rule on constitutional issues. This begs the question as to the utility of the Singapore Constitution, and whether Singapore would be better off with an uncodified constitution, similar to that of the United Kingdom.

While this may seem to be a plausible alternative, it must be acknowledged that not only is each country unique, a

1

Sir Stephen Laws ‘There are substantial and unacceptable risks in moving to a legal constitution from our current political one’ <http://blogs.lse.ac.uk/constitutionuk/2014/09/15/there-aresubstantial-and-unacceptable-risks-in-moving-to-a-legal-constitutionfrom-our-current-political-one/> accessed 25 July 2016

2

Thio Li-Ann, ‘Between Apology and Apogee, Autochthony: The ‘rule of law’ beyond the rules of law in Singapore’ [2012] Singapore Journal of Legal Studies 269-297

3 4

Obergefell v. Hodges 576 U.S. (2015) King v. Burwell 576 U.S. (2015)

constitution is but more than a legal document. Thus, the Singapore Constitution should not be abolished due to the important role it plays in the larger Singapore context.

I. UNITED KINGDOM First, the constitutional arrangement of the UK must be examined so as to provide an alternative model to that of Singapore. With regards to the twin functions of a constitution – protecting rights and providing the framework by which a nation is governed – the UK draws upon various sources. A fundamental principle underpinning the UK system that the UK rests upon is the separation of powers doctrine. This delineates the powers of the three branches of government – the legislature, executive and judiciary. In so doing, the more political branches, such as the legislature and executive, deal with issues of policy and administrative matters, while the courts adjudicate on disputes brought before it. Yet, underlying the structure of government is the Diceyan conception of parliamentary sovereignty, where ‘[p]arliament has, under the English constitution, the right to make or unmake any law whatever, and further, that no person or body is recognized by the law of England as having a right to override or set aside the legislation of Parliament’.5 This makes the UK constitution arguably a political one, governed by politics.

With regards to protecting fundamental rights, the UK did not have a list of protected rights until recently. The European Convention of Human Rights and various international law documents such as the UN Declaration of Human Rights were often invoked, but did not have binding effect. With the HRA, rights were codified and binding on all. While this opened the floodgates of rights claims, the HRA at the same time conferred greater powers to the courts to protect these rights. These can be seen in Section 3 where the courts have a duty to interpret all legislation in a convention complaint manner, as well as Section 4 which gives the courts power to issue a declaration of incompatibility. However, all these powers are still subject to the doctrine of parliamentary supremacy.

II. SINGAPORE While Singapore, on the other hand, has a written constitution, it is similar in practice to the workings of the UK’s political constitution. With parliamentary supremacy being the guiding principle, courts often defer decisions surrounding policy to the political branches – the legislature and executive6. Also, a distinction must be drawn at this point between the constitutional systems of the UK and Singapore. While both the UK and Singapore adopt the

5

A.V. Dicey, Introduction to the Study of the Law of the Constitution (10th edn Macmillan & Co Ltd, London 1962)

6

SMU Apolitical, ‘The Singapore Constitution: A Brief Introduction’ <http://ink.library.smu.edu.sg/cgi/viewcontent. cgi?article=1000&context=studentpub> accessed 25 July 2016

23

separation of powers doctrine, Singapore adopts a less pure distinction, with an overlap between the legislature and executive7. Thus, there are arguably two main organs of the state – the parliament/executive and the judiciary.

Judicial Review In Singapore, constitutional rights are principally protected through judicial review. Judicial review, hinging on the principle of legality,8 is thus the “principle engine(s) of the rule of law”9 in Singapore. Unlike the UK, however, the judiciary’s power and basis for judicial review is derived from Article 93 of the Constitution, which vests judicial power in the Supreme Court10. The court is able to declare an “Act of the Singapore parliament invalid for inconsistency with the Singapore Constitution and, hence, null and void.”11 A decision would thus be inconsistent with the Constitution in two main ways: by overstepping the separation of powers laid out in the Constitution (ultra vires), or by infringing on fundamental liberties as enshrined in Part IV. The former usually deals with decisions by the executive, while the latter is raised with regards to both an executive power and an Act of Parliament.

The ultra vires doctrine shall first be explored. The principle of the separation of powers is implicit in the Constitution, with Part V, VI and VII laying out the duties and powers of the executive, legislature and judiciary respectively.

Although the Westminster system, as adopted in Singapore, only allows for a partial separation of powers,12 the principle that each branch acts as a check and balance for the other two still holds. In Chan Hiang Leng Colin v. Public Prosecutor,13 Chief Justice Yong commented that the court’s responsibility was to ensure that “the provisions of the Constitution are observed… and (it) has a duty to declare invalid any exercise of power, legislative and executive, which exceeds the limits of the power conferred by the Constitution, or which contravenes any prohibition which the Constitution provides.”14 The ultra vires doctrine, with its roots in the United States Supreme Court case of

7

Kevin Tan, The Singapore Legal System (2nd edn reprint Singapore University Press, Singapore 2003) 78

Furthermore, Part IV of the Constitution gives constitutional status to a list of fundamental liberties. Any decision that might infringe on these fundamental liberties is thus subject to judicial review.19 These include, but are not exhaustive of: personal liberty,20 protection against retrospective criminal laws,21 equality,22 freedom of speech, assembly and associations, freedom of religion,23 and education rights.24 While some of these rights are uncontroversial, such as the right to education, other rights have been raised before the courts and are thus subject to judicial interpretation.

III. DEFERENCE TO PUBLIC BRANCHES Ultra Vires With the rise of hybrid public-private bodies, the courts have refined the scope of the ultra vires principle in order to better apply it to the practical intricacies of the situation.

Instead of looking to the source of the power, the courts now pay more attention to the particular decision made, and instead determine if the body was acting on public powers when making that decision. Arguably, this could restrict the scope of the ultra vires theory. In Public Service Commission v. Lai Swee Lin Linda,25 while it was not disputed that courts should look to the source of power exercised by the body, the Court of Appeal explained that this was not always decisive.

Instead, “much depends on the circumstance”.26 In this case, the termination of a legal officer’s employment after an extended probationary period was held to be contractual in nature, rather than a matter of public law. As the body was

9

15 16 17 18

10

19

8

525 [86]

Chng Suan Tze v. Minister for Home Affairs [1988] 2 SLR(R)

Chan Sek Keong, ‘Judicial Review – From Angst to Empathy’ (2010) 22 Sing Ac LJ 469 [472] Thio Li-Ann, ‘Lex Rex or Rex Lex? Competing Conceptions of the Rule of Law in Singapore’ [2002] 20 UCLA Pacific Basin Law Journal 1

Chan Hiang Leng Colin v. Public Prosecutior [1994] 3SLR(R)

14

(n 13) [50]

26

12

Associate Professor Gerard Carney ,‘Separation of Powers in the Westminster System’ <http://www.parliament.qld.gov.au/aspg/ papers/930913.pdf> accessed 25 July 2016 209, 231

ACC v. CIT [2010] 1 SLR 273 [21] Attorney-General v. Fulham Corporation [1921] 1 Ch 440

Chen Zhida, ‘The Nature of Judicial Review in Singapore’ (2013) 31 SLR 79

13

Mohammad Faizal bin Sabtu v. Public Prosecutor [2012] 4 SLR 947, 958 [14]

Marbury v. Madison 5 U.S. 137 (1803)

Wong Yip Pui v. Housing and Development Board [19831984] SLR(R) 739

20 21 22 23 24 25

11

24

Marbury v. Madison,15 is “concerned not with the merits of a decision but the process by which the decision has been made.”16 In practice, this means that each body is conferred powers by Parliament, and can only act within the scope of those powers or “reasonably incidental” to them.17 This was seen implicitly in the High Court case of Wong Yip Pui v.

Housing and Development Board.18 In this case, the court had ruled that the plaintiff was not an authorised occupier based on the definition in Section 2(1) of the Act in question, and thus the HDB’s action was illegal.

Constitution of Singapore, Article 9(1) (n 19) Article 11 (n 19) Article 12 (n 19) Article 15 (n 19) Article 16

Public Service Commission v. Lai Swee Lin Linda [2001] 1 SLR(R) 133 (n 24) [44]

not exercising statutory powers when making the particular decision, the case could not be judicially reviewed. This was affirmed in UDL Marine (Singapore) Pte Ltd v. Jurong Town Corp,27 where the court again examined the source of power of the particular transaction, rather than the body involved.

Thus, even though a public body may be acting in a way that seems to exceed its powers, if that particular decision is not made on the basis of its public powers, it is not deemed to be ultra vires. This arguably limits the scope of the ultra vires doctrine. Yet, wider implications of this principle must be considered. In Linda Lai, the court referred to the United Kingdom case of Datafin.28 In this case, the Court was willing to subject the Panel, a self-regulating body wielding immense de facto power, to judicial review. While some may use this to argue that judicial review may be extended in certain situations where a private body is performing a public function as well, it must be acknowledged that this principle has not been made explicit in Singapore yet.

Thio Li-Ann argues that this approach - where the courts not only look at whether a specific body performs a public law function, but also to the specific decision in question and its consequences – cannot be justified in terms of the ultra vires theory. Instead, its “justification is better sought in an acknowledgement of the independent constitutional role of the courts to prevent the abuse of public power, whether de jure or de facto, a shift from the control of conferred powers, to the need to control power and protect the interests of individuals within the legal order”.29 This may thus arguably be a better and more effective method of fulfilling the constitutional role of providing a framework for governmental powers.

Presumption of Constitutionality With regards to holding the executive accountable, the court often gives the executive wide discretionary powers.

Although clearly stating that this discretionary power cannot override a fundamental liberty enshrined in the Constitution,30 it has to first be shown that this fundamental liberty was breached. The Supreme Court holds strongly to the presumption of constitutionality – when seeking judicial review, the burden of proof is on the claimant to show that the decision or Act is unconstitutional. This burden is often very difficult to discharge, as “it will usually be necessary for the person challenging the law to adduce some material or factual evidence to show that it was enacted arbitrarily or had operated arbitrarily”.31 For example, in Ramalingam

27

SGHC 45

UDL Marine (Singapore) Pte Ltd v. Jurong Town Corp [2011]

28

R v. Panel on Take-overs and Mergers, ex parte Datafin plc [1987] QB 815

29

Thio Li-Ann, ‘The Theory and Practice of Judicial Review of Administrative Action in Singapore: Trends and Perspectives’ SAL Conference 2011 – Singapore Law Developments (2006-2010)

30

Ramalingam Ravinthran v. Attorney-General [2012] SGCA 2

31

Public Prosecutor v. Taw Cheng Kong [1998] 2 SLR(R) 489

[41]

Ravinthran v. AG, the Court gave effect to the constitutional standing of the office of Attorney-General, ruling that “given the constitutional status of the Attorney-General, the courts should presume that he acts in the public interest as the Public Prosecutor, and that he acts in accordance with the law when exercising his prosecutorial power.”32 Thus, it may be argued that the Court is hesitant to adjudicate on the legality of executive decisions and legislative Acts.

IV. GENERAL CONSTITUTIONAL APPROACH Dworkin argues that there are two ways of constitutional interpretation: the moral reading and orginalism. The moral reading of a constitution gives effect to what the framers intended to say, while originalism insists that the constitution should be read in accordance with what the framers expected their language to do. Traditionally, the Singapore courts have adopted the latter approach, taking a more “literal, amoral” interpretation of the Constitution,33 often refraining from concluding that public policy infringes on fundamental rights. This could be seen in the case of Jabar v. PP, where the Court of Appeal, adopting a positivist approach, stated that as long as the law was “validly passed

by Parliament», “the court is not concerned with whether it is also fair, just as reasonable as well».34 The courts have also sought to construe these rights narrowly. In Rajeevan Edakalavan,35 Yong CJ refused to extend the Article 9(3) right to legal counsel to a right to be informed of one’s constitutional right to counsel. Similarly, in the case of Lim Meng Suang, the court held that the Article 9(1) right to liberty “refers only to the personal liberty of a person from unlawful incarceration or detention”, does not extend to “a limited right to privacy and personal autonomy allowing a person to enjoy and express affection and love towards another human being.”36 However, there are suggestions that the judiciary might be taking a more purposive interpretation in some cases. In Yong Vui Kong,37 the Court of Appeal said that the court would not qualify as law “legislation directed at securing the conviction of particular known individuals… or legislation of so absurd or arbitrary a nature that it could not possibly have been contemplated by our constitutional framers as being “law” when they crafted the constitutional provisions protecting fundamental liberties”. Yet, Dr Jack Lee says that “it is likely that this principle will only be applied in exceptional circumstances”,38 and thus cannot be indicative

32 33

(n 30) [46]

34 35 36

Jabar v. PP [1995] 1 SLR 617

37 38

Yong Vui Kong v. Public Prosecutor [2010] SGCA 20

Thio Li-Ann and Kevin Tan, Evolution of a Revolution: Forty Years of the Singapore Constitution (Routledge-Cavendish, Oxford 2009) Rajeevan Edakalavan v. Public Prosecutor [1998] 1SLR(R) 10

Lim Meng Suang and another v. Attorney-General and another appeal and another matter[2014] SGCA 53 Jack Tsen-Ta Lee ‘Protecting Human Rights: The Approach

25

of the current constitutional position.

V. REASONS The Separation of Powers and Parliamentary Supremacy Underlying the unwillingness of the courts to take a more active role as guardians of constitutional values is the judiciary’s respect for the twin principles of the separation of powers and parliamentary supremacy.

The courts are quick to rebut the assumption that deference of the courts to the legislature means that the courts are not upholding constitutional values. Instead, it is argued that their decisions are constitutional as the courts are giving effect to the doctrine of the separation of powers. In Phyllis Tan, Chan CJ applied the doctrine by explaining that “both organs have an equal status under the Constitution, and neither may interfere with each other’s functions or intrude into the powers of the other, subject only to the constitutional power of the court to prevent the prosecutorial power from being exercised unconstitutionally.”39 This point was further emphasized in the case of Lim Meng Suang, where the Court ruled that while the submissions were valid in their own right, they involved “extra-legal considerations and matters of social policy which were outside the remit of the court, and should, instead, have been canvassed in the legislative sphere.”40 It does seem that the Court sees its role as only adjudicating on the legality of a decision, instead of taking a substantive conception of what is ‘good’ law. This is further confirmed as the Court in Yong Vui Kong affirmed that it is “obliged to apply domestic laws in the event of any inconsistency with international law norms.”41 Thio Li-Ann and Kevin Tan rightly make the observation that “the courts seem more protective of executive interests than individual freedoms, manifesting a bureaucratic ethos out of joint with judicial impartiality and rights guardianship.”42 This is in line with the current position in the UK, where the traditional role of judges is to interpret the law,43 and also “to ascertain and give effect to the true meaning of what Parliament has said in the enactment to the construed”,44 with the courts having no power to declare of the Singapore Courts’ <https://singaporepubliclaw.com/2015/03/11/ protecting-human-rights-singapore/#n8> accessed 25 July 2016

39

Law Society of Singapore v. Tan Guat Neo Phyllis [2008] 2 SLR 239 [144]

40 41 42 43 44

(n 36) [189] (n 37) [121] (n 33) 218 Duport Steels v. Sirs [1980] 1 WLR 142

R (on the application of Quintavalle) v. Secretary of State for Health [2003] 2 AC 687 [8]

26

invalid enacted laws.45 Yet, similar to Singapore, there have been some judges that have questioned this traditional literal approach, supporting instead the legal constitution. This is most clearly seen in the Jackson case, where Baroness Hale and Lord Hope notably questioned whether parliamentary supremacy was absolute, and instead envisioned a more active role of the courts in “(treating) with particular suspicion46 (and might even reject) any attempt to subvert the rule of law by removing governmental action affecting the rights of the individual from all judicial scrutiny”. However, judges in the UK are still divided as to the extent of their political role.47 Ultimately, as in both countries, there is no clear consensus as to how far the judiciary has shifted away from its traditional deferential approach, and it is thus unfair to make any preliminary statements that may suggest otherwise.

The Singapore Context Many who have analysed the Singapore legal system attribute it the underlying values of the government and society. Discretion must be applied when comparing different legal systems, especially within the unique context of “independent South-East Asian states with their quite different goals and priorities in national development.”48 The local conception of government by honourable men (junzi) was proposed in the government’s Shared Values command paper, where it was posited that “the concept of government by honourable men (junzi), who have a duty to do right for the people, and who have the trust and respect of the population, fits us better than the Western idea that a government should be given as limited powers as possible, and should always be treated with suspicion unless proven otherwise.”49 Thus, with the integrity of government prized, this serves to reinforce the idea that the government is competent and able to act in a constitutional manner.

VI. CONCLUSION On the surface, the Singapore Constitution has not played an active role in courts. However, this might instead be indicative that constitutional values are indeed being applied and thus there is no need to invoke the constitution. Upon closer examination into the workings of the state, it can be seen that the principles of the constitution are underlying and present. Furthermore, the constitution is merely one source of constitutional values, with other values – such as

45 46 47

Pickin v. British Railways Board [1974] UKHL 1 R (Jackson) v. Attornery General [2005] UKHL 56 [159]

Tom Mullen, ‘Reflections on Jackson v. Attorney General: Questioning Sovereignty’ (2007) 27 LS 1-25

48

Christine Chinkin, ‘Abuse of Discretion in Malaysia and Singapore’ in Harding, The Common Law in Singapore and Malaysia (Butterworths 1985, Singapore) 262

49

Singapore Government, Shared Values (White Paper) (Cmd. 1 of 1991) [41]

that of junzi – providing the guiding principles of the state.

This idea of ‘constitutional values’ – drawing upon more than one source – places Singapore’s constitutional framework more in line with the UK’s constitutional framework, rather than the US’s. Despite both countries having codified constitutions, the US’s constitution seems to be more determinative of the country’s core constitutional values.

On the other hand, Singapore’s constitutional framework is interestingly similar to that practiced in the UK. Precisely because its lacks an entrenched constitution, the UK is said to have a variety of constitutional sources; namely, the Human Rights Act 1998, the Magna Carta and the European Communities Act 1972.

Yet, comparing the UK and Singapore, the UK’s system seems more flexible. It is not only easier to change a state’s constitutional values through passing or amending statues, but it allows for better protection of constitutional values. Mark Elliot argues that in the UK, the extent of each constitutional source’s influence is policed by other constitutional measures. When one source’s ‘claim to constitutional fundamentality’ is more compelling than another, it is accorded greater status.50 Therefore, the core of a country’s constitutional values is safeguarded.

On the other hand, a constitution may have its advantages, as it could act as a last line of defence to unconstitutional actions of the state. Furthermore, even though the practical reality of both UK and Singapore’s constitutional order is the same, it may be argued that a country’s constitutional order has deeper symbolic meaning.

A country’s constitutional order cannot merely be seen through legal lenses, but other social factors, such as its role in a nation’s identity51 must be taken into account. Just as the proposal of a codified constitution in the UK would have significant symbolic importance, any amendment or repeal of the Singapore constitution would have immense symbolic meaning. Thus, despite the possibility that Singapore’s constitutional values may remain intact even without a constitution - as evidenced by UK’s constitutional framework – Singapore’s constitution holds deeper value and should not be abolished.

50

Mark Elliot, ‘Reflections on the HS2 case: a hierarchy of domestic constitutional norms and the qualified primacy of EU law’ <https://ukconstitutionallaw.org/2014/01/23/mark-elliot-reflectionson-the-hs2-case-a-hierarchy-of-domestic-constitutional-norms-and-thequalified-primacy-of-eu-law/> accessed 25 July 2016

51

Stephan Ortmann, ‘Singapore: the politics of inventing national identity’ 28(4) Journal of Current Southeast Asian Affairs 2346

27

ROLE OF INTERNATIONAL LAW IN COMBATING TRANSBOUNDARY HAZE

by Chng Luey Chi

International environmental law is an area of public international law marked by application of principles that have evolved in the environmental context. International environmental law is unique in its appeal to the “common good” of mankind, and to promote “harmony” and “cooperation” in international activities.1 This comes as no surprise given the problems international environmental law seeks to solve often have a communal element, such as overfishing or climate change. International environmental law has thus forged a distinct character for itself – it conceives itself as a mode of harmonization to deal with problems that transcend the individual that can only be dealt with on a cooperative basis.2 It is an international framework borne out of a genuine concern for the environment. Despite the centrality of its subject matter to the basic conditions of life, international environmental law is constantly regarded as a marginal body of law that exists primarily in the periphery.3

environmental law is examined in combating transboundary haze. The article will analyse the nature of the transboundary haze first, before exploring the architecture of international environmental law, noting its fragmented and contentious nature. The article will then explore whether Indonesia can be held to be legally responsible under international law for its actions, and if so, which relevant international environmental principles or instruments are applicable.

Beyond this, the article will critically evaluate the efficacy of international environmental law to effect changes and examine the various international legal mechanisms Singapore may choose to engage Indonesia.

It is against this backdrop that the role of international

The 2015 Southeast Asian Haze was an air pollution crisis affecting several countries in Southeast Asia. It is a result of forest fires due to illegal slash-and-burn practices on the Indonesian islands of Sumatra and Kalimantan. Combined with the dry conditions of the area, these fires spread rapidly, causing massive transboundary haze.

1

Stephen Humphreys, Human Rights And Climate Change (Cambridge University Press 2010).

2 3 28

Ibid.

Ibid.

I. SOUTHEAST ASIAN HAZE 2015 i) Causes of the Southeast Asian Haze 2015

Source: UNDP

Air quality reached hazardous levels in late September 2015 to a Pollution Standards Index (PSI) reading of 317 in Singapore, leading to the unprecedented closure of all primary and secondary schools on September 25.4 The haze deteriorated further, reaching a record high PSI reading of 341. The situation prompted the Singapore Sports Hub to suspend activities at all outdoor venues while major food chains such as McDonald’s halted delivery services.5 ii) Reactions to the transboundary haze While the laws of Indonesia forbid the use of fire to clear land, the illegal practice of slash-and-burn persists due to weak enforcement. According to a Riau Provincial Police spokesman, most fires are started at night in remote locations,

4

Luo Er Chan and Wai Kit Leong, ‘Schools To Close On Friday Due To Worsening Haze Situation: MOE’ Channel NewsAsia (2015) <http://www.channelnewsasia.com/news/singapore/schools-toclose-on/2147982.html> accessed 16 July 2016.

5

Min Kok Lee, ‘Haze In Singapore: A Problem Dating Back 40 Years’ The Straits Times (2015) <http://www.straitstimes.com/ singapore/environment/haze-in-singapore-a-problem-dating-back-40years> accessed 16 July 2016.

making it difficult to track down culprits.6 Additionally, corruption continues to fuel the haze with corporations that “take advantage of lax enforcement and murky regulations to continue clearing forests at an increasingly rapidly rate.”7 There have been varying political reactions to the haze: former president of Indonesia, Dr Susilo Bambang Yudhoyono, publicly apologized to Malaysia and Singapore for the harm and damage caused by the haze. Other leaders, however, have taken different stances. Indonesia’s VicePresident Jusuf Kalla rapped neighbouring countries for complaining about the haze and asked neighbouring states to be grateful for the clean air they enjoy for the rest of the year.8

6

Arshad A, ‘Indonesia Begins Cloud-Seeding To Fight Haze’ AFP News (2013) <https://sg.news.yahoo.com/indonesia-begins-cloudseeding-fight-haze-051337093.html> accessed 16 July 2016

7

Schonhardt S, “How corruption is fuelling the haze”, The Straits Times (25 June 2013) online: The Straits Times <http:// www.straitstimes.com/the-big-story/asia-report/opinion/story/howcorruption-fuelling-the-haze-20130625> accessed 16 July 2016

8

The Straits Times, ‘Indonesia’s Vice-President Jusuf Kalla Criticises Neighbours For Grumbling About Haze’ (2016) <http:// www.straitstimes.com/asia/se-asia/indonesias-vice-president-jusuf-kalla-

29

The Singapore government consistently offered Indonesia assistance to combat the haze. Preceding the dry season, Singapore offered Indonesia an ‘assistance package’ to combat haze on 3 June 2015. The offer was reiterated when the haze affected Singapore. Initially, Indonesia accepted the offer but rejected it subsequently. Only on 7 October 2015, after the haze had affected Singapore for over a month did Indonesia accept Singapore’s offers. iii) Understanding the haze crisis The protracted and complicated nature of the crisis is due to an unfortunate confluence of factors: that of the haze being a communal problem resulting from the domestic enforcement, or lack thereof, of a sovereign State, driven by financial interests, given the relatively low costs of slashand-burn. This occurs against the backdrop of a sensitive political climate with differing political interests. It should be noted that international environmental law ought not be regarded as the panacea to the haze crisis. It is but one of the many tools available to Southeast Asian states to deal with the crisis. That said, we should not understate the role of international environmental law, or international law in general, to deal with such problems. This will be later addressed in the article.

II. THE ARCHITECTURE AND PRINCIPLES OF INTERNATIONAL ENVIRONMENTAL LAW International environmental law is significantly less well developed than other areas of international law. There is no comprehensive global international environmental organization with competence over all environmental matters, such as the WTO over international trade issues.

It is made up of ‘soft law’ mostly: recommendations, principles and declarations that fall short of the status of ‘hard law’, such as those in treaty law.9 There is, for instance, no general customary or treaty law obligation on States to protect and preserve the environment. Most environmental treaties that exist are sectorial or regional. These treaties tend to concentrate on specific regulatory issues upon which States are ready to agree on, and do not impose a general obligation on all states to protect the environment. This is in part due to the piecemeal development of the subject.

Nevertheless, international environmental law contains principles that are well regarded, with some claim to some form of customary status and are mostly unchallenged.

III. RELEVANCE OF INTERNATIONAL ENVIRONMENTAL PRINCIPLES i) Permanent sovereignty over natural resources The permanent sovereignty over natural resources originates from the United Nations General Assembly Resolution 1803 (XVII), “Declaration on Permanent Sovereignty over Natural Resources” which grounded the right as a principle of international law. The principle emerged as a political claim of new states, many of which were recently decolonised, which demanded the right to participate in the development of their natural resources and the benefits accruing from the exploitation of these resources.12 The promotion of the principle was a result of the fear that their resources would continue to be exploited without conceding to them a fair and equitable share.

The UNGA Resolution 1803, rooted in state sovereignty, stipulates that states have the right to possess, use and dispose freely of any surface and subsurface natural resources, connected with their territory, and for this purpose they may not only regulate their economy but also nationalise or expropriate property, both of nations and foreigners.13 This therefore translates to Indonesia’s sovereign right to exploit its resources as it wishes.

The permanent sovereignty over natural resources, however, has been modified over the years with the emergence of international environmental law. The UNGA Resolution 37/7, which adopts the World Charter for Nature, is an instance of states incorporating conservation practices when conducting their activities within their rights. The 1992 Rio Declaration, likewise, makes reference to the need to incorporate environmental preservation in the development process, a key aim of the principle of permanent sovereignty over natural resources. Therefore, Indonesia’s right to exploit its resources may not be entirely unqualified. ii) Trail Smelter Dispute – No Harm rule

An important aspect of international environmental law is that in its attempt to regulate State behavior it encounters the “twin yet related obstacles of State sovereignty and permanent sovereignty over natural resources”.10 This relates

The right is further qualified by the ‘No Harm’ rule that emerges from the Trail Smelter Dispute. The dispute was a result of a claim brought against Canada by the United

criticises-neighbours-for-grumbling-about-haze> accessed 16 July 2016

International Law (4th edn, OUP 2014).

9

Stephen Humphreys, Human Rights And Climate Change (Cambridge University Press 2010).

10 30

to one of the primary organising principles in international law, that of State consent which stems from the sovereign right of each State. Relatedly, much of what international environment law attempts to manage is also related to development and economic interests as noted by the 1972 Stockholm Declaration that recognised the relationship between environmentalism and development.11

Catherine Regwell, ‘International Environmental Law,’,

11 12 13

Ibid.

Ibid.

Ibid.

States of America for fumes from a smelter plant crossing the border into the United States. The tribunal found that Canada was responsible for the environmental damage caused by the transboundary pollution, establishing the principle of international environmental law that activities in a state’s territory should not cause harm to other states.14 This principle can be positioned in the wider corpus of international environmental law. The principle has been integrated into a host of environmental conventions such as Principle 21 of the 1972 Stockholm Declaration of the United Nations Conference on Human Environment and the Rio Declaration. Furthermore, the principle enjoys customary international status as noted by the ICJ in the Gabčíkovo-Nagymaros Case where the ICJ stated that, “The existence of the general obligation of States to ensure that activities within their jurisdiction and control respect the environment of other States or of areas beyond national control is now part of the corpus of international law relating to the environment.”15 It is therefore undoubted that the No Harm principle enjoys some customary status in international law.

The argument therefore follows that while States are free to exploit their natural resources as they wish, the No Harm rule curtails this right to the extent that there is an obligation imposed on States not to allow their territory to be used in such a manner so as to cause significant harm to the territory of the other States. This means Indonesia has the responsibility to ensure that activities within its jurisdiction do not cause damage to areas beyond its national jurisdictions. In other words, Indonesia is likely to be seen as being legally responsible for the harm and damage caused to its neighbors.

However, some have disputed the relevance of the No Harm Rule. First, the Arbitration in 1941 required the Tribunal to decide on the issue of compensation. At that point, Canada had already affirmed its responsibility for the damage caused. Secondly, it could be argued the principle focuses on the particular incident: the pollution of US territory due to a Canadian smelter. These arguments, however, hold little weight. The numerous developments in the No Harm Rule since the 1941 arbitration – such as its affirmation by the ICJ in the Gabčíkovo-Nagymaros Case and integration in other environmental treaties – has led it to become an important principle in international environmental law. iii) Efficacy of international environmental principles The recognition of the No Harm rule as customary international law by the ICJ is significant for two reasons: first, customary international law is regarded as a source of law under Article 38(1) of the International Court of Justice and therefore elevates the status of the No Harm rule.

14 15

Ibid.

Secondly, and more significantly, customary international law is applicable to all states, unlike treaties, which only binds States party to them. In other words, save certain exceptions, the No Harm rule is applicable to all States.

It is important to note that this applies to a State’s international, not domestic, legal obligations. It is entirely possible that a State owes an international legal obligation that does not exist domestically. Whether the international legal obligation exists domestically depends on the reception of international law by the State. This is significant as it affects the right of citizens to bring a claim against their government for a failure to uphold a domestic legal obligation. That said, the No Harm Rule, as a customary international law, applies as an international legal obligation to all states. This means that states are able to bring a claim against Indonesia on the grounds of Indonesia’s breach of a customary international law.

However, this has to be approached cautiously for various reasons. Firstly, bringing a claim against another State may be perceived as an antagonistic and unwarranted decision.

Not only will it sour relations between States, it will also be contrary to the ASEAN way of managing affairs in ASEAN, which prioritizes dialogue over litigation. Secondly, the ICJ’s jurisdiction does not automatically extend to every contentious claim brought before it – there are a series of legal obstacles member states have to overcome before a case can be heard before the ICJ, such as obtaining the consent of both parties. Thirdly, the litigation might detract from current efforts to manage the problem. After all, what is required is a reform within the Indonesian forestry sector to encourage compliance with current rules. Any litigation before the ICJ will more likely than not impede any attempts by member states to assist Indonesia.

Even if the dispute is heard before the ICJ – whether through the consent of both parties or otherwise -, it is difficult to predict with any certainty how the ICJ will decide. The ICJ is entitled to reform or alter the legal question posed to facilitate its response or to clarify the issue. The ICJ has done so on numerous occasions, such as in its Advisory Opinion on Kosovo’s Declaration of Independence and its Advisory Opinion on Nuclear Weapons. This is in keeping with the ICJ’s settled practice of judicial economy, that of not developing jurisprudence further than required to settle the question of law it faces. This has typically occurred in face of politically contentious questions. Given the ICJ’s role as a neutral arbitrator that answers questions of international law, it is understandable why the ICJ might behave in such situations. This therefore suggests that the ICJ might not be the appropriate forum for such a difficult and multi-faceted dispute.

IV. RELEVANCE CONVENTIONS

OF

INTERNATIONAL

Ibid.

31

i) ASEAN Agreement on Transboundary Haze Pollution The Agreement is a legally binding environmental agreement in 2002 by all 10 ASEAN countries to reduce haze pollution in Southeast Asia. The Agreement was a response to the 1997 Southeast Asian Haze, which had an estimated cost of USD $9 billion, which was a result of land clearing via slash-and-burn for agricultural uses. As of 2004, all ten nations ratified the Agreement.16 The Agreement calls for haze to be mitigated through concerted national efforts and international co-operation in the context of sustainable development. The guiding principles of the Agreement, as contained in Article 3, call on parties, “in the spirit of solidarity and partnerships and in accordance with their respective needs, capabilities, and situations, strengthen co-operation and co-ordination to prevent and monitor transboundary haze pollution”.17 Furthermore, it is stated under the Vienna Convention on the Law of Treaties in Article 26 that “Every treaty in force is binding upon the parties to it and must be performed by them in good faith”. It is therefore clear that Indonesian bears a legal duty to prevent and monitor transboundary haze pollution under the ASEAN Haze Agreement.

The Agreement, however, is characteristically ASEAN in that it prioritises negotiation and consensus over conflict.

In Article 27 of the ASEAN Agreement, any disputes are to be settled “amicably by consultation or negotiation.” ii) Ramsar Convention Professor Tommy Koh and S. Jayakumar recently wrote in The Straits Times that the Ramsar Convention, also known as the Convention on Wetlands of International Importance, is an available avenue for Singapore to assist Indonesia given that “two-thirds of the fires in Indonesia occur on peat wetlands”. Indonesia, in fact, has the largest tropical peat wetlands in the world which are rich in biological diversity.

Singapore, by joining the Convention, would be able to assist Indonesia to preserve its wetlands.18 The Ramsar Convention aims to conserve and promote wise use of wetlands and their resources. This is therefore of direct relevance to Indonesia’s current predicament. It is noted that despite the conventions’ “rather unpromising beginnings” initially, “much has been accomplished”.19 The primary regulatory device is the listing of sites for protection that is then afforded such sites under national

law. Contracting parties are required to submit triennial reports on the implementation of treaty to the contracting parties, providing an opportunity for review of national implementation measures.

Once designated as such sites, Ramsar sites not only acquire protection under national law but also acquire recognition under international law as being significant for the international community as a whole. Failure to promote the conservation of wetlands on the list and their wise use may lead to a listing on the “Montreux Record of Ramsar sites requiring priority attention”20 established in 1990, which highlights threats to designated sites.

As Professor Tommy Koh and S. Jayakumar highlighted, developing countries might raise the argument that given it is their right to cut down their forests, they should therefore be compensated if they ought preserve them instead.21 This is itself remedied by the Ramsar Convention. The Small Grants Fund for Wetland Conservation and Wise Use, established in 1990, has the express purpose of facilitating compliance, along with other forms of technical assistance.

The Ramsar Advisory Mission was established as a technical assistance mechanism to provide further advice regarding the problems that have caused Montreux listing to be contemplated.

Given that Indonesia is currently party to the Ramsar Convention; Singapore, if party to the Convention, would be better placed via the Convention’s framework to assist Indonesia in preserving its peat lands. iii) Efficacy of international environmental conventions The ASEAN Agreement, while promising, adheres strongly to the ASEAN way – it accords great amount of respect to state sovereignty and refuses to empower parties from intervening. The consent of each state, even the state in which the fire is occurring, remains as the central organizing principle in the ASEAN agreement. Furthermore, there is a lack of accountability or legal mechanisms to enforce the agreement. In this sense, it appears the ASEAN agreement will make little difference.

The Ramsar Convention, on the other hand, provides a framework in which Member States will be able to assist Indonesia in managing the haze. The problem, however, is that this process likewise heavily depends on State consent.

Without Indonesia’s consent, there is little to nothing States can do through the Ramsar Convention.

16

Alan Khee-Jin Tan, “The ASEAN Agreement on Transboundary Haze Pollution: Prospects for Compliance and Effectiveness in Post-Suharto Indonesia” 13 (2005) NYU Envtl LJ 657

17

Tommy Koh and S Jayakumar, ‘The Haze, International Law And Global Cooperation’ The Straits Times (2015) <http://www. straitstimes.com/opinion/the-haze-international-law-and-globalcooperation> accessed 16 July 2016.

18 19 32

Ibid.

Ibid.

V. AN EVALUATION ENVIRONMENTAL LAW

20 21

Ibid.

Ibid.

OF

INTERNATIONAL

While there is no lack of international environmental law principles or treaties that speak against Indonesia’s actions, the primary deficiency seems to be that of compliance. This is not an unusual affliction of international law. In fact, it is one of the primary arguments raised against international law as a body of law in its inability to enforce or obtain compliance.

This argument, however, misconceives of international environmental law and international law in general. This article will argue that international law should not be thought of primarily as an extension of municipal legal systems on a global scale that is concerned with compliance. Instead, international law, including international environmental law, should be thought of more appropriately as a language and a tool to conceptualize the international political order.

The power and value of international law is not measured by its ability to bring about enforcement, but in its role as a preeminent language in which international affairs are discussed. The fact that States have acceded to speaking in the language of international law is significant in that language is constitutive of values, and the decision of States to choose to speak in the vocabulary of international law therefore suggests an acceptance of these values.

This demonstrates that the haze is not the result of the government of Indonesia’s singlehanded belligerence but a confluence of several complex factors. Even if there were a successful claim brought against Indonesia before the ICJ, it is hard to imagine a judgment by the World Court would somehow alter the internal dynamics of forestry management. Therefore, the value of international environment law is best appreciated by regarding it as a language to enforce a sense of duty, rather than through the compliance mechanism it offers.

This is likewise applicable to the haze problem. The value of customary international law is in providing member States with a vocabulary to address the haze problem, such that there is a common language which can be employed to enforce a sense of duty, or even shame States for failing.

The primary benefit of customary international law, therefore, should not be thought of in terms of bringing Indonesia before the ICJ, but in its provision of a common denominator to negotiate the Haze pollution. This argument likewise applies to the ASEAN agreement. While it lacks enforcement mechanisms, it is significant in that it is an “expression of the collective expectation among the ASEAN states for effective action to be taken to combat future forest and land fires”.22 At the very least, the Agreement’s provisions “encapsulate the expectations of the regional community”23 and therefore carries some moral force in enshrining an expectation. If anything, conceptualizing international environmental law as a shared language lends credence to Article 28 of the ASEAN Agreement that calls on States to negotiate and consult in cases of breach.24 The value of international environmental law should therefore not be understated in this context. As characterized

by Tan, the haze problem ought be understood “within the contexts of bureaucratic corruption, patronage politics, social injustice and the uncertainties by regional autonomy”.25

22

Alan Khee-Jin Tan, “The ASEAN Agreement on Transboundary Haze Pollution: Prospects for Compliance and Effectiveness in Post-Suharto Indonesia” 13 (2005) NYU Envtl LJ 657

23 24 25

Ibid.

Ibid.

Ibid.

33

PRIVILEGE AGAINST SELF-INCRIMINATION A C O M PA R AT I V E A S S E S S M E N T

by Chng Luey Chi

I. INTRODUCTION The privilege against self-incrimination refers to the right of the defendant or the suspect from being legally compelled to answer questions. It entitles the person in any legal proceeding to refuse to answer questions or produce documents that may incriminate him.1 It is important to distinguish legal compulsion from legal incentive. The former arises where a statute or an act intervenes to empower officials to require answering of questions, with the sanction of criminal penalties for refusal to do so.2 The latter, however, merely motivates and incentivizes the defendant or suspect to speak, but does not impose punishment for refusing to.

The privilege against self-incrimination in Singapore is formulated rather weakly â&#x20AC;&#x201C; it is not an entrenched constitutional right like in the United States of America as

1 2 34

I. H Dennis, The Law Of Evidence (Sweet & Maxwell 1999) I. H Dennis, The Law Of Evidence (Sweet & Maxwell 1999)

per the Fifth Amendment, nor is it formulated as strongly as in the United Kingdom where it stems from the European Convention of Human Rights Article 6(1), the right to a fair trial.

This article seeks to carry out a comparative assessment of the privilege in Singapore and the United Kingdom, explaining and analysing the standing of the privilege in each country. It will also attempt to position the privilege within the wider criminal procedural system, and provide reasons for the way privilege has been formulated. In these sections, the article will outline the difficult and contradictory position that afflicts the privilege against selfincrimination in both Singapore and the UK. The article will then attempt to explain the state of the privilege in both countries by examining the rationales that underlie the privilege against self-incrimination. It will argue that there is a lack of a convincing rationale for the privilege.

This is a fundamental deficit of the concept. Without a clear idea of what the purpose of the privilege is, it is difficult for

Source: tripwire

any legislation to formulate the scope of the privilege in a meaningful and purposive manner. This in turn leads to an ambiguity that is endemic to the privilege.

This article will focus on the privilege at the pre-trial stage, such as during police questioning, as opposed to during trial, where the defendant refuses to testify.

II. PRIVILEGE AGAINST SELF-INCRIMINATION IN SINGAPORE Under S22(1) of the Criminal Procedure Code,3 police officers have the power to compel anyone “who appears to be acquainted with any of the facts and circumstances of [a case under investigation] to appear before them”. The powers of the police extend to a person who is suspected of having committed the offences. They are further empowered under S22(2) of the Code to question and take statements from the person, who “shall be bound to state what he knows of the facts and circumstances of that case”. This, however, is qualified: the suspect does not have to provide information that might “expose him to a criminal charge, penalty or

forfeiture”.4 As noted by Hock, while the suspect may be able to exercise this right, it is overall relatively weak.

The leading case of PP v Mazlan bin Maidun5 further weakens the privilege against self-incrimination. In brief, the Court of Criminal Appeal held: 1) the accused did not have the right to be informed of his privilege; 2) the privilege was not a fundamental rule of natural justice and therefore does not qualify as a constitutional right under Article 9(1) of the Constitution which states that “no person shall be deprived of his life or personal liberty save in accordance with law”; 3) the fact that the police did not inform the person of the privilege prior to taking a statement from him under S22 does not in itself make the statement inadmissible at trial.

Of equal, or perhaps even greater significance is the Court’s affirmation of the voluntariness rule, a rule which has roots in the privilege against self-incrimination in Mazlan. The significance of this will be explained later on.

The article will focus on the first two findings of the Court and its discussion of the voluntariness role. It will demonstrate that the judgment dealt a strong blow against the privilege but more significantly, the Court’s affirmation

4 3

Ho Hock Lai, “The Privilege Against Self-Incrimination and the Right of Access to a Lawyer” (2013) 25 SAcLJ Cap 68, 2012 Rev Ed.

5

Public Prosecutor v Mazlan bin Maidun [1992] 3 SLR(R) 968

35

of the voluntariness rule presents an ambivalent and seemingly contradictory attitude towards the privilege.

More broadly, it will posit the treatment of the rule, as a whole, reflects a shift away from adversarial justice towards inquisitorial justice, and that this movement coheres with Hor’s suggestion that the Singapore criminal justice system appeals to Packer’s “criminal control” model.6 i) Accused does not have a further right to be informed of his privilege The Courts are right in Mazlan that the accused has no right to be informed of his privilege – S22 of the Criminal Procedure Code neither requires the police to inform the individual of such a privilege, nor does it confer on the accused a right to be told so. As argued by Hor, the Court cannot be faulted on a literal reading of S227. However, a more purposive interpretation of the section would suggest that the individual be informed of his privilege for it to have any meaning. It seems implausible that Parliament’s intention in conferring the privilege does not extend to imposing a duty to inform the individual of the existence of the privilege if there is to be any real substance to the privilege.

It is notable the law was different prior to amendments made to the Criminal Procedure Code in 1976. Prior the 1976 amendments, Schedule E prohibited questioning of persons in custody without giving them the standard caution.

The judge was also given the power to exclude statements in substantial non-compliance. However, Schedule E was repealed when the power to draw an adverse inference was introduced.8 More recently, in 2009, the Law Society called for the introduction of a legal requirement that the police inform the suspect whom they wish to question under S22 about his privilege against self-incrimination. However, there was no change in the law. ii) Privilege is not a fundamental rule of natural justice and does not qualify as a constitutional right under A9(1) of the Constitution The Privy Council in Ong Ah Chuan v PP9 introduced the concept of natural justice as a constitutional concept in Singapore under Article 9(1). The Court in Mazlan, however, argued that the privilege “has never been regarded as subsumed under the principles of natural justice” and that to view it as such would require “adventurous extrapolation”.

The Court did so on the basis that the privilege had “no explicit expression in the Constitution” and was “largely evidential in nature”.

While it may be true the privilege is not explicitly stated, there is no requirement that rules of natural justice must be explicitly stated to receive constitutional protection. If anything, the court’s role in Mazlan is precisely to decide whether the privilege is a fundamental rule of natural justice.

6

Michael Hor, “The Privilege Against Self-Incrimination and Fairness to the Accused” [1993] Singapore Journal of Legal Studies

7 8

Ibid.

9

Ong Ah Chuan v PP [1981] MLJ 64

Ho Hock Lai, “The Privilege Against Self-Incrimination and the Right of Access to a Lawyer” (2013) 25 SAcLJ

36

As noted by Hor, many natural justice principles are not explicitly stated in the Constitution either.10 Additionally, the evidential nature of the right ought not be regarded as an argument against the privilege being regarded as part of natural justice – the presumption of innocence, an undoubtedly “fundamental rule of natural justice”11 is “evidential” as well, as mentioned by Lord Diplock in Haw Tua Tau v PP. Beyond refuting the reasons provided by the courts, an argument can be made in favour of viewing the privilege as part of natural justice. The Privcy Council in Haw Tua Tau v PP argues at [50] that natural justice relates to fairness – Lord Diplock said legislature is free to enact whatever laws it thinks appropriate to regulate criminal procedure subject to the rule that “it must not be obviously unfair”. In light of this, it seems obvious that a fair trial would invariably require fair procedure, where the legitimate interests of both parties are protected. It would not be unreasonable for such a principle to extend to the interrogation process, where the accused ought be protected from the police relying on illegitimate devices to extract information, iii) Affirmation of the voluntariness rule The Court, at [142] to [144], turns their attention to the voluntariness rule: no statement by an accused is admissible in evidence unless it is a voluntary statement.12 The Court distinguishes the police not having to inform a person of his privilege from that of the police telling the suspect that he is bound to tell the truth without an accompanying reference to the privilege against self-incrimination. This, to the Court, would amount to an “inducement” within the voluntariness rule and so would render the evidence inadmissible. The Court based this argument on the fact that “it would be reasonable to assume that such an omission (to inform the accused of his privilege where he has been told he was bound to tell the truth) might have caused a person to say what he might not otherwise have said”.

The Court’s chosen justification for the voluntariness rule speaks in favour of the privilege against self-incrimination.

After all, the Court’s primary concern in the voluntariness rule is in protecting the accused’s choice to answer. The Court stated, “At least, we think a reasonable doubt could arise as to whether he would have said the same things if he had been informed that he was entitled to refrain from doing so.” If so, it seems odd the Court has weakened the privilege against self-incrimination significantly given the privilege aims to uphold the very principle it has chosen to affirm the voluntariness rule. iv) Evaluating and positioning the privilege against selfincrimination It is clear the privilege against self-incrimination is formulated weakly in Singapore. Yet the selfsame judgment dealing a blow against the privilege affirms the voluntariness

10

Michael Hor, “The Privilege Against Self-Incrimination and Fairness to the Accused” [1993] Singapore Journal of Legal Studies

11 12

Hwa Tua Tau v PP [1981] 2 MLJ 149

Dorcas Quek, ‘Concept of Voluntariness in the Law of Confessions’ (2005) 17 SAcLJ

rule that stems from the privilege against self-incrimination.

The privilege therefore occupies a discomforting position in Singapore’s criminal procedure as explained by Hor, in that it neither achieves the aim it sets out to achieve, nor do other criminal procedures adequately compensate it.

More significantly, it is possible to explain the Court’s treatment of the privilege by noting the shift of the criminal justice system away from adversarial justice to a more inquisitorial one, where the suspect is expected to cooperate and divulge what he knows before trial. The privilege is seen to be incompatible with effective investigation and prosecution of crime.13 The public interest in favour of efficient investigation and prosecution of crime outweighs the rights accorded to the suspect. This is unsurprising and in fact coheres with a wider narrative of the criminal justice system in Singapore14 – Goh, for instance, argues that the Singapore criminal system appeals to Packer’s “crime control” model, which maximizes the executive and administrative role of the police and prosecutor.15 A utilitarian calculus that aims to minimize inefficiencies such as time-consuming trial procedures undergirds the model. This stands in stark contrast to the United Kingdom’s treatment of the privilege against self-incrimination.

III. PRIVILEGE AGAINST SELF-INCRIMINATION IN THE UNITED KINGDOM The discussion on the privilege against self-incrimination in the United Kingdom will focus largely on the jurisprudence of the European Court of Human Rights. The treatment of the privilege in the United Kingdom is invariably tied up with the European Court’s treatment of the privilege since the inception of the Human Rights Act in 1998.

The privilege against self-incrimination is situated in Article 6(1) of the European Convention of Human Rights, the right to fair trial. Although the Convention does not expressly state the privilege against self-incrimination, it has been read into A6(1) by the European Courts in Saunders v UK16. The Courts in Saunders argue the privilege lies at “the heart of the notion of a fair procedure under Article 6” even though the privilege is not expressly stated in Article 6, unlike the Court of Criminal Appeal in the case of Mazlan which denied the right constitutional protection because it was not explicitly stated.

The privilege against self-incrimination in the UK is undeniably stronger than that in Singapore. The police have a legal duty to inform the accused of his privilege against self-incrimination. The Police and Criminal Evidence Act 198417 requires the police to caution a person whom there are grounds to suspect of an offence before the police questions him. A failure to administer this caution would result in

13

Michael Hor, “The Privilege Against Self-Incrimination and Fairness to the Accused” [1993] Singapore Journal of Legal Studies

14 15

Ibid.

16 17

Saunders v UK (1996) 23 EHRR 313

Goh Yi Han, “Law” (first published 2015, Institute of Policy Studies (Singapore); Straits Times Press) Police and Criminal Justice Act 1984

the statement being excluded under S78 of the Police and Criminal Evidence Act 1984 as it would adversely affect the fairness of the proceedings. This stands in clear opposition to the privilege against self-incrimination in Singapore, which denies the right of the defendant or suspect to be informed of the privilege.

English law follows the judgment of Saunders decided by the European Court of Human Rights strictly. The case of Saunders v UK18 involved inspectors of the Department of Trade and Industry questioning Saunders about a fraud he had allegedly committed. Under the Companies Act 198519, Saunders is legally compelled to answer, such that his refusal would sanction criminal punishment. Saunders answers the questions posed and his answers are used against him in a criminal trial. Saunders therefore brings a claim to the European Court of Human Rights that his Article 6 rights have been breached.

The European Courts of Human Rights reached the conclusion that his Article 6 rights were breached and argued at [69] that the privilege “does not extend to the use in criminal proceedings of material which may be obtained from the accused through the use of compulsory powers but which has an existence independent of the will of the suspect such as, inter alia, documents acquired pursuant to a warrant, breath, blood and urine samples and bodily tissue for the purposes of DNA testing.” Of significance is the idea that the privilege does not apply to evidence existing independent of the will of the defendant. This was echoed in R v Kearns20 where the UK courts recognized a distinction between materials with an “existence independent of the will of the suspect or accused persons and statements that he has had to make under compulsion” and affirmed that there was no infringement of the privilege in the former case.

While the privilege against self-incrimination provides greater protection to individuals in the UK, it is unfortunately undermined by the uncertain scope of the privilege, and more fundamentally, is inflicted by the lack of a clear justification for the privilege. i) Uncertain scope of the privilege in the UK This seemingly clear position, however, was complicated by the case of R v S,21 which concerned the police seizing two computers belonging to the defendant which was encrypted. Under S58 of the Terrorism Act, the police were empowered to compel the defendant to answer questions.

As such, the police asked the defendant for the encryption key. It is here the Court of Appeal makes a troubling pronouncement where they argued the encryption key once created, “remains independent of the defendant’s ‘will’ even when it is retained only in his memory”, and draws an analogy to a “key to a locked drawer”. Based on such reasoning, the Court of Appeal argued that the encryption key exists independent of the defendant and so the privilege

18 19 20 21

Saunders v UK (1996) 23 EHRR 313 Company Act 1985 R v Kearns [2002] EWCA crim 748 R v S [2009] 1 WLR 1489

37

is not violated if placed under legal compulsion. This, however, is logically unsustainable. Following the Court of Appeal’s reasoning, any information stored in our mind will be regarded as having an existence independent of my will – after witnessing an event, our minds encode and store the event in our memory. This therefore means our memory has an existence independent of us, and will therefore not be afforded protection under the privilege. ii) Uncertain scope of the privilege in the European Courts of Human Rights The uncertain scope of the privilege is not a problem exclusive to the UK. European jurisprudence on the privilege is likewise riddled with these problems. The case of Saunders in 1993, as explained, states that the privilege does not extend to evidence that have an independent existence of the will of the defendant. The case of Jalloh v Germany22 however creates complications. In Jalloh, the defendant is suspected to have swallowed a bag of cocaine when approached by a police officer. The defendant is administered an emetic which causes him to regurgitate the bag. While the bag has an existence independent of the will of the defendant, and is therefore not covered by the privilege, the Grand Chambers found a breach of the privilege and the defendant’s Article 6 rights. In its judgment, the Grand Chamber attempts to distinguish Jalloh from Saunders by arguing at [113] that the bag was “real evidence” while the material obtained in Saunders was “obtained by coercion for forensic examination with a view of detecting, for example, the presence of drugs”.23 In other words, the Grand Chamber attempted to differentiate between evidence that directly incriminates and evidence that does not directly incriminate. However, this is an artificial line drawn by the Grand Chamber – there is no material difference between perceiving the incriminating value of the evidence immediately and perceiving the incriminating value of the evidence only with further steps taken. All evidence has to be examined to some degree. In this sense, the Grand Chamber is drawing a line in the sand.

The bright-line drawn by Saunders was further diminished

by O’Halloran and Francis v UK,24 where the defendants’ cars were filmed going through a speed camera. Under the Road Traffic Act, they are required to provide information on the identity of the driver. The first defendant refuses to provide information and is prosecuted for refusing to do so while the second defendant admitted that he was the driver and was prosecuted. Both defendants brought claims that their Article 6 rights were violated. Applying the Saunders test, the privilege is clearly breached in this instance. The information the defendants withheld did not have an existence independent of their will and ought be covered by the privilege. However, the Court found that there was no breach of the privilege. Their primary argument was that driving involved drivers voluntarily entering a clear regulatory regime, as stated at [57] that, “Those who choose to keep and drive motor cars can be taken to have accepted certain responsibilities and obligations…”. While this is not an unfamiliar argument, O’Halloran had the

22 23

Jalloh v Germany (2006) 44 EHRR 32

24

O’Halloran and Francis v UK (2007) 46 EHRR 21

Mike Redmayne, ‘Rethinking The Privilege Against SelfIncrimination’ (2005) 27 Oxford Journal of Legal Studies

38

effect of chipping away at the coherence of the privilege in European jurisprudence. Overall, as Redmayne argues, “The ECtHR…struggles to rationalize the privilege in a way that gives it clear scope.”25 iii) Evaluating and positioning the privilege against self-incrimination There is no doubt the privilege against self-incrimination in the UK provides greater protection to suspects or defendants as compared to protection provided by the privilege in Singapore. This could arguably be explained by the Human Rights Act 1998 which incorporates the right to a fair trial under Article 6 of the ECHR. It is noted by Dennis that Strasbourg jurisprudence demonstrates that the “determination…of [a] formal charge” for the purposes of Article 6 is interpreted widely. It does not restrict itself to the events occurring at the trial, but events preceding the trial. As a result of this expansive view of the criminal process the European Court of Human Rights adopts, this means pre-trial events are regularly evaluated against Article 6 of the European Convention on Human Rights.

IV. RATIONALISING THE PRIVILEGE AGAINST SELF-INCRIMINATION IN BOTH SINGAPORE AND THE UK The privilege affords suspects differing degrees of protection in Singapore and the United Kingdom. This difference can be easily explained by the differing legal and social climate in the two countries. The UK, for instance, being party to the European Convention of Human Rights, places a greater emphasis on individual rights. This is contrasted against Singapore which believes that a strong and efficient criminal justice system is required for social order. It is important to note that a value judgment ought not be made as to the choice of the model by each country. There is no objectively better or worse model. Instead, it is whether the choice of model is appropriate for the particular country.

What is of even greater interest is the uncertain scope of the privilege in both systems. Such uncertainty in the United Kingdom is clear, given the various, sometimes contradictory, judgments in both the UK and the European Courts of Human Rights on the scope of the privilege. In Singapore, the Courts dealt a fatal blow to the privilege in Mazlan but chose to affirm the voluntariness rule in the selfsame case. This uncertainty as to the position of the privilege within each respective system can be attributed to the lack of a clear rationale behind the privilege. If we are unsure as to what is the purpose of a procedure, we will naturally be unclear as to its scope or position in the system.

As Redmayne argues, the privilege “is one of the most puzzling rules of criminal procedure” and that “it is difficult to escape the feeling the privilege remains mysterious”.26 One of the reasons raised to explain the privilege is that it maintains a distance between the individual and the state

25

Mike Redmayne, ‘Rethinking The Privilege Against SelfIncrimination’ (2007) 27 Oxford Journal of Legal Studies

26

Mike Redmayne, ‘Rethinking The Privilege Against SelfIncrimination’ (2007) 27 Oxford Journal of Legal Studies

when the state is in one of its most powerful guises.27 This is a justification raised by the European Court of Human Rights in Saunders. However, this is a weak argument given that the state regularly uses coercion against its citizens when imposing punishments. These instances of coercion, however, can be justified given the right circumstances.

To argue that the role of the privilege is to distance the individual from the state is to beg the question – the issue is whether such coercion can be justified.

Another key reason raised is that of the privilege being “closely linked to the presumption of innocence”, an argument the Court in Saunders raises as well.28 However, in a system without the privilege against self-incrimination, the prosecution still has to prove that that the defendant is guilty beyond the requisite standard of proof, that being proof beyond reasonable doubt. It may be true that placing pressure to provide information makes it easier for the prosecution to prove their case. Yet, we do not find it morally objectionable when we carry out actions that make it easier for the authorities to meet the standard of proof, such as increasing the police budget.

An argument raised in favour of the privilege is the cruel tri-lemma.29 The tri-lemma posits that placing an individual under a legal compulsion to answer would mean forcing the individual to face a cruel tri-lemma: he is forced to choose between self-incriminating, committing perjury, or risk being convicted for refusing to answer. While it may seem appealing, there is nothing inherently wrong with harsh processes in the criminal procedural system to facilitate criminal prosecution – for instance, the system regularly allows for suspects to be remanded. Furthermore, it seems to be a tri-lemma that only the guilty faces; in that only the guilty will find themselves in such a conundrum.

A brief review of the justifications provided in favour of the privilege demonstrates that the value of privilege is something extremely difficult to articulate. Redmayne attempts to explain why this is so, “The arguments surrounding the privilege are closely connected to difficult questions of political morality, questions that often seem to reveal deep paradoxes within liberalism. These are questions about the ways in which we can demand that citizens support state institutions, about when it is legitimate to sanction conduct, and about how we can preserve a degree of citizen autonomy while maintaining a functioning state.”30 It should therefore come as no surprise that the role of the privilege against self-incrimination is one that remains murky in both legal systems.

27 28 29 30

Saunders v UK (1996) 23 EHRR 313 Ibid.

Ibid.

Ibid.

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RE-EXAMINING TORTIOUS ‘LOSS OF A CHANCE’ IN LIGHT OF ACB v THOMSON MEDICAL PTE LTD AND OTHERS [2015]

by Hillary Chua

Source: feminella

40

The ‘IVF mix-up’ case of ACB v Thomson Medical Pte Ltd and others [2015] SGHC 9 (henceforth; “ACB”) involved the birth of a child (‘Baby P’) formed from the negligent mixing of a woman’s egg with a sperm sample from a man other than her husband, during an IVF procedure.

Consequently, the mother sued various parties, including the chief embryologist and the hospital, bringing claims in tort and in contract for the upkeep of Baby P. Counsel for both sides presented the case as a “wrongful birth”,1 but Justice Choo Han Teck was quick to distinguish that the parents in this case actually wanted a child and were prepared to pay for its upkeep,2 albeit for a baby who was fully theirs, genetically. Moreover, he expressed qualms about how “wrongful birth” claims are premised upon the birth of a healthy child being treated as a loss.3 Although Justice Choo ultimately dismissed the claim, he left open the possibility of a new claim being brought under a different head of damages; namely pain and suffering.4 Whilst the judge’s respect for the intrinsic value of Baby P’s life, by not deeming her a loss, is commendable, the outcome of the case – receiving no compensation for a seriously botched medical procedure – would seem unsatisfactory to most.5 However, reconceptualising the case as a loss of a chance claim could divorce it from notions of “wrongful birth”, bolstering its legitimacy.

As such, this article proposes that the loss in ACB’s tort action be reformulated as the plaintiff couple’s lost chance to have a child who was biologically theirs. ‘Loss of a chance’ could be seen as an independent head of actionable damage,6 for the purposes of shifting the moral grounds of the ACB claim.

This article shall seek to defend its proposal in four parts: In Part (1), ‘loss of a chance’ shall be defined and the ACB claim reconceptualised along those lines. Part (2) shall seek to justify recasting the claim as a lost chance, as opposed to alternative forms of loss. Part (3) shall define the boundaries of ‘loss of a chance’ reformulations, in order to optimise the reformulated claim’s moral advantages. Finally, Part (4) shall explore whether the reformulated claim could be successful on policy grounds, if it were to be brought before the courts.

1

The term “wrongful birth” shall be used to refer to cases such as McFarlane v Tayside Health Board [2000] 2 AC 59 and Cattanach v Melchior [2003] HCA 38; (2003) 215 CLR 1, involving claims that a child ought not to have been conceived or born due to medical negligence in conducting sterlisations. In fact, such cases may be more accurately termed “wrongful conception cases” (See Margaret Fordham, ‘AN IVF Baby and a Catastrophic Error – Actions for Wrongful Conception and Wrongful Birth Revisited in Singapore’ [2015] SJLS 1, 5).

2 3 4 5 6

[2015] SGHC 9, Choo J [15] ibid. [16] ibid. [17] Fordham (n1) 6-7

Jeremy Liang Shi Wei and Low Kee Yang, ‘Recognising Lost Chances in Tort Law’ [2014] SJLS 98.

If these arguments were to be adopted by the plaintiff in a further appeal, or by plaintiffs in a future case with similar facts, this could be a potential first-step towards recognising ‘loss of a chance’ in Singapore medical negligence law.

I. “LOSS OF A CHANCE”: DEFINITION AND RECONCEPTUALISATION ‘Loss of a chance’ is a doctrine that has variably been associated with damages or causation in tort actions,7 whereby plaintiffs claim for “a loss of a chance of a favourable outcome, rather than the loss of the outcome itself.”8 Whilst some have defined the doctrine as a departure from the traditional balance of probabilities rule of causation,9 it is better understood as a principle which elevates lost chances to heads of actionable damage in their own right.10 This has been referred to as “pure loss of a chance” by Jane Stapleton,11 and henceforth, this article’s use of the term “loss of a chance” shall reference this idea. It is this concept that would allow the ACB claim’s focus to shift away from “wrongful births”, and onto a new loss. Liang and Low make a further distinction between “pure loss of a chance” and a “twofold precondition”,12 but this article shall not concern itself with this difference. In “pure loss of a chance” cases, causation would be established on the balance of probabilities, by asking whether there was a more than 50% probability that the defendant’s negligence caused the plaintiff’s loss of a chance (at obtaining a benefit or avoiding negative consequences).13 Consequently, the degree of lost chance’s significance would then be relevant to the calculation of proportionate damages.

Significantly, previous applications of the doctrine pertained to cases where the future, or what would have happened to the claimant, had there been no breach of duty, is uncertain.14 In the context of medical negligence claims, this “uncertainty” often comes from diseases with an unclear aetiology. For example, in the seminal loss of chance case of Gregg v Scott,15 there was an indeterminate interaction between the progression of cancer, the patient’s characteristics and the events which took place.16 At first glance, that definition of ‘loss of a chance’ does not seem to apply to the facts of ACB, as on the facts, there was no

7 8 9 10 11

ibid. 98 Gregg v Scott [2005] UKHL 2, Lord Nicholls [24] Mallett v McMonagle [1970] AC 166, Lord Diplock [176] Liang and Low (n6) 99

Jane Stapleton, ‘Loss of the Chance of Cure from Cancer’ (2005) 68 MLR 996, 999

12 13 14

ibid. 114

15 16

[2005] UKHL 2

Liang and Low (n6) 116

Andrew Burrows, ‘Uncertainty about Uncertainty: Damages for Loss of a Chance’ (2008) 1 Journal of Personal Injury Law 31, 33 Chris Miller, ‘Gregg v Scott: Loss of Chance Revisited’ (2005) 4 Law, Probability and Risk 227, 234

41

question as to the likelihood of what would have happened, had the defendants not been negligent in conducting the IVF procedure. However, ‘loss of a chance’, as defined by this article, depends on a lost opportunity to achieve the intended, counterfactual outcome, rather than the existence of statistical uncertainty in securing that chance. As such, by botching the IVF procedure, the defendants did cause the couple to lose their chance of having a child which was fullybiologically theirs. Thus, the case could be recast as claim for that lost chance, which would entail damages reflecting the significance of the lost chance upon the couple’s lives.

Admittedly, the plaintiffs might then claim that their lost chance’s significance was felt through the financial burden of raising Baby P: Raising the same claim for damages, albeit with a new normative basis. Nevertheless, Justice Choo’s observation that the couple were prepared for the upkeep of a child in any case would preclude such a claim.17 As such, damages would be most likely be in the form of a stipulated sum,18 though the exact calculus for damages falls beyond the scope of this article.

Ultimately, the core advantage of recasting ACB as a loss of a chance, is that it elucidates the frustrated expectations of the couple and makes it a basis for claiming damages (in addition to consequential economic loss for their medical fees).19 Specifically, the reformulated claim would compensate the couple for having gone through the whole process of IVF, pregnancy and birth with the expectation of having a child who was entirely theirs, biologically, only to realise that such a child had not been brought into existence.

Unfortunately, the doctrine has yet to be recognised in either UK or Singapore tort law, primarily on the grounds of policy.20 Nevertheless, this article proposes that not only can these policy reasons be overcome, recasting the ACB case as a loss of chance would be the ideal route to the claim’s successful recognition.

II. ALTERNATIVE FORMS OF LOSS The tort action in ACB failed because Justice Choo opined that the primary loss alleged by the plaintiff – pure economic loss from the upkeep of Baby P – was tied to the notion that Baby P’s life and birth was an actionable loss; an implication that Justice Choo found morally unacceptable.21 Though the

17 18

[2015] SGHC 9, Choo J [15]

For example, in Rees v Darlington Memorial NHS Trust [2003] UKHL 52, a sum of £15,000 was stipulated for “wrongful birth” claims.

19 20 21

[2014] SGHC 36, Choo J [10] [2005] UKHL 2 [86-90]

[2015] SGHC 9 [15] – [16] Notably, Stapleton observes that in pure economic loss claims are in fact claims for pure lost chances [See (2005) 6 MLR 68, 1005]. However this point was not explored in the ACB judgement and the term “pure economic loss” appeared to have

42

judge did not elaborate on his moral qualms, his views are justifiable on moral intuitions of human life (regardless of rational capacity) being intrinsically valuable. Additionally, this might be justified on Razian grounds: Treating Baby P as a loss through which damages could be claimed would be to disregard her status as a bearer of rights: A status she possesses due to the intrinsic desirability of her wellbeing.22 The loss of a chance reformulation in Part (1) would divest the claim of such worrisome notions. However, that was but one way of reconceptualising the loss; alternatives include pain and suffering from childbirth, a lost chance to abort the child or the plaintiff’s loss of autonomy in planning her family.23 Each of these shall be examined, such that the comparative merits of the Part (1) reformulation can be made clear.

Firstly, Justice Choo suggested that the plaintiff could claim for pain and suffering caused by the defendants’ negligence, at the end of his judgement.24 Pain and suffering is associated with physical injury, and this harks back to how physical injury is traditionally seen as the only actionable loss in medical negligence claims.25 Margaret Fordham, relying on the case of McFarlane v Tayside Health Board,26 deduced that in the context of ACB, this must encompass pain and suffering from pregnancy and childbirth.27 Unfortunately such a claim is unlikely to be successful: Since the plaintiff’s intention was to become pregnant, even if the defendants had not been negligent, she would have had the same experiences of pregnancy and labour. Thus, the plaintiff would be unable to establish causation.

Secondly, in the ACB case, the plaintiff’s counsel suggested that her loss be formulated as the lost opportunity to abort Baby P.28 Given this article’s loss of a chance proposition, the question of why this alternate loss of a chance formulation was not adopted should be addressed. Justice Choo dismissed this submission for appearing to be a mere afterthought,29 but it would not be difficult to find a substantive reason for rejecting this conception of the loss. If the plaintiff had sought the chance to abort Baby P, then the IVF-mix-up would necessarily have had to have occurred. Thus, the argument would have been illogical – It directly contradicts the thrust of the claim; that the IVF-mix-up ought never to have occurred. In contrast, characterising the loss as been a shorthand for an expenses claim which needed to “hook” onto another form of loss; Choo J interpreted this as the child which was conceived.

22 23 24 25

Joseph Raz, The Morality of Freedom (OUP, 1986), 191

26 27 28 29

[2000] 2 AC 59 (Henceforth, “McFarlane”)

Fordham (n1) 8 [2015] SGHC 9 [17]

Edwin Peel, ‘Loss of a Chance’ Revisited: Gregg v Scott’ (2003) 6 MLR 623, 626 Fordham (n1) 4 [2015] SGHC 9 [14] ibid.

the couple’s lost chance to conceive a child of their shared parentage encompasses the latter idea.

Finally, Fordham has proposed viewing the plaintiff’s loss as a loss of autonomy, from being denied the right to plan her family as she wished.30 This argument would be the strongest alternative proposition for reformulating the ACB loss, as it was adopted by the UK courts in the case of Rees v Darlington Memorial NHS Trust,31 following Lord Millett’s suggestion in McFarlane32 that a sum of £15,000 awarded for parental loss of autonomy in all “wrongful birth” cases.

In Rees,33 a woman sued for the birth her child, which she had conceived subsequent to a negligently conducted sterilisation. The House of Lords granted her the aforementioned award to reflect her loss of autonomy in birthing a child that she did not wish to have.34 Similarly, the loss in ACB could also be seen as a loss of autonomy; the plaintiff suffered a blow to her autonomy in planning her child’s genetic make-up, and the plaintiff could argue that the stipulated sum should apply to her as well. However, this would collapse the distinction between ACB and the “wrongful birth” claims; reintroducing the problem of awarding compensation for the birth of a child, which caused the claim to fail in the first place. Contrastingly, if the loss of a chance formulation were to be adopted, further policies could be put in place to differentiate the admissibility of the two cases: A subject explored in the next section.

The discussion above demonstrates that the loss in ACB ought to be seen as the couple’s lost chance to conceive a child which was genetically related to them both. This formulation neither fails to pass the hurdle of causation, nor contradicts the thrust of the case, and it can be relied upon to create policy distinctions between ACB and less morally acceptable claims.

III. POLICING THE BOUNDARIES OF LOSS OF A CHANCE REFORMULATIONS One of the benefits of reformulating ACB as a loss of a chance case is that it shifts the case’s emphasis away from Baby P and submissions that her birth was a mistake, and towards the couple’s thwarted expectations of having a child related to them both. Whilst this elucidates a key difference between ACB and the morally-questionable “wrongful birth” cases, this may be eclipsed by the fact that both cases involve losses of autonomy in relation to reproductive health interventions. Furthermore, Baroness Hale in Gregg v Scott noted that virtually any case involving causation could

30 31 32 33 34

ibid. 6 [2003] UKHL 52 [2000] 2 AC 59 [2003] UKHL 52 ibid. Lord Millett [123] –[125]

be recast as a chance case.35 As such, “wrongful birth” cases could just as easily be characterised as losses of chance and the distinction between the two would be lost. However, this article argues that it is possible to stipulate policy restrictions on the scope of loss of a chance formulations, such that ACB-type claims are admissible, whilst “wrongful birth” claims are precluded.

The facts of McFarlane36 can be used to illustrate how “wrongful births” might also be reformulated as lost chances. In that case, a couple sought damages for the maintenance of a child who was born to them as a result of an unsuccessful, negligently-conducted sterilisation. The child was the relevant loss in that case. In loss of a chance terms, the couple could be said to have lost their chance to have unprotected sexual intercourse with no consequences.

Notably, this reformulation of McFarlane37 cannot be divorced from concern with the child’s “mistaken” birth to the same degree as in ACB, because the couple in McFarlane would have to rely on their opposition to having any child in order to make their claim. However, one could still argue that it at least puts a gloss on the issue by making the parents’ autonomy rights in family planning the focus of the claim.38 As previously mentioned, the House of Lords seemed willing to accept this argument through its award of a conventional sum in the factually-similar case of Rees v Darlington Memorial NHS Trust.39 Nevertheless, this article maintains its stance that clear policy constraints ought to be placed upon the loss of a chance reformulations, lest more morally questionable claims be let in through the back-door. JU v See Tho Kai Yin40, where the negligent screening of a pregnant mother thwarted her chance to abort her congenitally disabled child, may be one such example.

As such, this article proposes that courts should only recognise lost chances in medical negligence, if a plaintiff has lost a chance to receive a cure: Either to halt the progression of a disease (such as in Gregg v Scott) or to bring a genetically-related child into the world (this should encompass ACB situations; as infertility has been defined by the World Health Organisation as a ‘disease’).41 These limits upon loss of a chance can be justified by an enlightened understanding of the nature of doctor-patient relationships: That doctors undertake not to guarantee a cure, but

35 36 37 38 39 40 41

[2005] UKHL 2 [225] [2000] 2 AC 59 ibid.

Fordham (n1) 8 [2003] UKHL 52 [2005] 4 SLR(R) 96 (HC)

Fernando Zegers-Hochschild et al., ‘International Committee for Monitoring Assisted Reproductive Technology (ICMART) and the World Health Organization (WHO) Revised Glossary of ART Terminology’ (2009) 92 Fertility and Sterility 1520, 1522

43

to give their patients the chance of a cure42 – A tangible opportunity to overcome diseases, such as the ones above, through medical intervention.

Whilst the aforementioned limits would preclude “wrongful birth” claims from being brought as losses of chance, the boundaries for loss of a chance cases involving infertility should be further explicated. In ACB the couple lost the chance to have a child which was genetically-related to them both. However, it is possible to envisage how this could be used to advance morally dubious arguments, by plaintiffs claiming lost chances to have children with characteristics other than genetic relation. For example, in the Northern Irish case of A (A Minor) v A Health and Social Services Trust,43 sperm from someone of a different ethnicity to the plaintiff’s parents was negligently utilised in an IVF procedure (where the usage of donor gametes was intended). If the case were recast as a loss of a chance, it would be concerned with the lost chance to have a child of the “correct” race,44 which has unfortunate eugenic implications. Thus, the characteristic of genetic relation to both parents should be the only trait that plaintiffs can rely upon in bringing loss of a chance claims involving IVF. By restricting loss of a chance claims to lost chances for cures, and restricting IVF cases to ACB-like situations, the doctrine could sift out morally-dubious medical negligence claims from the meritorious ones.

IV. RECOGNISING THE ACB LOSS OF A CHANCE CLAIM Thus far, this article has established that the negligence issue in ACB could be brought as a loss of a chance claim such that ACB could be divested of allusions to “wrongful birth” scenarios. However, all this begs the question of why the plaintiffs in ACB would ever want to bring an appeal on such a basis, given loss of a chance’s status as an unrecognised head of actionable damage, in Singapore and UK tort law.

In Singapore, this version of loss of a chance simply has yet to be presented before the courts.45 In the UK, the doctrine in its pure form was rejected in Gregg v Scott by Lord Hoffmann and Baroness Hale on policy grounds.46 As such, this article shall establish how these objections may be overcome.

42 43 44

ibid. 106 [2010] NIQB 108 (QBD (NI))

Andrea Mulligan, ‘Tortious liability for mistakes in IVF: duty of care, public policy and the non-identity problem in A (A Minor) and B (A Minor) v A Health and Social Services Trust’ (2011) 34 DULJ 256, 270

45

Liang and Low (n6) 113; Tan Hun Hoe v Harte Denis Mathew [2001] SGCA 68, Chao Hick Tin JA [54]

46 44

ibid. 100,

Lord Hoffmann deemed the recognition of ‘loss of a chance’ a radical change which would open the floodgates of tort claims and negatively affect the distribution of resources within the National Health Service (NHS); he concluded that accordingly, only Parliament was entitled to decide upon its recognition.47 The two limbs of his argument are interrelated: If recognising ‘loss of a chance’ would greatly widen the scope of medical negligence claims, then its financial impact upon the insurance and public healthcare systems would indeed be great. However, the primary thrust of the floodgates argument could be said to come from Baroness Hale’s concern that any claim could be formulated as a lost chance. Yet, this article has already countered this argument. The boundaries for loss of a chance reformulations in Part (3), would serve to narrow the scope of such claims.

In fact, the doctrine’s ability to permit meritorious medical negligence claims (that would otherwise be unsuccessful, such as ACB) could be said to be its greatest strength.

Furthermore, Liang and Low crucially argued that loss of a chance would achieve tort law’s fundamental aims of compensation and deterrence, within medical law.48 The costs of bringing a medical negligence claim and the courts’ restrictive approach to such claims, under the present state of UK and Singapore law, are deterrents to patients who have experienced clear cases of doctors’ negligence. This is not least because such negligence may have had devastating effects on their health: Casting them and their families into emotional and financial distress, and making them far less likely to pursue a claim. This gives doctors ample scope to become complacent from a lack of court enforcement of their duties towards patients. Hence, permitting loss of a chance claims could redress this imbalance of power. Successful loss of a chance claims would alert the entire profession of the significance of particular missteps.49 For example, if a loss of a case like Gregg v Scott, 50 for the misdiagnosis of (late-stage) cancer, were to be successful in Singapore, doctors would think twice before dismissing unusual patches on a CT scan as a technical error.

To counterbalance the harshness of this proposal, the courts should adopt an appropriate mode of calculating damages for loss of a chance: One which emphasises sending out a message of deterrence, rather than extorting doctors. Whilst it is beyond this article’s scope to discuss what this might be, transplanting the UK approach of awarding fixed sums of damages for losses of autonomy (in “wrongful birth” cases) to losses of chance might be a potential way forward. In this way, patients would receive a nominal recognition of their undue suffering. Although this would not ease their financial burdens significantly, patients would benefit from the triumph of knowing that the state, law and justice on

47 48 49

[2005] UKHL 2 [86]-[90]

50

[2005] UKHL 2

Liang and Low (n6) 101

Matsuyama v Birnbaum, 890 NE (2d) 819 (2008) (Mass.

Sup. Jud. Ct.), Marshall CJ, 828

their side. Furthermore, such a calculation of damages would not punish doctors unduly for their ‘human errors’, nor would it overburden the insurance and healthcare systems.

As such, if the reformulated ACB claim were to be heard by the Singapore courts, the courts would be able to recognise the doctrine without fearing floodgates, and with the assurance that it would promote tort law aims by achieving justice in deserving medical negligence claims.

CONCLUSION This article has demonstrated how the ACB claim for the upkeep of Baby P was unsuccessful, because it was saddled with questionable implications about Baby P’s moral worth.

Thus, this article proposed a solution for this compelling medical malpractice case to be recognised by the courts: Recasting the loss in ACB as the plaintiff’s lost chance to have a child that was biologically-related to her and her husband, and seeking damages accordingly. This reformulation, if recognised by the Singapore courts in a further appeal of ACB, or future case of its kind, would introduce loss of a chance as an independent head of damages into Singapore’s medical law. Additionally, restricting the doctrine to ‘lost chances for cures’ on policy grounds would give it a twofold advantage: Bringing justice to the most deserving victims of medical malpractice, whilst preventing morally-dubious claims from flooding the system. Such refinement and recognition of loss of a chance would reshape Singapore’s medical negligence law to be more just and robust.

45

THE NECESSITY OF EMPIRICAL DATA IN FAMILY LAW-MAKING

by Jonathan Koh

INTRODUCTION This Article seeks to argue that the development and reformation of Singapore’s family law must be complemented by a robust base of empirical data that is currently lacking. With the Women’s Charter1 as the focal point for analysis, this Article will embark on an attempt to put forward suggestions of reform to the Charter, which is currently based on insular and theoretical arguments and, in doing so, point out the inadequacies of such a methodology.

The writer thinks that this is the most convincing way of disarming the fallacy that the normative dimension of family law leaves no room for hard empirical data. After pointing out the areas of empirical data which are lacking, this Article will examine the current sources of empirical data available to the public sphere that the Ministry of Social and Family Development (“MSF) consults on occasions of law reform.

In doing so, this Article will assess if the current level of

1 46

Cap. 353, 2009 Rev. Ed.

empirical data supplied is sufficient to augment and inform the public’s perspective on the Women’s Charter.

THE WOMEN’S CHARTER The Charter was passed in 1961 after a campaign by MP Chan Choy Siong2. The Charter had two predominant aims: the specific aim of making marriage in Singapore monogamous and the general aim of raising the legal status and rights of women in Singaporean society. These aims must be seen in their cultural and legal context where the law previously followed the doctrine of unity of personality, subsuming the rights of the wife under the husband’s upon marriage3. This

2

National library board, ‘Chan Choy Siong’ (Singapore Infopedia, 1999) <http://eresources.nlb.gov.sg/infopedia/articles/ SIP_791_2005-01-22.html> accessed 8 March 2016

3 7

Leong, The Singapore Women’s Charter: 50 Questions (2011),

Source: comesingapore

its creation must be based on theoretical blueprints before it is practically tested and data is collected to measure its efficacy and efficiency.

What must be especially noted, however, is the extent to which family law and the Women’s Charter in particular is regarded as a value-laden and highly normative area of law.

This is not only due to the fact that the “home is thought to be a private place, a refuge from society, where relationships can flourish untrammeled by public interferences”6, but also because the views on what constitutes an ideal family is dependent on shifting cultural perspectives and religious differences7. While most can agree that women’s rights ought to be protected, the content of such rights and what it demands of the law varies – ultimately, the two categories of questions in the reform of family law are invariably: “what rights of women should the law seek to actively protect?” and “how exactly should the law protect these rights?”

In light of the strongly normative nature of this area of law, it is understandable and indeed worthy of recognition that the Ministry of Social and Family Development has proactively sought to consult the public in its attempts to reform the Women’s Charter8. However, normativity is not a rational reason to exclude the adoption of empirical data in the building of opinions and arguments for legal reform.

This Article seeks to argue that it is possible and indeed ideal to anchor the consultative process of law reform in family law to pertinent and comprehensive data from which the values of consultees can flow and ultimately culminate in a consultation of greater clarity and rationality of purpose and means. Rather than adopting specific existing suggestions for legal reform as a basis for critique, this Article will build its own set of suggestions in order to clearly present them under the categories of policy aims and the means in which to achieve them – the former being what the Charter should be aiming to achieve and the latter how to achieve them.

meant that women at the time were legally vulnerable and incapable of holding many rights that would today seem essential. During the parliamentary consideration of the Charter, the Select Committee tasked to produce a report on the feasibility of the various stipulations within the Charter could only take into account witness opinions such as that of the Chairman of the Women’s Association of Singapore4 and it was particularly evident that most of their considerations were based on the projection and theorising of possible outcomes and impacts5. This was due to the pioneering nature of the Charter in its aim to establish a bedrock of women’s rights in the multi-cultural Singaporean context; it was logically impossible for the committee to have relied heavily on any pre-existing empirical data then. This is not unlike the designing and building of a complex machine –

4

Report of the Select Committee on the Women’s Charter Bill (First Session) L.A. 16 of 1960

5

Report of the Select Committee on the Women’s Charter Bill, L.A. 16 of 1960

The main motivation for this exercise is twofold: first, it serves as a control experiment in highlighting the necessity of empirical data in critiquing legislation through its very absence. Second, the writer feels this, as opposed to speaking in purely theoretical terms, is the best method of convincing the reader that empirical data is necessary.

AN EXERCISE TO THE CONTRARY The law must grant substantive rights to women in order to bridge a pre-existing gap in cultural and economic advantages that play a big influence in the private sphere.

Such advantages manifest in a myriad of ways – such as the gender pay gap and the education levels of women.

6

O’Donovan, K, Sexual Divisions in Law, 1985, London: Weidenfeld and Nicholson, p 107

7

This was highlighted as early as during the consideration of the Women’s Charter Bill, where the sensitive issue of varying religious stances on monogamy in marriages was consistently raised.

8

This was most recently done in 2015 via the public consultation exercise on the draft Women’s Charter (Amendment) Bill.

See https://www.reach.gov.sg/participate/public-consultation/ministryof-social-and-family-development/family-policy-unit/consultationpaper-on-draft-womens-charter-amendment-bill-2016

47

What family law is concerned with, however, is not directly tackling these problems but in accepting these problems as a disadvantageous starting point for women and understanding that these problems extend themselves in many ways into the private sphere. Family law in Singapore must therefore recognise that women are at a disadvantage not only in the public sphere for economic reasons but also in the private sphere in having equal say in making choices for the family. Given that there are currently different starting points for men and women in the private sphere, any part of family legislation that on the surface grants a formally equal bundle of rights to both men and women must be brought to scrutiny; such formally equal laws should be compared to the theoretical alternative – the overt and substantive protection or granting of women’s rights. At the same time, however, equal regard should be given to the issue of the over-granting and over-protection of women’s rights explicitly through the law. This paves the way to other problems such as creating a counter-productive overdependence on the law as micro-adjudicator as opposed to relying on the law’s soft power in promulgating pro-equality values in society and creating the misconception that the law is overly protective of women at the expense of men9.

Examples of the Women’s Charter granting formally equal rights to both parties in a marriage include the requirement of mutual ‘cooperation’10 and ‘equal rights in the running of the matrimonial household’11. These sections while seemingly granting equal rights and legal parity to both parties are subject to and tempered by the harsh realities of inequality between partners. The fact of the matter is, in most families where the husband is the primary breadwinner, the husband will also be the primary decisionmaker within the family. If such laws have no practical effect in private disputes between marital partners, what instrumental purpose do they then serve? Such laws seem only to serve as evidentiary standards in courts to which a plaintiff seeking divorce can prove to have met in order to claim that the defendant has behaved in a manner that the plaintiff “cannot reasonably be expected to live with the defendant”12. This may be in line with the unspoken doctrine that the courts should refuse to interfere with matters and disputes within the marriage until it has reached the stage of irretrievable breakdown, but this also seems to be contrary to the supposed primary purpose of the Women’s Charter, as stated earlier – to grant women parity within marriages.

Ironically these parts of the Women’s Charter which were originally meant to set the stage for an equal marriage has instead become a benchmark for divorce. Proponents for the status quo may argue that there is ‘soft power’ in the law, in that it is held not only as a legal benchmark but also as an informal promulgator of ideal family values. Following this, critics should therefore take care not to neglect these parts of the Women’s Charter as signaling mechanisms that, whilst unable to empower women through hard legal means, are

9

This must explain why some felt in the latest consultation process by MSF that the Women’s Charter ought to be renamed the more neutral Family Charter. See the Consultation Paper on Draft Women’s Charter (Amendment) Bill 2016 para. 18

10 11 12 48

Women’s Charter 2009 s.46(1) Women’s Charter 2009 s.46(4) Women’s Charter 2009 s.95(3)(a)

still able to equalise power differentials in the family. It is agreed that this is the middle road to take between forcibly interfering with the family structure through legal means and not doing anything at all; the ‘soft’ power of the law, especially in family law, should not be underestimated.

However, this is also precisely why the current legislation is inadequate – these laws are far removed from the workings of everyday lives. Without the necessary social institutions to informally dispense the law through mediation, counselling and education, the soft effects of the legislation cannot be far-reaching. Currently, the only government services that carries out marriage counselling are the Community Mediation Centres (CMCs) and the Ministry of Social and Family Development through the Family Service Centres (FSCs). However, even in this case, it would be impractical to expect mediators in such services to put to acrimonious couples any objective notion of what equality between marital partners entails – the primary breadwinner of the family will be likely to claim that ‘equal rights’ mean the separation between the control over family finances and the daily household chores, with each party minding his or her own area of influence. Such an interpretation only reinforces the status quo and cements the powerlessness of women in many families. The law should therefore be reformed to increase its specificity – especially in detailing equal rights and ownership over the income of wage-earners in the family. Proponents of the status quo are likely to label this as over-meddling, and that ultimately “law cannot make us better people”13. However, such statements miss the point – marriages cannot be viewed solely in the light of ‘redeemable’ and ‘irredeemable’. If the Women’s Charter wants to be a promulgator of values, it must also be capable of nudging parties towards a more favourable and conducive marital outcome rather than simply facilitating separation.

Another area in which the Women’s Charter plays an instrumental role is in dictating the process of divorce.

Following the doctrine that divorce ought to be a last resort, the Charter demands that judges consider ‘the possibility of a reconciliation of the parties’14 and ‘refer the parties for mediation’15. This seems to contradict the Charter’s apparent view of non-interference in various other parts of the legislation, such as those evidenced in the paragraph above. It is neither theoretically logical nor practically conducive to divorcing parties for the law to be a by-stander until the dispute between parties sufficiently deepens so as to constitute parties’ opinions that there has been an ‘irretrievable breakdown of marriage’16. A substantial proportion of divorces are due to cumulative problems, which means that the early identification of such problems and the introduction of dispute resolution can greatly increase the possibility of reconciliation. To do so at the point of time when parties feel that the state of their marriage warrants a legal dissolution is therefore counterproductive. Also, the introduction of dispute resolution measures pursuant to the Charter17 can potentially prolong

13

Leong, The Singapore Women’s Charter: 50 Questions (2011),

14 15 16 17

Women’s Charter 2009 s.49

36

Women’s Charter 2009 s.50(1) Women’s Charter 2009 s.95 Women’s Charter 2009 s.50

the divorce process. This can not only prove to be taxing to women who have no income of their own and have to remain under the same roof as their husbands but also disadvantageous in negotiating ancillary matters such as maintenance and child custody as the legal proceedings lengthen into a war of psychological and economic attrition.

POSSIBILITIES FOR EMPIRICAL DATA While the above venture into critiquing the Charter and suggesting methods of reform is merely brief venture that certainly be expanded and elucidated upon, the writer hopes that it is sufficient in portraying the point that regardless of how the area of family law-making is normative by nature and that there is no ‘best answer’, it is possible for some answers to be better than others. Any keen-eyed reader will undoubtedly note the lack of evidential substantiation and, in its place, normative assertions. Indeed, while the above arguments can be advanced, they will undoubtedly be improved if they could be supported by evidence. In the following sections, this Article hopes to highlight certain key areas of data which will help to do so. Such data can assist in two main areas: the establishing of legislative goals and the crafting of ways to reach these goals. While the goal of actively granting women’s rights to make up for the economic inequality, as discussed above, might appear sound, it is based on the underlying assumption that there is indeed inherent economic inequality. Pertinent empirical data will therefore have to include average income differentials between partners in marriages, as well as systemic observations such as the percentage of stayhome men versus that of stay-home women. Such data is essential in assessing the fundamental premise that women are economically vulnerable and that this vulnerability extends into the household18. Furthermore, any piece of legislation could not possibly be a one-size-fit-all; policy makers will have to weigh respective vulnerabilities and decide how best to grant certain rights to most women and identify the groups of women who need those rights the most. This means that it is useful for stakeholders to know the spectrum of economic circumstances women in society are in, which further extends the need for such data.

Looking further at the suggestion of specifying the actual terms of parity between couples, its desirability can be assessed based on several areas of information. Most notably, one must note the number of times actual subsections (s.46 specifically) have been invoked in court not to deal with divorce but with marital disputes, especially pursuant to a S.59 “summary way” cause of action, survey the actual extent in which the original clause is involved in family mediation and survey the substantive content of family counselling and mediation – does the ‘ideal state of family’ promulgated by the law have any part to play in day-today family disputes through semi-official institutions? All this information is mostly institutional in that they involve the manner in which institutions such as the courts and

18

For instance, the World Economic Forum Gender Gap Report ranks Singapore 59th in the world in substantive equality between men and women after assessing key areas such as employment prospects, health and education.

Family Services Centres navigate couples through disputes.

This applies further to the assessment of whether judicial consideration of reconciliation has the adverse effect of lengthening the divorce proceedings. Pertinent data will include the effectiveness of mediation in achieving reconciliation and in shortening the divorce process by allowing parties to amicably agree on ancillary matters.

The proportion of divorce cases, split according to various strata such as number of children and family income, that are referred to mediation and their corresponding outcomes and success rates will also give a better and more in-depth overview of how the relevant legislation truly impacts families and couples on the ground.

The capacity for hard data to inform normative choices is not limited to the venture above. The most recent Consultation Paper on the Draft Women’s Charter (Amendment) Bill 2016 conducted by the Ministry of Social and Family Development includes a list of suggestions of to reform the Charter19. The most contentious suggestion would certainly have been allowing post-divorce maintenance for incapacitated men who cannot work, as currently only women have the right under the Charter to claim maintenance20.

While such suggestions are certainly worth considering, the matter of evidential substantiation comes into play once again. Supporters of maintenance for incapacitated men cite the ‘progress of women in today’s society’21 while critics ‘felt that men are the traditional breadwinners of the family and that our society is not ready to accept that women have the same responsibility as men’22. While the question of the extent women in society must progress in order to justify maintenance for incapacitated men is a normative one, it still remains capable of at least being informed by data that indicate the economic standing of women relative to men as well as the extent of maintenance granted in divorce cases relative to the income differentials between husbands and wives. The Bill was eventually passed but what was of particular interest to the subject at hand was the opening speech by the Minister for Social and Family Development at the Bill’s second reading23. The only primary statistic mentioned was divorce rates, the traditional benchmark for the effectiveness of marriage laws in Singapore. While there was also mention of other trends – such as the increasing instances of wives being the main breadwinner and the increasing instances of trans-national marriages – the speech was not concerned with providing key statistics that not only

19

Reach, ‘Consultation Paper on Draft Women’s Charter (Amendment) Bill 2016’ (REACH, 19 October 2015) <https://www. reach.gov.sg/participate/public-consultation/ministry-of-social-andfamily-development/family-policy-unit/consultation-paper-on-draftwomens-charter-amendment-bill-2016> accessed 8 March 2016

20 21

Women’s Charter 2009 s.69

Consultation Paper on Draft Women’s Charter (Amendment) Bill 2016 para. 9

22

Consultation Paper on Draft Women’s Charter (Amendment) Bill 2016 para. 10

23

Opening Speech by Mr Tan Chuan-Jin, Minister for Social and Family Development, At The Second Reading of The Women’s Charter (Amendment) Bill 2016, In Parliament, 29 Feb 2016 - See more at: http://app.msf.gov.sg/Press-Room/Opening-Speech-by-MrTan-Chuan-Jin-Minister-for-Social-and-Family-Development-At-TheSecond-Reading-of-The-Womens-Charter-Amendment-Bill-2016In-Parliament-29-Feb-2016#sthash.4sB3C3HE.dpuf

49

exemplified these trends but also examined them further in detail. Although it could be said that the parliamentary speech is not intended to pay close attention to every detail of the thought that went into the policy-making process, the apparent lack of any empirical data at all is rather telling of the focus in methodology.

While it would be neither practical nor advisable to base family law reform purely on an empirical methodology due to the normative nature of family law, there is no denying that such consultations should be built upon a base of hard data that will enrich and deepen the dialogue between stakeholders and the Ministry of Social and Family Development. Bringing this to its logical conclusion, the MSF ought to seek out initial consultations on what aspects of empirical data it ought to collect, attempt to collect such data and hold a final consultation that will allow stakeholders to assess the data before coming to their individual conclusions. The presentation of these conclusions should also be accompanied by the empirical findings in order to provide a fuller picture of the policy-making process.

THE CURRENT EMPIRICAL LANDSCAPE If one accepts that empirical data is indeed important to augment the consultation process, the next question is naturally whether one would easily be able to find the relevant data. Unfortunately, the answer seems to be negative.

The MSF’s release of data is intermittent and sparse rather than consistent and comprehensive – official publications such as ‘State of the Family’24 only provide qualitative surveys on the social attitudes of Singaporeans towards the concept of a family. This demonstrates that the Ministry’s attitude towards the development of family law remains in the domain of purely subjective and normative opinions.

The writer believes that such publications ought instead to include key empirical data that span wider key societal aspects such as income differentials and the outcomes of family counselling undertaken by the Ministry-run FSCs. This is especially important given that it is likely that stakeholders consulted will have to refer to such publications in shaping their suggestions for law reform. Furthermore, it would be ideal for the emphasis on empirical data to be taken one step further to include statistics on the development of family cases in our courts – such as the number of claims under s.59 of the Charter to allow for decisions on matrimonial property to be carried out in a “summary way”. This will allow stakeholders to assess the efficacy and popularity of the particular hard legal recourse as a method of solving marital disputes and generate more informed views on how the law may be reformed. Currently, an empirical approach via statistical analysis of the courts remains less popular than a case-by-case analysis of the law’s development.

However, the latter does more in charting the common law development of family law than it does in signaling legislative efficacy in the vast majority of cases. While there have been inspiring attempts at developing an empirical

24

National family council, ‘Family First, State of the Family Report 2009’ (Ministry of Social and Family Development, 17 March 2009) <http://app.msf.gov.sg/portals/0/Summary/research/NFCStateoftheFamilyReport2009.pdf> accessed 8 March 2016

50

approach in examining the development of Singaporean law25, these remain as outliers and have not focused singly on the area of family law. Understandably, an empirical approach to court proceedings and decisions is no small feat – one must best try to disentangle the messy threads of arguments, track them back to their sources of law and determine if they were subsequently pertinent in informing the court’s decision. However, the writer thinks that this is a worthy investment of time and resources; if the empirical exercise is successful, it will not only improve the quality of legislative reform in the area of family law but also expand the number of methodological approaches to law-making at large. In light of an absence of freedom of information laws in Singapore, it is all the more important for government institutions to supply the necessary social, institutional and judicial data if it truly wishes to create a meaningful and fertile dialogue with stakeholders in important consultative processes.

CONCLUSION Given that the world at large and Singapore in particular are moving towards trends of ‘Big Data’, where unimaginable amounts of information are valued, processed and sometimes monetised, one cannot help but to be sympathetic towards apprehension at involving empirical data in something as normative and culture-bound as family law. If it is any consolation at all, perhaps one should remember that the role of empirical data is ever-present throughout the legislative process, regardless of the area of law concerned.

There is certainly room for debating the extent of weight that empirical data ought to be given in family law-making – but our current methodological formula that systemically excludes the collection, examination and adoption of empirical data only does the country and all those to whom these laws apply a disservice.

25

Goh and Tan, An Empirical Study on the Development of Singapore Law, Singapore Academy of Law Journal pp. 176-226 (2011) 23 SAcLJ

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ASEAN AND THE EU M OV E M E N T T OWA R D S G R E AT E R I N T E G R AT I O N ?

by Ammani Mathivanan

Source: Batik Wijayakusuma

52

With ever increasing global connectivity, nations have never been more dependent on each other than before. To preserve peace in the region and promote growth within the domestic markets, countries have to be reliant on each other on issues such as security and trade. Regional institutions such as the European Union (EU) and the Association of the South-East Asian Nations (ASEAN) are seen to play a crucial role in the world order and economy. Apart from being associations that bring together nations in the same region for greater cooperation and support, the mutual aims of both organisations are progress and development to remain economically competitive. However, this is where the similarities end. The level of integration and pursuits of both organisations differ completely. The EU is a supranational, independent institution with a clear mandate and legal framework whereas ASEAN functions on an intergovernmental level relying mainly on a consensus based approach.

INTRODUCTION This article will analyse four main areas in relation to ASEAN and the EU so as to examine the effectiveness of ASEAN as a regional model. Firstly, the historical origins and the initial aims of both institutions will be scrutinized in order to provide a clear context for the basis of comparison. Secondly, the legal framework or lack thereof will be discussed with a view to ascertain whether a clear legal structure will provide a better dispute resolution process in ASEAN. Thirdly, in light of ASEAN’s recent Economic Community (AEC) venture, the economy and common market in both institutions will be examined. Drawing upon the common market in the EU, it will be examined if a greater level of integration is necessary for success. Lastly, the remaining two pillars of ASEAN, Political-Security and Socio-Cultural Communities, will be considered collectively through ASEAN’s Intergovernmental Commission on Human Rights (AICHR), drawing upon the EU’s commitment to fundamental rights as a basis of comparison. These two pillars are crucial to ASEAN, as it promotes the development of good governance and greater dialogue in the region.

It will be asserted that despite the different historical origins and initial goals of ASEAN, a greater level of integration is indispensable for the effective functioning of the AEC. Although ASEAN’s evolution into a supranational institution like the EU will not be possible in the near future, it will be stressed that a clear legal framework must be established to support ASEAN’s various ventures including the AEC. Furthermore, it will be argued that the AICHR’s capabilities be enhanced for the promotion of human rights and democracy in the region.

HISTORICAL ORIGINS AND GOALS The historical origins and initial objectives of both ASEAN and the EU are fundamentally different. Nonetheless, the

challenges that nations in both institutions currently face are similar. The EU integration experience can hence be relied upon to assess the institutional framework in place to support the realisation of ASEAN’s pillars.

Economic integration formed an integral part of the European Union. The detrimental effects of both World Wars on the European economy, as well as the constant conflicts between nations such as Germany and France led to the formation of EU so as to attain a lasting peace within the region.1 Initial integration on an economic level was focused upon the pooling of resources such as coal and steel to prevent further rearmament and promote advancement in the global arena. Integration amongst member states was vital in order to remain competitive with the United States of America (US), an emergent superpower. The Treaty of Rome clearly set out the framework of the institution and the measures that were to be pursued in order to achieve this economic community.2 In comparison, ASEAN was established by the newly independent member states after years of colonialism, with the aim of fostering an environment of trust and stability and to curb the threat of communism. Most member states, with the exception of Thailand, had recently gained their independence, and prized their sovereignty above all else. Interference in their national affairs was strongly opposed.3 ASEAN was established to foster a stable external environment so as to permit states to focus on their internal progress and development. Unlike the EU, cooperation and collaboration in a common economy was not initially envisioned and did not form the basis of the institution.

Member states desired an inter-governmental approach to the state of affairs in the region and were unwilling to cede any form of sovereignty.

Despite the differing circumstances that led to the formation of both ASEAN and the EU, the external environment has now become more similar. The restructuring of international politics and economy through globalisation has led to nations pursuing international cooperation so as to ensure economic development.4 Due to the increasing inter-connectivity between countries attributed to trade and the complex security issues of today, approaching issues at a regional level can be seen to be more beneficial when compared to the sole reliance on national policies.

Collaboration, via such regional institutions, will not only increase the member state’s position on the international stage in ensuring that their voices are heard, but it is also

1

Lay Hwee Yeo, ‘The Everlasting Love for Comparison: Reflections on the EU’s and ASEAN’s Integration’ in Roger E Kanet ed ‘The United States and Europe in a Changing World’ (Dordrecht: republic of Letters Publishing, 2009) 185. Accessed < http://www. eucentre.sg/?p=3516>

2

Treaty Establishing the European Community (Treaty of Rome) [1957] 298 U.N.T.S. 11

3 4

Lay (n 1) 190 ibid at 199

53

seen as an effective strategy to stimulate further economic progress. In order to remain competitive against large economies such as US, China and India, smaller nations such as the countries in South-East Asia must pool their resources so that advancement is not hindered.

Although both institutions have different starting points, the challenges that they both currently face are now more similar than those that prompted their creation. The presences of large economies, as well as the need to combat the threats to security presented by this current wave of terrorism, have placed greater importance on the need for regional cooperation. While it has been repeatedly stressed that ASEAN member states clearly do not wish for European Level integration, further assimilation with an elaborate and efficient institutional framework, similar to the EU, is critical moving forward.5 With the 12th ASEAN Summit, leaders pledged their commitment in establishing an ASEAN Community through the Cebu Declaration on the Acceleration of the Establishment of an ASEAN Community by 2015.6 Three pillars were established, namely the Political-Security Community, the Economic Community and the SocioCultural Community, this declaration together with the ASEAN Charter reflects the commitment of member nations for greater cooperation and integration within the region. However, despite these new initiatives, the dispute resolution process remains imbedded on a consensus based approach without a proper legal order or institutional framework. Further, the absence of a detailed agenda in streamlining the gaps in the regulatory frameworks and integration of stakeholders in the AEC, impedes ASEAN’s objectives.

LEGAL FRAMEWORK AND DISPUTE RESOLUTION PROCESS An effective legal framework and dispute resolution process is crucial for the operative functioning of any regional institution.

Article 13 of the Treaty on European Union (TEU) establishes this institutional structure.7 The European Council, European Parliament, European Court of Justice and the European Commission, function collaboratively in order to uphold the rule of law and the objectives of the EU. These institutions ensure the Member States’ compliance with the various European Treaties. In addition, they sustain

5

Ong Keng Yong, Kyaw San Wai, “ASEAN and the EU: Different Paths to Community Building” (2015) 277 RSIS Commentary 2, accessed < https://www.rsis.edu.sg/wp-content/ uploads/2015/12/CO15277.pdf >

6

Cebu Declaration on the Acceleration of the Establishment of an ASEAN Community by 2015 (adopted 13 January 2007)

7

Consolidated Version of the Treaty on European Union [1992] OJ C115/13 (TEU), art 13

54

the venture of the common market that guarantees the four main fundamental freedoms in the region; free movement of goods, capital, services and people as established in Article 45 of the Treaty on the Functioning of the European Union (TFEU)8, through the creation of regulations and directives so as to develop consistency across the member states.

Member states are able to resolve conflicts and inconsistencies in their internal market through the European Court of Justice (ECJ) and can also bring claims against other members for the lack of compliance. In Commission v Belgium, proceedings were brought by the Commission for Belgium’s failure to implement a directive concerning water pollution.9 This firm institutional structure, permits clear, legally binding resolutions as illustrated. The ability of the Commission to bring enforcement actions, further safeguards relations between states and prevents any political repercussions that might result from member states directly bringing a claim against each other.

Another key function of the European Court is its ability to grant preliminary rulings in accordance with Article 267 of the TFEU.10 Member states are able to raise queries with the ECJ in order to ensure the consistent applicability of EU law within their states. This encourages collaboration and active participation of the domestic courts in the progressive rulemaking in the region.

ASEAN, on the other hand does not have a legal structure that remotely resembles that of the EU. Decisions and dispute resolutions are handled on a political plane, requiring the consensus of the states that are engaged.11 This soft-law approach is reflected in two main instruments; The Treaty of Amity and Cooperation (TAC)12 and the Vientiane Protocol13. These instruments were subsequently used as a basis in Chapter 7 of the ASEAN Charter in formulating the dispute resolution process.14 Chapter 7 outlines that the first line of resolution is dialogue, consultation and negotiation, and Article 23 provides that parties can undergo conciliation or mediation.15 Agreement of parties is key before this procedure can be undertaken, and as such

8

Consolidated Version of the Treaty on the Functioning of the European Union [2008] OJ C115/47 (TEU), art 45

9 10 11 12

Case 1/86 Commission v Belgium [1987] ECR 2797 TFEU, art 267 Ong, Kyaw (n 5)

Treaty of Amity and Cooperation in Southeast Asia (adopted 24 February 1976, entered into force 21 June 1976) (TAC)

13

ASEAN Protocol on Enhanced Dispute Settlement Mechanism (adopted and entered into 29 November 2004) (Vientiane Protocol)

14

Charter of the Association of Southeast Asian Nation (adopted 20 November 2007, entered into force 15 December 2008) (ASEAN Charter), art 22; Walter Woon, ‘Dispute Settlement the ASEAN Way’ (2012) 9, accessed <http://cil.nus.edu.sg/wp/wp-content/ uploads/2010/01/WalterWoon-Dispute-Settlement-the-ASEANWay-2012.pdf>

15

ASEAN Charter, art 22-23; Woon (n 14) 9

stands as one of the inherent weaknesses of the process.

The dispute surrounding the Preah Vihear temple, between Thailand and Cambodia called for the application of the TAC.16 The lack of cooperation amongst parties has however, deterred further progress. The Vientiane Protocol, on the other hand is usually administered with regards to economic disputes.17 Under the mandatory procedure established under this protocol, one party can seek consultation with another in the resolution of disagreements. This mechanism, which is administered by the Senior Economic Official Meeting (SEOM), can also include the formation of a panel to impartially analyse the situation. The recommendations published by the panel are enforceable, and non-compliance could result in sanctions.

Even though this procedure looks promising in establishing a legitimate dispute resolution process in ASEAN, it is rarely employed by states. Nations prefer the dispute resolution procedure of the World Trade Organisation due to its non-binding nature.18 The flexibility it provides countries in deciding if the recommendations should be adopted is found to be more ideal.

In order to ensure the legitimacy of ASEAN and its policies, member states must give importance to the measures and procedures that are first available in the region. The Eminent Persons Group (EPG) which was set up to re-envision ASEAN, highlighted that one of the main problems is the lack of commitment of member states in following up on their plans.19 In line with ASEAN’s aspirations of further economic integration and the common market, a robust binding legal framework must be established.

It is acknowledged that establishing a supranational judicial institution like the ECJ will not be possible in the near future due to the weak rule of law in some member states.

Furthermore, the varying political dispositions across ASEAN, prevents a conjunctive effort on that level.20 This feat has been gradually achieved in the EU as democracy and a stable domestic government can be seen as basic prerequisites for membership.

Nevertheless, ASEAN nations must reaffirm their commitment to the regional institution and employ the Vientiane Protocol in resolving economic disputes. This Protocol should further develop to include decisions that are legally binding in nature and the consequences of noncompliance must be clearly established. Repercussions on a political level will not be sufficient in the effective

functioning of the ASEAN Economic Community.

Remedies for non-compliance such as damages should be formulated and agreed on by states.

ECONOMY AND THE COMMON MARKET To support the efficient implementation and development of the AEC, the policies and procedures in place for the functioning of the Common Market in the EU must be taken into consideration.

The establishment of a European Economic Community (EEC), one of the main objectives of the EU, was first enshrined in the Treaty of Rome. It sought to bring about the economic integration of the member states through the setting up of a common market and a customs union.21 The Common Market, which contains four fundamental freedoms was formalised through the European Economic Area (EEA) agreement. A Customs Union entailed a free trade area amongst member states, with a common external tariff for the engagement of trade with non-member nations.

The development and the sustainability of this venture has been only possible due to the commitment and political will of the states to delegate some of their sovereignty to the European Union Institutions.22 Hence, European Union law plays a decisive role in ensuring that members adhere to their commitments, and that the standards are equally observed. Through the implementation of directives and regulations, consistencies in law and policies in member states which impact the economic community were developed and are constantly regulated.

Similar to the common market in the EU guaranteeing the four fundamental freedoms in the region, the free movement of goods, services, labour and capital is also central in the economic integration being pursued by the ASEAN Economic Community (AEC).23 After the Asian Financial Crisis, states realised the importance of ensuring regional stability through economic ventures.24 Economic integration would not only boost growth amongst member states, but would also permit them to remain competitive against much larger economies. Many private companies such as Air Asia welcomed this venture in order to combat the rising competition from businesses in other regions.25 Member states in ASEAN have persistently opposed the European styled integration and as such there have been no

21 16 17 18 19 20

Woon (n 14) 23 ibid at 15 ibid at 17 ibid at 9

Michael Ewing Chow, Tan Hsien Li, ‘The Role of the Rule of Law in ASEAN Integration’ 2013 EUI Working Papers 9, accessed <http://cil.nus.edu.sg/wp/wp-content/uploads/2010/10/Ewing-ChowTanHsien-Li-The-Role-of-the-Rule-of-Law-in-ASEAN-Integration.pdf>

Mr Pierre Gramegna, Mr Lim Chin Beng, ‘European and ASEAN Integration Processes: Similar Models?’ UN University Lectures (UNU Public Forum, 8 May 1997) 4, accessed <http://archive.unu. edu/unupress/lecture18.html>

22

‘Safety in numbers’(The Economist, 20th Nov 2014) accessed <http://www.economist.com/news/21631940-asean-invitescomparison-eu-safety-numbers>

23 24 25

ASEAN Economic Blueprint (January 2008) Lay (n 1) 191 The Economist (n 22)

55

mechanisms in place for the harmonisation of standards.

Currently, 70 % of intra-regional trade is not barred by tariffs. Even if such charges are present they account for less than 5%.26 The presence of a non-tariff barrier, on the other hand, can be seen to have deterred ASEAN’s vision of economic integration.27 These measures, which are clearly protectionist in nature, include subsidies granted to domestic products, and the varying of labelling and manufacturing requirements across states. If these were present in the EU, they will clearly run contrary to the free movement of goods enshrined in Article 34 TFEU due to their potential to distort free trade between nations.28

Haze Pollution has failed to yield any improvements. The lack of a binding dispute resolution process can once again be perceived as the basis of failure.

Economic integration and the environment are also interrelated. Diverse standards in environmental regulation have the potential of creating trade barriers in the common market.29 The EU has acknowledged this interconnectivity and has stressed the need for sustainable development in the region through Article 11 and 191 to 193 of the TFEU.30 These provisions relate to carbon emissions, pollution and the disposal of toxic material, all of which are a direct byproduct of economic activities.

The Asian Development Bank (ADB) and the Institute of South East Asian Studies (ISEAS), a think-tank in Singapore, concluded in its study that ASEAN “has no prospects of coming close to…[a] single market by the AEC’s 2015 deadline – or even by 2020 or 2025”, because “nations lack the interest to establish a bureaucracy that sustains the EU”.34 The political will in ASEAN to create and sustain such an institution, present in the EU, is absent. Hence the measures that can be pursued for the establishment and maintenance of the AEC remain speculative at best.

Article 17 to 20 of Directive 2008/98/EC, made under the purview of the European Economic Area and the Treaty Establishing the European Community, sets out the measures of storing and monitoring waste production, storage and disposal.31 Member states have to adhere to the common standards established in the directive, as the lack of compliance will lead to enforcement actions under the ECJ. These measures also permit common standards to be developed in the manufacturing and production industries in nations, further removing any barriers to trade.

In ASEAN however, there has been a lack of concrete action plans with regards to environmental regulation.32 The AEC has to attend to these issues so as to enable a synchronised development in its economic community. One of the main concerns with regards to environmental management is the haze emanating from Indonesia. Deforestation on an unprecedented level has caused severe air pollution in its neighbouring countries, Malaysia and Singapore. At its worst stage, it resulted in the shutdown of air traffic and continues to negatively impact the regional population’s health.33 The 2002 ASEAN Agreement on Transboundary

26 27 28 29

Gramegna, Lim (n 21) 12 The Economist (n 22) TFEU, art 34

Rob Edens, ‘Why ASEAN Economic Community Can’t Ignore the Environment’ (The Diplomat, 22 September 2015) accessed < http://thediplomat.com/2015/09/why-asean-economic-communitycant-ignore-the-environment/>

30 31

TFEU, art 11, 191-193

32 33

Edens (n 29)

Council Directive 2008/98/EC of 19 November 2008 on waste and repealing certain Directives [2008] OJ L312/3

56

ibid

These detrimental environmental effects are unmistakably linked to economic production in ASEAN member states and the lack of adequate mechanisms to remedy the situations.

Hence to ensure the effective functioning of the AEC, it is vital that ASEAN takes into consideration the regulation of these ventures through an efficient dispute resolution process and the introduction of measures to prevent means of production that are harmful to the environment.

Even if a supranational judicial institution is not well suited to the divergent political atmosphere of ASEAN, further development of the Vientiane Protocol could aid in the competent functioning of the AEC. Moreover, it is proposed that a multi-government institution be set-up to supervise ASEAN transition into a common economy, especially with regards to identifying barriers to the common market and developing viable plans for rectification.

DEMOCRACY AND HUMAN RIGHTS In order to remain relevant in the international scene and to provide a strong foundation for the development of the economic community, democracy and human rights in ASEAN must be pursued.

Democracy and the commitment to human rights are the basic principles member states must adhere to before they can be granted membership to the EU.35 Even though economic progress through integration was always the initial intention of the institution, its functions were soon enhanced to include rights. This was evident through the EU Charter of Fundamental Rights36. This Charter applies to institutions of the EU and national authorities so as to ensure that EU law does not infringe the fundamental rights

34 35

The Economist (n 22)

Wilfrido V. Villacorta, ‘Inter-regional Cooperation in Democracy Building: Prospects for Enhanced ASEAN-EU Engagement’ 2008 IDEA 7, accessed <http://www.idea.int/resources/analysis/loader. cfm?csmodule=security/getfile&pageid=35050>

36

Charter of Fundamental Rights of the European Union [2012] OJ C326/02

of any citizen in its pursuit of economic objectives. 37

persons with disability and the elderly.43

The European Convention of the Human Rights (ECHR)38 under the purview of the Council of Europe, an independent institution to the EU, is yet another avenue for the states in the EU to preserve and uphold human rights in the region.

All member states of the EU are party to the Convention with its membership exceeding that of the Union. However, the increasing frustration of member states with regards to the Convention is clearly evident. Rulings of the Strasbourg Court are seen by states such as Britain to be an excessive interference with their internal affairs, causing tremendous domestic upset.39 Nonetheless, the effectiveness of such instruments in preserving the basic human rights of individuals throughout the region is unquestionable.

The AICHR’s involvement and work in these areas will contribute significantly to the progression of civil society in the region. Even if it is to assume a consultative function, it must establish itself as an independent institution with the ability to investigate potential human rights violations and advise the respective governments. These improvements will contribute significantly to ASEAN’s realisation of its remaining two pillars, and affirm its commitment in the gradual pursuit of human rights in the region.

Article 2 of the ASEAN Charter establishes its commitment to the principles of democracy and the protection of human rights.40 The Blueprints of the ASEAN Socio-Cultural Communities and Political-Security Communities similarly reflect the intention of the member states to achieve both of these ventures collaboratively through the promotion of human rights in the region. However, unlike the AEC, development in these two pillars has been relatively slow.41 The pursuit of human rights should be prioritised, not only to remedy the inherent unfairness in certain societies, but also to remain relevant in the international arena.

However, ASEAN member states are vehemently opposed to interference in their internal affairs, and this is often perceived as a direct infringement of a state’s right to governance.

The ASEAN Inter-governmental Commission on Human Rights (AICHR) was set up to oversee the development of human rights in the region. Initially considered to be a huge step towards the promotion and development of human rights within the region, its function was soon realised to be merely consultative, restrictive, without much independence and hindered by the inadequate allocation of resources.42 Even though its development into an institution similar to the European Court of Human Rights is too ambitious, some form of progress must be made in order to improve the basic quality of life amongst its citizens. It could start with the interest and rights of the groups of people enunciated in the Blueprints: Woman and children, migrant workers,

37

‘EU Charter of Fundamental Rights’ (Justice, 2016) accessed <http://ec.europa.eu/justice/fundamental-rights/charter/index_en.htm>

38

European Convention on Human Rights (adopted 4 November 1950, entered into force 3 September 1953) 213 UNTS 221 (ECHR)

CONCLUSION The EU and ASEAN were established for different purposes.

However in light of the similar external factors brought on by ever increasing global connectivity, integration can be seen to be crucial in ensuring economic growth and stability in the region. ASEAN should learn and adopt some of the measures from the EU so as to realise the objectives from its three pillars. From the establishment of a compelling and comprehensive dispute resolution procedure to the AEC and the gradual pursuit of rights in the region, the presence of a strong political will of member states is crucial in realising its potential.

Member States must come to a realisation that progress within ASEAN will only be possible if consensus is reached on these issues and more effective procedures are implemented to address the structural inadequacies currently plaguing ASEAN. The recent South China Sea dispute has highlighted the importance for a collective voice from the region. Member States have failed to present a united position as to the outcome to the International Court of Justice (ICJ) ruling, undermining the legitimacy of this institution in bringing greater regional cooperation.

ASEAN states must review their policies and relationship with one another if this establishment is to achieve its objectives.

Further, the United Kingdom’s (UK) recent vote to leave the EU (BREXIT) should not be taken to reflect the impediments of further integration, but instead presents itself as a key lesson to all ASEAN states. One of the issues it currently faces is that the UK wants to reap the benefits of the common market without yielding its sovereignty or accepting one of its four freedoms, free movement of people. Compromises are inevitable and a nation has to yield a part of its sovereignty so as to enjoy the wider benefits regional cooperation brings; a flourishing economy and a collaborative effort in dealing with security threats of the present day.

39

‘Theresa May: UK should quit European Convention on Human Rights’ (BBC, 25 April 2016) accessed <http://www.bbc.com/ news/uk-politics-eu-referendum-36128318>

40 41 42

ASEAN Charter, art 2 Ewing-Chow, Tan (n 20) 28 ibid 31

43

ibid 29

57

CAN UNCLOS SAVE THE DAY? A R E V I E W O F T H E A R B I T R AT I O N D E C I S I O N ON THE SOUTH CHINA SEA

by Jonathan Tan

INTRODUCTION The United Nations Convention on the Law of the Sea [UNCLOS] is arguably the most important development in international maritime law. Concluded in 1982, UNCLOS was “prompted by the desire to settle, in a spirit of mutual understanding and cooperation, all issues relating to the law of the sea”.1 Apart from consolidating what was previously a set of disparate treaties, “the adoption of UNCLOS in 1982 has led to a period of relative stability in global ocean affairs by providing a legal framework for the sustainable development of the oceans and their natural resources.”2 As such, UNCLOS has been conferred impressive titles like

1

Preamble of the 1982 United Nations Convention on the Law of the Sea [UNCLOS], 1833 UNTS 3 / [1994] ATS 31 / 21 ILM 1261 (1982), Retrieved August 2, 2016

2

Hong, N. (2012). UNCLOS and ocean dispute settlement: Law and politics in the South China Sea. Milton Park, Abingdon, Oxon: Routledge, p2

58

a “Constitution for the Oceans”3, a “world order treaty”4 and a “primary pillar of international law”5. In fact, Prows hailed UNCLOS as the “culmination of thousands of years of international relations, conflict and now nearly universal

3

See, e.g., Tommy T.B. Koh, President of the Third United Nations Conference on the Law of the Sea, Remarks, A Constitution for the Oceans (Dec. 6 & 11, 1982 [hereinafter Koh Remarks], available at http://www.un.org/Depts/los/convention_agreements/texts/koh_ english.pdf ) (adapted from statements by Koh at the final session of the Conference at Montego Bay, in CTR. FOR OCEANS LAW & POL’Y, 1 UNITED NATIONS CONVENTION ON THE LAW OF THE SEA 1982, A COMMENTARY 491 (Myron H. Nordquist ed., 1993).

4

Christian Tomuschat, Obligations Arising for States Without or Against Their Will, 241 RECUEIL DES COURS 194, 268-71 (1993).

5

David J. Bederman, Counterintuiting Countermeasures, 96 AM. J. INT’L L. 817, 817 (2002) (identifying “seven pillars” of international law: state responsibility, the Rome Statute of the International Criminal Court, diplomatic immunities, the law of the sea, the law of treaties, the Nuremberg Principles, and jurisdictional immunities of states).

adherence to an enduring order for ocean space”.6 However, UNCLOS currently faces what certainly is one of its greatest challenges since its adoption – the South China Sea dispute. The six countries surrounding the South China Sea have been embroiled in a long-standing impasse over territorial rights over the various landforms like the Paracels and the Spratlys, as well as sovereignty over the ocean space.

While territorial disputes at sea are not by any means a novel occurrence, the South China Sea dispute appears increasingly intractable. Not only is the number of claimants unprecedented, there are growing fears of the area becoming a “flashpoint” due to heightened military activity.7 Given the growing tensions and ineffectiveness of diplomacy, the Philippines announced in 2013 that it would take China to an arbitration tribunal under UNCLOS to challenge the latter’s territorial claims in the South China Sea. With China

boycotting the proceedings, the Philippines commenced its hearing on 7th July, 2015. On 12th July 2016, the Arbitral Tribunal handed down its verdict in favour of the Philippines, ruling that China had violated the Philippines’ sovereignty8.

The article will first analyse the Tribunal’s verdict and its implications for the South China Sea dispute. However, given China’s refusal to submit to the tribunal’s jurisdiction and accept the verdict, the article will then go on to explore what the post-arbitral options are for the Philippines and other interested parties. Finally, in light of what has happened, the article will seek to critically assess the wider effectiveness of UNCLOS and its prospective role, if any, in the South China Sea dispute.

I. WHAT IS THE SOUTH CHINA SEA DISPUTE ABOUT?

6

Prows, P. (n.d.). Tough Love: The Dramatic Birth and Looming Demise of Unclos Property Law, Texas International Law Journal, Vol. 42:241. SSRN Electronic Journal SSRN Journal. doi:10.2139/ssrn.918458, p1

A. Historical Background

7

Why is the South China Sea contentious? (July 12, 2016).

Retrieved August 02, 2016, from http://www.bbc.com/news/world-asiapacific-13748349

8

Why is the South China Sea contentious? (2016)­­­­

59

The dispute over the South China Sea stems from competing claims from six nations – China, Vietnam, the Philippines, Taiwan, Malaysia and Brunei. Surrounding the same ocean space, it may seem inevitable that there are overlapping claims as to the territorial rights for various territories. Apart from the better-known Paracel and Spratly islands, there are “dozens of rocky outcrops, atolls, sandbanks and reefs”.9 During the period of European colonial powers, the South China Sea was originally “primarily a sailing route from the Straits of Malacca to China, Korea and Japan…a ‘Far Eastern’ thoroughfare”. Believing the Spratlys and other territorial features in the South China Sea to be of “little strategic value, …none of the naval powers thought of establishing extensive maritime zones”. Consequently, maritime delimitation only emerged as a concern in the post-colonial era, ironically as a result of the introduction of the concept of “200-nautical-mile Exclusive Economic Zones [EEZs]” by UNCLOS.10

B. Competing Claims As early as 1948, China first published what has now become known as the famous ‘nine-dash line’ in a “Map Showing the Location of the Various Islands in the South Sea”.11 Moreover, on 7th May 2009, China sent two Note Verbales to the UN Secretary-General that stated that it has “indisputable sovereignty over the islands in the South China and the adjacent waters”, asserting that this is a position “widely known by the international community”.12 By contrast, Vietnam says it has “actively ruled over both the Paracels and the Spratlys since the 17th Century” with documentary proof, while the Philippines “invokes its geographical proximity to the Spratly Islands as the main basis of its claim”.13 China’s claim by far the most expansive out of all six rivals – it stretches far beyond any conceivable EEZ, extending to ocean space just off the Vietnamese and Malaysian borders.

Despite some ambiguity as to the exact Chinese claims of sovereignty, they have mapped and named an estimated 291 islands and reefs in the region14, stretching “hundreds

9 10

Why is the South China Sea contentious? (2016)

Tønnesson, S. (2001, March 16). An International History of the Dispute in the South China Sea. EAI Working Paper No. 71, 23. doi:ISSN 0219-1318

11

Boundary Department of the Ministry of Interior, Republic of China, “Map Showing the Location of the Various Islands in the South Sea” (1948).

12

Note Verbale from the Permanent Mission of the People’s Republic of China to the United Nations to the Secretary-General of the United Nations, No. CML/17/2009 (7 May 2009) (Annex 191); Note Verbale from the Permanent Mission of the People’s Republic of China to the United Nations to the Secretary-General of the United Nations, No. CML/18/2009 (7 May 2009) (Annex 192).

13 14

Why is the South China Sea contentious? (2016)

Johnson, W. (2015, June 9). Everything you need to know about the South China Sea conflict – in under five minutes.

60

of miles south and east from its most southerly province of Hainan”15 and spanning an area of 3.5million square kilometres16.

China’s territorial claims are disputed by the other surrounding countries – the Spratly islands is the most hotly contested territory with competing claims from Vietnam, Taiwan, Malaysia, the Philippines and Brunei.

The Paracel Islands are contested by Taiwan and Vietnam, while the Scarborough Shoal is claimed by Taiwan and the Philippines as well. Malaysia and Brunei are considerably smaller players in the dispute, laying claim to some other territory in the South China Sea that they believe fall within their EEZs under UNCLOS.17

C. Rising Tensions While these rival countries have “wrangled over territory in the South China Sea for centuries, …tension has steadily increased in recent years”.18 Confrontations and violent incidents have been occurring with increased regularity, causing this territorial dispute to come to the forefront of international law in recent decades.

While there had been clashes in 1974 and 1988 causing death of 70 Vietnamese troops and 60 Vietnamese sailors respectively, the past few years has saw a real escalation of tensions. In 2012, China and the Philippines had a lengthy standoff after mutual accusations of intrusions in the Scarborough Shoal, while China’s placement of a drilling rig near the Paracel Islands caused several collisions between Vietnamese and Chinese ships in 201419.

Fears of these incidents erupting into open conflicts are not unfounded due to the proliferation of military presences in the region. The initial peaceful endeavour of island-building has been transformed by stationing of military forces on these “floating islands” – in particular, China possesses the capability and willingness to use its military vessels to protect its claims,20 even installing “missile launchers, runways, barracks and other security facilities” on these islands.21 Moreover, the involvement of the United States as a third party backing the countries against China has not helped.

Retrieved August 2, 2016, from http://blogs.reuters.com/greatdebate/2015/06/09/everything-you-need-to-know-about-the-southchina-sea-conflict-in-under-five-minutes/

15 16

Why is the South China Sea contentious? (2016)

17 18 19 20 21

Why is the South China Sea contentious? (2016)

Holmes, O., & Phillips, T. (2016, July 12). South China Sea dispute: What you need to know about The Hague court ruling.

Retrieved August 2, 2016, from https://www.theguardian.com/ news/2016/jul/12/south-china-sea-dispute-what-you-need-to-knowabout-the-hague-court-ruling Ibid Ibid Johnson, W. (2015) Holmes, O., & Phillips, T. (2016)

While the US has correctly called upon China to abide by international law in the form of UNCLOS, the actions by US aircraft and naval vessels to assert freedom of navigation in the region, supported by its ally Japan supplying military hardware to the Philippines and Vietnam, has agitated China.22 The Philippines has been a willing party by welcoming Japan to conduct joint military exercises and also the US to land fighter jets.23

on Mischief Reef. As Mischief Reef was held to be a lowtide elevation, China’s construction of artificial islands and structures on the Reef was ruled to “constitute acts of attempted and unlawful appropriation”.27 In looking more closely at the Decision, the article seeks to highlight certain areas of the Convention that have been affirmed, as well as considering other areas that the Tribunal has certainly expanded into and offered valuable insight.

D. Underlying Motivations Theintensely heated nature of this dispute stems largely from the economic value of the South China Sea area. Not only are there thought to be “significant oil and gas reserves”, the passage is a trade route worth an estimated $4.5 trillion. Moreover, there are “giant fisheries” that provides a livelihood for many of the countries asserting sovereign rights over the region. Moreover, in China’s pursuit of its superpower ambitions, sovereignty brings “a level of energy security and independence far beyond what it currently possesses”.24 Moreover, the hostility between the various countries is at least partially informed by the political realities of ChinaASEAN tensions – according to Tønnesson, “Southeast Asians tended to see the Chinese U-shaped line as a thorn in their flesh, and a challenge to the whole idea of Southeast Asian region.”25

II. ARBITRATION DECISION A .Outcome The Arbitral Tribunal ruled in favour of the Philippines by deciding that China’s territorial claims could not be based on any EEZ or continental shelf arising from the “islands” that they claim sovereign rights over. Not only are most of the features deemed to be “low-tide elevations” not capable of generating any territorial sea, even the “high-tide elevations” in the Spratlys like Itu Aba, Thithu, and other high-tide features are “not capable of sustaining an economic life of their own”, hence being prevented by Article 121(3) of UNCLOS from generating any entitlement to an EEZ and continental shelf.

Moreover, the Tribunal held that China had “breached Articles 60 and 80 of the Convention with respect of the Philippines’ sovereign rights in its exclusive economic zone and continental shelf ”26 in its persistent activities

22 23 24 25 26

Johnson, W. (2015) Holmes, O., & Phillips, T. (2016) Johnson, W. (2015) Tønnesson, S. (2001), p.23

Philippines v China (July 12, 2016), PCA Case No 2013-19: In the Matter of the South China Sea Arbitration (An Arbitral Tribunal

B. China’s Non-Participation China’s immediate response to the Philippines’ submission was to reject the jurisdiction of the Tribunal and “adhered to a position of neither accepting nor participating in these proceedings”.28 China’s Foreign Ministry’s clear articulation of this position in public statements and diplomatic Note Verbales was explicable in terms of how “it considers nonparticipation in the arbitration to be its lawful right under the Convention”.29

i. Non-Participation Fails To Affect Proceedings However, China’s non-participation failed to cripple the arbitration proceedings, as Article 9 of the Convention’s Annex VII stipulates that the “absence of a party or failure of a party to defend its case shall not constitute a bar to the proceedings”.30 Moreover, China still remained a Party to the arbitration and per Article 296(1) of the Convention and Article 11 of Annex VII, it “will be bound under international law by any decision of the Tribunal”.31

ii. Special Responsibility On The Tribunal That being said, China’s non-participation does impose an added burden on the Tribunal, as it “cannot, in China’s absence, simply accept the Philippines’ claims or enter a default judgment.”32 Instead, Article 9 of the Convention demands that the Tribunal satisfy itself “not only that it has jurisdiction over the dispute but also that the claim is well founded in fact and law.”33 Firstly, the Tribunal sought to ensure that procedural fairness was ensured despite the non-participation of one Party. For the non-participating party [China], the Tribunal took Constituted under Annex VII to the 1982 United nations Convention on the Law of the Sea), Retrieved August 2, 2016, p415

27 28 29 30 31 32 33

Ibid, p408 Ibid, p3 Ibid Ibid, p3 Ibid, p 45 Ibid, p4 Ibid

61

a number of measures to safeguard its procedural rights, including ensuring that all communications and materials in the arbitration had been promptly delivered, both electronically and physically. Ample time was also given for China to submit written responses34, hence ensuring that China continued to wilfully stay away from the proceedings.

For the participating party [the Philippines], the Tribunal also adopted safeguards for its procedural rights – citing the International Tribunal for the Law of the Sea in the Arctic Sunrise case, the participating party “should not be put at a disadvantage because of the non-appearance of the [nonparticipating party] in the proceedings.”35 For instance, to prevent the Philippines being placed in a position of having to guess what China’s position is, the Tribunal has discerned China’s positions on the issues by “consulting communications from China’s officials, statements of those associated with the Government of China and academic literature by individuals closely associated with Chinese authorities”,36 affirming the practice of international courts and tribunals.37

not asked the Tribunal to rule on sovereignty and, indeed, has expressly and repeatedly requested that the Tribunal refrain from so doing.”41 Instead, the Philippines confines its submissions to having the Tribunal to declare the status of the various islands.

Moreover, the Tribunal held that “a dispute concerning whether a State possesses an entitlement to a maritime zone is a distinct matter from the delimitation of maritime zones in an area in which they overlap.”42Simply put, the Tribunal astutely distinguishes a dispute over boundary delimitation from the wide variety of issues considered in the course of such a dispute – while the Tribunal lacks jurisdiction to decide on the former, the Tribunal is free to adjudicate on the latter.

Finally, the Tribunal clarifies that “the mere act of unilaterally initiating an arbitration under Part XV in itself cannot constitute an abuse of the Convention”,43 contrary to China’s claim.

iii. Award On Jurisdiction Fundamentally, China’s non-participation was largely driven by “its view that the Tribunal lacks jurisdiction to consider any of the Philippines’ claims”.38 In a Position Paper published by China’s Foreign Ministry39, China submitted its view that the essence of the arbitration is the “territorial sovereignty over the relevant maritime features in the South Sea” and given that the Philippines’ submitted disputes “would constitute an integral part of maritime delimitation between the two countries”,40 the Tribunal lacks jurisdiction to arbitrate on these matters.

However, the Tribunal clearly establishes its jurisdiction in the matters submitted for arbitration. First, while there is a dispute between the Parties regarding sovereignty over the islands, the actual matters submitted by the Philippines do not concern sovereignty – in fact, “the Philippines has

34 35

Ibid, p46

36 37

Philippines v China (2016), p48

Arctic Sunrise (Kingdom of the Netherlands v. Russian Federation), Provisional Measures, Order of 22 November 2013, ITLOS Reports 2013, p. 230 at p. 243, para. 56.

See Procedural Order No. 4, p. 5 (21 April 2015), citing as examples Arctic Sunrise (Kingdom of the Netherlands v. Russian Federation), Provisional Measures, Order of 22 November 2013, ITLOS Reports 2013, p. 230 at p. 243, para. 54; Arctic Sunrise Arbitration (Kingdom of the Netherlands v. Russian Federation), Award on Jurisdiction of 26 November 2014, para. 44; Fisheries Jurisdiction (United Kingdom v. Iceland), Merits, Judgment, ICJ Reports 1974, p. 3; Nuclear Tests (Australia v. France), Judgment, ICJ Reports 1974, p. 253; Aegean Sea Continental Shelf (Greece v. Turkey), Judgment, ICJ Reports 1978, p. 3.

38 39

Philippines v China (2016), p4

Position Paper of the Government of the People’s Republic of China on the Matter of Jurisdiction in the South China Sea Arbitration Initiated by the Republic of the Philippines (7 December 2014)

40 62

Philippines v China (2016), p4

C. Interpretation Of Article 121 Of Unclos In its Decision, the Arbitral Tribunal stated that “Article 121 has not previously been the subject of significant consideration by courts or arbitral tribunals”, despite it being heavily discussed and interpreted rather differently by academic scholars.44 Hence, the Tribunal’s direction on the interpretation of Article 121 arguably contributes to UNCLOS jurisprudence.

i. Issue Of Island-Building Island-building in the South China Sea is quite a common activity, with Vietnam and the Philippines having claimed 21 and 8 islands, respectively. Moreover, while China began this exercise much later, it has conducted it at an unprecedented scale and at lightning speed. 45 Evidence of such island-building can easily be found via satellite imagery, like pictures by the Lowy Institute for International Policy showing the transformation that Fiery Cross Reef had undergone from May 2014 to September 2015.46 However, despite the appeal of island-building in augmenting the status of existing maritime features, Articles 121(1) of the Convention, similar to Article 13, unequivocally specifies the criteria for assessing any maritime feature as a

41 42 43 44 45 46

Ibid, p58 Ibid, p59 Ibid, p58 Ibid, p204 Johnson, W. (2015)

South China Sea: Conflicting Claims and Tensions. (n.d.).

Retrieved August 2, 2016, from http://www.lowyinstitute.org/issues/ south-china-sea

“naturally formed area of land” – low-tide elevations would be submerged at high tide, whereas high-tide elevations are above water at high tide.47 The tribunal clearly establishes that the “naturally formed” requirement demands “the status of a feature to be evaluated on the basis of its natural condition”.48 Hence, where “substantial human modification” has distorted the islands and buried the reef platform, the Tribunal will “reach its decision on the basis of the best available evidence of the previous status of what are now heavily modified coral reefs”.49

ii. Issue Of Human Habitation And Economic Life Article 121(3) of the Convention clearly excludes “rocks” from being considered to be a fully-fledged island that generated an EEZ and continental shelf – if a high-tide feature cannot sustain human habitation or economic life of their own, it will be considered a “rock”. On this, the use of the term “rock” does not limit its reference in terms of geological or geomorphological characteristics, as “protrusions above water that are composed of coral, mud, sand or soil may constitute rocks within the meaning of Article 121(3) of the Convention”.50 Moreover, it was a key finding by the tribunal that the term “cannot” referred to the capacity or potential of the feature to sustain human habitation or economic life – the Tribunal does not embark on an enquiry into whether the features actually does not sustain human habitation or economic life at this current time, or whether it did in the past.51 Given that “forms of human habitation and livelihood vary greatly”, the Tribunal concludes that “no particular culture or mode of habitation should be assumed for the purpose of Article 121(3)”.52 With regards to the required level of economic activity to consider any feature to be a fully entitled island, the Tribunal held that “the phrase presupposes ongoing economic activity”, to be distinguished from “a one-off transaction or short-lived venture”.53 To illustrate this distinction, the Tribunal highlighted the failure of “purely extractive economic activities, which accrue no benefit for the feature of its population” to amount to economic life considered statutorily.54 Hence, the activities of fishing or mining of the resources in the region are not considered by the Tribunal to fall under Article 121(3) of the Convention.

47 48 49 50 51 52 53 54

Philippines v China (2016), p131 Ibid Ibid, p132 Ibid, p182 Ibid Ibid, p208 Ibid, p211 Ibid, p212

Ultimately, the Tribunal also ruled that Article 121(3) creates a cumulative requirement that to be a fully entitled island, a feature must be capable both of sustaining human habitation and of sustaining an economic life of its own.

This cumulativeness is “underscored by logic because the concepts of sustained “human habitation” and “economic life” are interrelated, and it is difficult to conceive of one without the other.”55

Iii. Purpose And Object Of Unclos China has “demonstrated a robust stance on the importance of Article 121(3)”, despite not having made any formal representations. China’s position was derived by the Tribunal from its diplomatic exchanges and public statements – in particular, it has “repeatedly alluded to the risks to “the common heritage of mankind” and “overall interest of the international community” if Article 121(3) is not properly applied to small features”, protesting Japan’s November 2008 claim of an extended continental shelf from the “rock” of Oki-no-Tori-shima.56 However, it seems to contradict its very position by suggesting that the high-tide features in the Spratlys are in fact fully entitled islands under Article 121(3).

While China may vary on its interpretation, the Tribunal instead turns to the objective rule of interpretation set out in Article 31 of the Vienna Convention that provides that a treaty “shall be interpreted in good faith in accordance with the ordinary meaning to the given to the terms of the treaty in their context and in the light of its object and purpose.”

The Philippines submits that a restrictive approach to recognizing high-tide features under Article 121(3) as fully entitled islands of the Convention precisely “reflect(s) overwhelming opposition to the prospect of granting very small, remote, and uninhabited islands extensive maritime zones that would unfairly and inequitably impinge on other States’ maritime space and on the area of international seabed”.57 Moreover, the Tribunal also highlights that in relation to the “naturally formed” requirement in the definition of an island in Article 121(1), “the object and purpose of the provision would be undermined if distant States could introduce technology, artificial additions and external supplies to support human habitation”.58 Thus, Article 121(3) of the Convention arguably intended to “avoid perverse effect of the major extensions of Coastal State jurisdiction beyond the territorial sea”.59 This accords with the original intentions of influential Ambassador Arvid Pardo of Malta at the time of the Seabed Committee meeting

55 56 57 58 59

Ibid, pp183-184 Philippines v China (2016), p199 Ibid, p181 Ibid, p183 Ibid, p182

63

in 1971, prior to the Third UN Conference, “If a 200 mile limit of jurisdiction could be founded on the possession of uninhabited, remote or very small islands, the effectiveness of international administration of ocean space beyond a national jurisdiction would be gravely impaired.”60 Hence, this supports a stricter approach as to what constitutes a fully entitled island, and all the high-tide features were thus deemed by the Tribunal to be mere “rocks”.

international law lacks any formal enforcement mechanisms to compel China to comply, apart from disparate international pressure from individual countries like the US, Japan and Australia. In this context, doubt must be cast over the value of international pressure, given China’s immense military prowess that seriously buttresses its refusal to budge. Hence, while the Philippines undoubtedly had its territorial claims endorsed by the Tribunal, its legal significance may remain largely symbolic without China’s recognition and submission.

III. LIMITATIONS A. China’s Lack Of Respect For International Law

B. Intractability Of Political Realities

It is clear that the Tribunal overwhelmingly ruled in favour of the Philippines. The Tribunal unequivocally repudiated China’s claim on the basis of historic rights, arguing that it fails to fall under the jurisdiction of “historic bays or titles” under Article 298(b) of the Convention as “there was no evidence that China had historically exercised exclusive control over the waters or their resources”.61 In particular, having found that Mischief Reef and Second Thomas Shoal are both low-tide elevations and that no high-tide feature in the Spratly Islands is capable of generating an entitlement an EEZ, the Tribunal found that it could declare certain sea territory within the EEZ of the Philippines, because those areas do not overlap with any possible entitlement by China. Consequently, it has gone on to condemn China’s violations of the Philippines’ sovereign rights in its EEZ.

Moreover, the Tribunal’s decision on various points of international maritime law based on UNCLOS may not bring significant progress, considering that much of the impasse stems primarily from more complex political realities. Fundamentally, even if the binding nature of the Tribunal’s decision were upheld by China, any implementation of its outcome would almost surely surface a much greater set of issues from the other rival countries.

According to Bonnie Glaser, director of the China Power Project at the Centre for Strategic and International Studies [CSIS] think-tank in Washington, while the ruling did not invalidate all of China’s claims to land or maritime territory in the South China Sea, it “really limit(ed) the amount of water that the Chinese could have any legal sovereignty claim to”.62 Naturally, China reacted angrily to the Tribunal’s decision, with the country’s official news agency, Xinhua, describing it as an ”ill-founded” ruling that was “naturally null and void”. The Communist party mouthpiece newspaper, the People’s Daily, echoed these sentiments by condemning the Tribunal for ignoring “basic truths” and having “trampled” on international laws and norms.63 However, therein lies the issue – China’s disregard for international law potentially diminishes the effectiveness of the Tribunal’s decision, given that the customary

60

Committee on the Peaceful Uses of the Seabed and the Ocean Floor beyond the Limits of National Jurisdiction, “Summary Record of the Fifty-Seventh Meeting,” UN Doc. A/AC.138/SR.57, p.

163 at p. 167 (23 March 1971) (Statement of the Representative of Malta).

There are also other underlying political currents between the rival countries that require consideration, like the China-ASEAN dynamic – “If a ‘Chinese’ sea were allowed in the middle of the region, then China would itself be a Southeast Asian power”,64 an unacceptable proposition for ASEAN. Moreover, China and Taiwan have long-standing friction, with Taiwan asserting independence against China’s provincial view of the island.

Intervention by external powers, like the US and Japan, has arguably hardened China’s stance on the issue. To date, the US has launched three freedom of navigation operations [FONOPs] “designed to challenge excessive maritime claims in the South China Sea”, while it has coordinated with Australia and japan to conduct surveillance operations and supply military hardware to China’s rivals.65 With the US being one of the only superpowers capable of standing up to China, this may be seen as necessary to maintain a regional balance of power.

However, not only is the involvement of the US viewed by China as aggressive and unnecessary, but it seems revealing that while the US had “virtually no response to previous (island) building by Southeast Asian countries in the South China Sea, but has vigorously opposed China’s efforts”.66 Regardless of the merits of the US’ intervention, it has definitely heightened tensions by causing China to feel victimized and threatened.

61

Phillips, T., Holmes, O., & Bowcott, O. (2016, July 12).

Beijing rejects tribunal’s ruling in South China Sea case. Retrieved August 2, 2016, from https://www.theguardian.com/world/2016/ jul/12/philippines-wins-south-china-sea-case-against-china

62 63 64

Holmes, O., & Phillips, T. (2016) Phillips, T., Holmes, O., & Bowcott, O. (2016)

IV. POST-ARBITRATION

64 65 66

Tønnesson, S. (2001), p.23 South China Sea: Conflicting Claims and Tensions (n.d.)

Johnson, W. (2015)

A. Developments In the immediate aftermath of the decision, China has reiterated its refusal to retract its presence in the region, and has in fact “upped activities in the South China Sea...to further entrench its presence in the region”. Island-building activities show no signs of letting up, and they have taken on an increasing militarized nature with placement of military equipment on islands.

Other potential forms of retaliation from China include “landing fighter jets on airstrips Beijing has built in disputed areas, declaring an air defence identification zone, or ADIZ, over the South China Sea or kicking off a dredging campaign at Scarborough Shoal…”67. These suggested measures will increase the chances of clashes occurring, and the precedents of such violent encounters only serve to caution against underestimating China’s willingness to unilaterally use force to assert its superiority in the region.

B. Prospects Efforts by the US and others to urge China to respect international maritime law by abiding by the Tribunal’s decision are positive steps in the right direction, although one must be sceptical of the potential success of such pressures given China’s stubbornness, backed by a credible threat of force.

it displayed the manoeuvrability of its dispute resolution mechanisms to retain jurisdiction despite non-participating parties.

However, it also displayed its limitations in terms of its jurisdictional reach, as it could not rule directly on issues of sovereignty and maritime delimitation – this severely cripples its effectiveness in providing a satisfactory resolution. Moreover, the involvement of superpowers like China who succeed in displaying wilful disregard for the arbitration proceedings and decision reveals how meek such customary international law remains in the face of political realities.

Nonetheless, the Tribunal has delivered an important decision that at least confers international legitimacy upon the claims by the Philippines, and correspondingly deflated those of China. While it is highly unlikely that this decision will be seen as panacea to the dispute, it lends the Philippines and other rival countries increased credibility in future negotiations, with newly elected president Rodrigo Duterte reportedly backing multilateral talks.71 It is hoped that Duterte will not downplay the Tribunal’s ruling, but use it strategically to nudge China in the right direction.

If the Tribunal’s decision can form a fundamental basis for negotiations moving forward, it should provide optimism for a turning point towards reconciliation.

It is interesting, however, that Chinese president, Xi Jinping, nonetheless insisted that China was still “committed to resolving disputes” with its neighbours.68 In fact, it has stood by its singular preference for bilateral negotiations with each party involved, even rejecting multilateral negotiations with ASEAN. While it is encouraging that China continues to extend a hand of reconciliation, albeit limited, many of the rivals are hesitant to take up this offer given that “China’s relative size and clout give it an unfair advantage”.69 Moreover, China’s offer cannot be taken at face value, because their willingness to negotiate does not necessarily correspond to a readiness to compromise, given how Chinese president Xi Jinping also reiterated that China’s “territorial sovereignty and marine rights” in the South China Sea remain unaffected by the arbitration.70

V. CONCLUSION The Tribunal’s decision on the South China Sea dispute has contributed to UNCLOS jurisprudence, and has shed light on how international maritime law can and continues to be relevant to offer hope of a resolution. In particular,

67 68 69 70

Holmes, O., & Phillips, T. (2016) Phillips, T., Holmes, O., & Bowcott, O. (2016) Why is the South China Sea contentious? (2016) Phillips, T., Holmes, O., & Bowcott, O. (2016)

71

Holmes, O., & Phillips, T. (2016)

65

SHOULD SINGAPORE CONSIDER REGULATING CORPORATE SOCIAL RESPONSIBILITY FOLLOWING THE 2008 FINANCIAL CRISIS?

by Eva Teh

As the most trade-dependent country in the Association of Southeast Asian Nations (ASEAN), it is little wonder that Singapore was the first country in East Asia to go into recession following the global financial crisis, which was later hailed as Singapore’s worst recession.1 As was the case in many countries, Singapore reacted to the financial crisis by putting in place strict regulations in the hopes of preventing and shielding itself from another crisis of similar proportion and reach. However, it will be argued that a regulatory framework encouraging corporations to engage in corporate social responsibility (CSR) initiatives may be a better way forward in order to avoid distorting the market and maintain Singapore’s business-friendly reputation.

CAUSES AND IMPACT OF THE GLOBAL FINANCIAL CRISIS The global financial crisis took the world by surprise in the scale and speed at which it unfolded. Nevertheless, while this crisis was unexpected, it was clear to many in the aftermath that it had been “eminently preventable”.2 It may be difficult to uncover the deeper, underlying causes of financial crises; one significant economic theory even puts it down to the idea of ‘animal spirits’ due to the irrational factors that may set off a crisis.3 Nevertheless, while there is no consensus with regards to the “wider implications of the

2 1

http://eresources.nlb.gov.sg/history/events/3cacf256-82cc4776-b7f8-83757723b502; EABER Working Paper 2008

66

Alison Kemper and Roger L Martin, ‘After the fall: The global financial crisis as a test of corporate social responsibility theories’ (2010) 7 European Management Review 229, 235

3

Stijn Claessans and M Ayhan Kose, ‘Financial Crises: Explanations, Types, and Implications’ IMF Working Paper, WP/13/28

While it was surely a mistake to allow the problems that led to the crisis to snowball, the regulatory failure at that point must be put into context. Prior to the global financial crisis, there had been a continuous move away from government intervention and regulation. Instead, emphasis and trust was placed almost entirely in free market forces. This was supported by Milton Friedman’s famous claim that “[t]here is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits”. Firms were expected to self-regulate and it was in this environment that a form of CSR emerged as a way companies could “signal pro-social attitudes, policies and behaviour”.8 Against this prevailing position, the question of how society could expect companies to “do good” when their priority was to ensure the highest returns possible for their shareholders remained a critical one that business ethicists and CSR specialists alike pondered.9 Such misgivings were far from baseless, as reports demonstrated following the unfolding of the crisis. Not only was the crisis shocking in terms of the devastating impact on financial markets across the globe, it was appalling in that it was “a manifestation of the abuse of trust”.10 The state of affairs was summed up well by Lord Adair Turner, then Chairman of the UK’s Financial Services Authority,11 when he said that prior to the crisis, “too much of the developed world’s intellectual talent was devoted to ever more complex financial innovations…which in their complexity and opacity created large financial stability risks”.12

crisis”,4 there is general agreement with regards to the need for more efficient regulation of a spectrum of companies.

5 This can be traced to the findings of the OECD Steering Group on Corporate Governance, which has identified “weak governance” as a major cause.6 Other researchers have reached similar conclusions, that weaknesses of corporate governance are “key elements contributing to the turmoil”.7

4

Shuangge Wen, ‘The Magnitude of shareholder value as the overriding objective in the UK: the post-crisis objective’ (2011) 7 JIBLR 325

5

Jingchen Zhao, ‘Promoting more socially responsible corporations through UK company law after the 2008 financial crisis: the turning of the crisis compass’ (2011) 9 ICCLR 275

6 7

ibid

Shuangge Wen, ‘The Magnitude of shareholder value as the overriding objective in the UK: the post-crisis objective’ (2011) 7 JIBLR 325

Indeed, the crisis seemed to prove economist Milton Friedman wrong since companies no longer generated enough value for the broader society.13 His famous argument that the company’s goal should only be to maximise profits could no longer be supported, since the narrow-minded pursuit of this goal had resulted in disaster not only for corporations but society at large. However, it should be noted that although Friedman was a strong proponent of free market capitalism, he had included a caveat that the profit-maximisation objective “must not violate the

8

Alison Kemper and Roger L Martin, ‘After the fall: The global financial crisis as a test of corporate social responsibility theories’ (2010) 7 European Management Review 229, 230

9 10

ibid

Eugene KB Tan, ‘Corporate social responsibility as corporate soft law: mainstreaming ethical and responsible conduct in corporate governance’ (2013) 31 Singapore Law Review 227, 244

11

As of April 2013, the Financial Services Authority has been replaced by two new agencies, the Financial Conduct Authority and the Prudential Regulation Authority.

12

Adair Turner, ‘The Financial Crisis and the Future of Financial Regulation (Speech delivered at The Economist’s Inaugural City Lecture, 21 January 2009) <http://www.fsa.gov.uk/pages/Library/ Communication/Speeches/2009/0121_at.shtml> accessed 25 April 2016

13

Alison Kemper and Roger L Martin, ‘After the fall: The global financial crisis as a test of corporate social responsibility theories’ (2010) 7 European Management Review 229, 235

67

fundamental rules of ethics and social responsibility”.14 Regardless of whether Friedman’s argument was wrong or has simply been distorted, the crisis has re-invigorated debate regarding the corporate objective. Some have pointed to the “predominance of shareholder value in the Anglo-American regime”, which has been blamed for encouraging short-term thinking that has “destroyed the long-term growth of banks and public corporations”.15 Others have instead focused on short-termism as the root cause of the crisis,16 being the reason for “short-term incentivised practice, in particular, inappropriate managerial remuneration and speculative investment”.17 Shuangge Wen argues that “understatement of long-term concerns by businesses and their narrow pragmatic preference for short-termism in interpreting shareholder value” has been a cause of the crisis, rather than shareholder primacy itself.18 Amidst these debates, the global financial crisis, followed by the nationalisation of some of the world’s largest corporations paved the path for the return of the state as “regulator, customer, competitor and investor”.19 The crisis had triggered demands for greater scrutiny and accountability and it was found that by late 2008, more than 60% of the American public believed that the most effective way to recover from the crisis and prevent future abuses was to “introduce stricter enforcement and stronger regulations on businesses”.20 In his inauguration address in 2009, US President Barack Obama said, “what is required of us now is a new era of responsibility”.21 With a “voluminous body of analysis” conducted following the crisis suggesting that corporate governance should be reformed “particularly in terms of the perfection of regulations and standards for risk control”,22 there is potential for governments to encourage corporations towards embracing greater responsibility

THE CONCEPT RESPONSIBILITY

OF

CORPORATE

SOCIAL

The global financial crisis therefore exposed the weaknesses of the single-minded pursuit of profit maximisation and etched out a role for governments to play in ensuring that corporations take on greater responsibilities for the good of society. One way in which governments may regulate companies without distorting market incentives is to introduce a regulatory framework by which companies may become more socially responsible. This framework may take the form of mandatory requirements in law, voluntary codes of conduct or a mix of legal and philanthropic responsibility in terms of regulations with a comply-or-explain component.

16

Prior to a detailed discussion of CSR-related regulatory frameworks, it is important to note that there is as yet no fixed definition of CSR. As a concept, CSR has roots in multiple disciplines such as economic, political and legal theory and is hence an “exceedingly diverse, multifaceted enterprise”.23 Nevertheless, while CSR remains without a universal definition, it can be observed that it is today an “inescapable priority” for corporations worldwide.24 Nike learned this the hard way when it was subjected to a global consumer boycott for initially denying any responsibility for abusive labour practices at some of its sub-contractor factories in the early 1990s. The change in its corporate culture is apparent today, as it “operates with an openness and transparency that would have been unthinkable 20 years ago”.25 Following a campaign by Greenpeace to stop Nike’s suppliers from dumping toxic chemical waste in 2011, it responded with a plan to go toxics-free by 2020 within weeks.26 Society has therefore become adept at denouncing and holding companies accountable for activities that are not socially responsible.27

17

23

14

Eugene KB Tan, ‘Corporate social responsibility as corporate soft law: mainstreaming ethical and responsible conduct in corporate governance’ (2013) 31 Singapore Law Review 227, 247

15

Shuangge Wen, ‘The Magnitude of shareholder value as the overriding objective in the UK: the post-crisis objective’ (2011) 7 JIBLR 325 Caitlin Helms, Mark Fox and Robert Kenagy, ‘Corporate short-termism: causes and remedies’ (2012) 2 ICCLR 45 Shuangge Wen, ‘The Magnitude of shareholder value as the overriding objective in the UK: the post-crisis objective’ (2011) 7 JIBLR 325, 332

18

Shuangge Wen, ‘The Magnitude of shareholder value as the overriding objective in the UK: the post-crisis objective’ (2011) 7 JIBLR 325, 326

19

Alison Kemper and Roger L Martin, ‘After the fall: The global financial crisis as a test of corporate social responsibility theories’ (2010) 7 European Management Review 229

20 21

ibid 236

Eugene KB Tan, ‘Corporate social responsibility as corporate soft law: mainstreaming ethical and responsible conduct in corporate governance’ (2013) 31 Singapore Law Review 227, 245

22

Shuangge Wen, ‘The Magnitude of shareholder value as the overriding objective in the UK: the post-crisis objective’ (2011) 7 JIBLR 325, 334

68

beyond mere profits. It can therefore be concluded that the narrow pursuit of profit-maximisation to the detriment of long-term and societal concerns is an important cause of the global financial crisis, and suggests that CSR engagement should be encouraged in order to address this problem and prevent future crises.

Benedict Sheehy, ‘Defining CSR: Problems and Solutions’ (2015) 3 Journal of Business Ethics 625, 627

24

Michael E Porter and Mark R Kramer, ‘Strategy & Society: The Link Between Competitive Advantage and Corporate Social Responsibility’ (Harvard Business Review, December 2006) < https:// hbr.org/2006/12/strategy-and-society-the-link-between-competitiveadvantage-and-corporate-social-responsibility> accessed 25 April 2016

25

Simon Birch, ‘How activism forced Nike to change its ethical game’ The Guardian (London, 6 July 2012) <http://www.theguardian. com/environment/green-living-blog/2012/jul/06/activism-nike> accessed 25 April 2016

26 27

ibid

Michael E Porter and Mark R Kramer, ‘Strategy & Society: The Link Between Competitive Advantage and Corporate Social Responsibility’ (Harvard Business Review, December 2006) < https:// hbr.org/2006/12/strategy-and-society-the-link-between-competitive-

Yet, framing the CSR debate as one between society at large and corporations is neither effective nor productive, since it ignores the symbiotic relationship between society and corporations. Indeed, the “mutual dependence” of society and corporations suggests that a better approach towards CSR would be one that follows the principle of shared value.28 Such an approach would conceivably allow corporations to realise that the pursuit of profits at society’s expense would inevitably lead to crisis, since demand for business is reliant on a healthy society with expanding needs. Having reached this conclusion, corporations will be much less likely to see CSR as an unavoidable burden but as a way to achieve long-term success. This is also in line with corporate sustainability, where firms strive to meet the needs of stakeholders, including shareholders, “without compromising its ability to meet the needs of future stakeholders as well”.29 Therefore, while the debate over defining CSR is far from over, it is clear that it has a real presence in the relationship between society and corporations and that it will in fact be harmful for businesses to neglect it. However, instead of being a divisive figure in this symbiotic relationship, there is potential for CSR to unify the profit-maximising aim of a company with its other social responsibilities. It will be argued that governmental regulation may be able to effectively encourage corporations to take this approach to CSR and the global financial crisis has not only created the space for governments to do this but has demonstrated a need for corporations to consider social responsibilities apart from profit maximisation. Indeed, the global financial crisis can be seen to be the result of these corporations’ singleminded pursuit of profits without care or concern for the broader society, which ultimately had a detrimental effect on the environment in which they operate as well. Having observed the lack of CSR in corporations prior to the crisis, it will therefore be argued that greater CSR engagement will be necessary to address weaknesses in corporate governance in order to prevent future crises.

CSR IN THE UNITED KINGDOM: SECTION 172 OF THE COMPANIES ACT 2006 The “severity of the financial turmoil” in the UK following the global financial crisis has been linked to the shareholder value paradigm, which has long been at the centre of the

UK corporate governance model.30 However, despite the predominance of shareholder value, long-term considerations have been supported in common law where the courts have recognised stakeholder interests relevant to the realisation of ultimate shareholder interests.31 Additionally, in evaluating pre-2006 company law regimes, the Company Law Review Steering Group stated explicitly that the laws governing directors’ duties did not require them to take “an unduly narrow or short-term view” but that directors are “obliged honestly to take account of all the considerations which contribute to the success of the enterprise”.32 Indeed, in a 2009 review of corporate governance in UK banks, Sir David Walker observed that there should be a balance between short and long-term performance objectives.33 It can therefore be said that it is the narrow interpretation of shareholder value resulting in the overemphasis of shortterm interests that is to blame for the grave effects of the global financial crisis on the UK economy, rather than the shareholder value paradigm itself.34 The UK has favoured a “light touch regulatory regime” in corporate law, emphasising shareholder autonomy in keeping with contract and agency theories.35 It is little wonder then that CSR has been used to initiate change in corporate governance regimes.36 One example of regulation that seeks to promote a more long-term view and therefore more socially responsible business practices is s172 of CA 2006, which came into effect in 2007. Having been conceived of prior to the global financial crisis, it cannot be seen as a response to the crisis. Nevertheless, Zhao Jingchen has argued that s172 “represents the practical reality of modern commercial practice” and provides support for directors to incorporate CSR policies within their company’s corporate strategies.37 As part of the enlightened shareholder value approach, s172(1) of CA 2006 codifies the duty of a director to promote the success of the company and explicitly makes reference to

30

Shuangge Wen, ‘The Magnitude of shareholder value as the overriding objective in the UK: the post-crisis objective’ (2011) 7 JIBLR 325

31 32

ibid 330

Shuangge Wen, ‘Revisiting the corporate objective through the economic lens – the UK perspective’ (2013) 8 ICCLR 302, 315

33

David Walker, ‘A review of corporate governance in UK banks and other financial industry entities’ (26 November 2009) <http://webarchive.nationalarchives.gov.uk/+/http:/www.hm-treasury. gov.uk/d/walker_review_261109.pdf> accessed 25 April 2016

34 advantage-and-corporate-social-responsibility> accessed 25 April 2016

28

Michael E Porter and Mark R Kramer, ‘Strategy & Society: The Link Between Competitive Advantage and Corporate Social Responsibility’ (Harvard Business Review, December 2006) < https:// hbr.org/2006/12/strategy-and-society-the-link-between-competitiveadvantage-and-corporate-social-responsibility> accessed 25 April 2016

29

Thomas Dyllick and Kai Hockerts, ‘Beyond the Business Case for Corporate Sustainability’ (2002) 11 Business Strategy and the Environment 130, 131

Shuangge Wen, ‘The Magnitude of shareholder value as the overriding objective in the UK: the post-crisis objective’ (2011) 7 JIBLR 325, 326

35

Shuangge Wen, ‘Revisiting the corporate objective through the economic lens – the UK perspective’ (2013) 8 ICCLR 302, 306

36

Eugene KB Tan, ‘Molding the nascent corporate social responsibility agenda in Singapore: of pragmatism, soft regulation, and the economic imperative’ (2013) 2 Asian J Bus Ethic 185, 192

37

Jingchen Zhao, ‘Promoting more socially responsible corporations through UK company law after the 2008 financial crisis: the turning of the crisis compass’ (2011) 9 ICCLR 275, 282

69

long-term consequences and various stakeholders.38 This is meant to broaden the “traditionally narrow” UK corporate governance model39 and reiterate the “inclusive nature of shareholder primacy”.40 In order to discharge the duty under s172, a director must consider the “likely consequences of any decision in the long term”.41 Stakeholder groups considered include primary internal (employees, members of the company)42 and external (creditors, suppliers, customers) stakeholders,43 as well as secondary external stakeholders (local communities, environment);44 45 these notably include “non-shareholder constituencies”.46 With the introduction of s172, a commitment to greater stakeholder consideration has been made, although this remains within the confines of shareholder primacy,47 since these concerns relate to the maximisation of shareholder benefit.48 Nevertheless, s172 represents a “cultural change” for corporate governance in the UK.49 However, the controversial50 duty entrenched in s172 was opposed by the business and legal community upon its introduction, who argued that UK companies would “cease to be appealing vehicles for foreign investors” and that it would be a “devastating strike” to London’s position as a centre of equity markets.51 It has also been argued that it would result in a “freezing impact on director decisionmaking”.52 First, the question of what would constitute long-term decisions is left up to the directors’ “good faith

38

Eugene KB Tan, ‘Corporate social responsibility as corporate soft law: mainstreaming ethical and responsible conduct in corporate governance’ (2013) 31 Singapore Law Review 227, 248

39

Jingchen Zhao, ‘Promoting more socially responsible corporations through UK company law after the 2008 financial crisis: the turning of the crisis compass’ (2011) 9 ICCLR 275, 282

40

judgment”.53 Additionally, balancing stakeholder interests is “a tricky issue” for directors who may have to resolve conflicts of interests.54 Indeed, this was a criticism voiced by the Law Society for England and Wales and reflects the predominant view that focusing on shareholder value remains the best way to promote “overall social welfare”.55 The feasibility of s172 has also been called into question due to the lack of accountability it may result in, where directors may “trump up a so-called long-term issue” to pursue their own interests,56 which is also a criticism of stakeholder theory.57 In fact, it may be difficult to enforce s172 since directors need only take these considerations into account and it remains only the board or shareholders who can initiate proceedings against the directors.58 Andrew Keay has also argued that the “real problem” may be that it is more difficult to regulate an Act that compels directors to behave in a certain way as compared to the past where it merely required that directors not fall short of particular standards.59 A broader concern would be that it is a limited business case approach that may discourage CSR in areas that are “not easily financially measurable” and regards ethical concerns as “incidental”.60 Nevertheless, it is argued that s172 has been generally successful. Firstly, the Department for Business, Innovation and Skills (BIS) has disclosed that it was well received by a majority of stakeholders, who were particularly positive about how it enhances the “consideration of wider responsibilities”.61 Although the final version of s172 in CA 2006 emphasises the long-term rather than a balance of short-term concerns as well, it reflects the pervasiveness of short-termism in commercial practice and the perspective that the long-term is of greater importance at the current stage.62 Indeed, while it lacks detailed guidance and, to

Shuangge Wen, ‘Revisiting the corporate objective through the economic lens – the UK perspective’ (2013) 8 ICCLR 302, 317

41 42 43 44 45

Companies Act 2006, Section 172(1)(a) Companies Act 2006, Section 172(1)(b) and (f ) Companies Act 2006, Section 172(1)(c) and Section 172(3) Companies Act 2006, Section 172(1)(d)

Jingchen Zhao, ‘Promoting more socially responsible corporations through UK company law after the 2008 financial crisis: the turning of the crisis compass’ (2011) 9 ICCLR 275, 283

46

Shuangge Wen, ‘The Magnitude of shareholder value as the overriding objective in the UK: the post-crisis objective’ (2011) 7 JIBLR 325, 330

47

Shuangge Wen, ‘Revisiting the corporate objective through the economic lens – the UK perspective’ (2013) 8 ICCLR 302, 315

48

Shuangge Wen, ‘The Magnitude of shareholder value as the overriding objective in the UK: the post-crisis objective’ (2011) 7 JIBLR 325, 331

49

Jingchen Zhao, ‘Promoting more socially responsible corporations through UK company law after the 2008 financial crisis: the turning of the crisis compass’ (2011) 9 ICCLR 275, 282

50

Andrew Keay, ‘Enlightened shareholder value, the reform of the duties of company directors and the corporate objective’ (2006) Lloyd’s Maritime and Commercial Law Quarterly 335

51

Shuangge Wen, ‘Revisiting the corporate objective through the economic lens – the UK perspective’ (2013) 8 ICCLR 302, 316

52 70

ibid

53

Shuangge Wen, ‘The Magnitude of shareholder value as the overriding objective in the UK: the post-crisis objective’ (2011) 7 JIBLR 325, 336

54

Andrew Keay, ‘Enlightened shareholder value, the reform of the duties of company directors and the corporate objective’ (2006) Lloyd’s Maritime and Commercial Law Quarterly 335, 352

55

Shuangge Wen, ‘Revisiting the corporate objective through the economic lens – the UK perspective’ (2013) 8 ICCLR 302, 316

56

Shuangge Wen, ‘The Magnitude of shareholder value as the overriding objective in the UK: the post-crisis objective’ (2011) 7 JIBLR 325, 336

57

Andrew Keay, ‘Enlightened shareholder value, the reform of the duties of company directors and the corporate objective’ (2006) Lloyd’s Maritime and Commercial Law Quarterly 335, 357

58 59 60

ibid 355 ibid 357

Onyeka K Osuji, ‘Corporate social responsibility, juridification and globalisation: ‘inventive interventionism’ for a ‘paradox’’ (2015) 3 International Journal of Law in Context 265, 275

61

Shuangge Wen, ‘Revisiting the corporate objective through the economic lens – the UK perspective’ (2013) 8 ICCLR 302, 315

62

Shuangge Wen, ‘The Magnitude of shareholder value as the overriding objective in the UK: the post-crisis objective’ (2011) 7 JIBLR 325, 327

some extent, gives directors an “unfettered discretion”,63 this is not a deadly flaw as it can also be seen as “principle-based guidance” that can be read with accompanying legislation relating to specific stakeholders.64 CSR IN INDIA: SECTION 135 OF THE COMPANIES ACT 2013 Prior to the reform of the Companies Act 1956, there was no clear indication beyond some judicial observations that a company had any social responsibility.65 Early instances of human rights abuses by corporations in India can be traced to slave trade and opium trafficking66 and abuses by the East India Company continued virtually unchecked for nearly a century before the British parliament removed it from power.67 A more recent example of human rights abuse by an MNC is the 1984 Bhopal disaster, which became “one of the worst chemical disasters in history” and exposed more than 500,000 people to toxic fumes.68 The MNC in question responded by dissociating itself from the tragedy, failing to clear the industrial site completely of toxic chemicals, while compensation was only awarded to the injured and families of those killed in 2003, nearly 20 years later.69 With the global financial crisis, the economic growth in India decelerated to 6.7% in 2008-2009 from an average 8.8% in the previous five years despite the initial belief that emerging economies were shielded from the effects of the global financial crisis.70

and re-issued in 2011.72 The Guidelines were introduced to promote corporate sustainability in a soft way by reaffirming that businesses are “an integral part of society” and therefore have a role in “upholding the essentials of ethical practices and good governance”.73 Efforts to incorporate CSR culminated in a reform of company law and the percentage requirement. Under the Companies Act 2013, a company with a specified net worth or profit in a financial year must contribute at least 2% of its average net profits in the three financial years prior towards CSR purposes,74 with preference to local areas and areas in which the company operates.75 CSR activities defined in Schedule VII include “eradicating extreme hunger and poverty, promotion of education, reducing child mortality and improving maternal health”.76 Although there are no direct sanctions, the Act applies the comply-or-explain approach, which means that companies have to explain any noncompliance in a business responsibility statement attached to its annual financial report,77 where a failure to report results in a penalty. Further, subsidiary legislation requires that corporate websites include information about CSR policies, which suggests that negative publicity is the main incentive (or dis-incentive).78

64

As one of the only examples of a mandatory CSR policy, India’s percentage requirement has garnered much attention and is arguably an “anomaly” considering the general understanding of CSR as a voluntary undertaking.79 It is possible that the 2% threshold may lead companies to limit their spending to that minimum, and even cause some to cut back where they have been spending more.80 More problematic, however, is the risk of companies complying merely with the letter of the law in satisfying the 2% requirement while maintaining socially irresponsible practices.81 At a Global Reporting Initiative (GRI) Sustainability Reporting for Sustainable Development conference in India, a joint declaration was issued stating that the requirement could lead to “forced philanthropy,

65

72

66

73 74

It was against this background that the CSR Voluntary Guidelines 2009 was issued by the Indian Ministry of Corporate Affairs71 and later comprehensively revised

63

Andrew Keay, ‘Enlightened shareholder value, the reform of the duties of company directors and the corporate objective’ (2006) Lloyd’s Maritime and Commercial Law Quarterly 335, 361 Jingchen Zhao, ‘Promoting more socially responsible corporations through UK company law after the 2008 financial crisis: the turning of the crisis compass’ (2011) 9 ICCLR 275, 284 Surya Deva, ‘Socially Responsible Business in India: Has the Elephant Finally Woken Up to the Tunes of International Trends’ (2012) 4 Common Law World Review 299, 303 Barcelona Panda, ‘Multinational corporations and human rights violations’ (2013) 4 Journal of Financial Crime 422, 423

67

William Dalrymple, ‘The East India Company: The Original Corporate Raiders’ The Guardian (London, 4 March 2015) <http:// www.theguardian.com/world/2015/mar/04/east-india-companyoriginal-corporate-raiders> accessed 25 April 2016

68

Edward Broughton, ‘The Bhopal disaster and its aftermath: a review’ (2005) 4 Environmental Health: A Global Access Science Source 6

69 70

ibid

Nirupan Bajpai, ‘Global Financial Crisis, its Impact on India and the Policy Response’ (2011) Columbia Global Centers Working Paper 5 <http://globalcenters.columbia.edu/mumbai/files/ globalcenters_mumbai/Global_Financial_Crisis_its_Impact_on_India_ and_the_Policy_Response_CGCSA_Working_Paper_5.pdf> accessed 25 April 2016

71

Barcelona Panda, ‘Multinational corporations and human rights violations’ (2013) 4 Journal of Financial Crime 422, 428

Surya Deva, ‘Socially Responsible Business in India: Has the Elephant Finally Woken Up to the Tunes of International Trends’ (2012) 4 Common Law World Review 299, 304 ibid 303

Eugene KB Tan, ‘Corporate social responsibility as corporate soft law: mainstreaming ethical and responsible conduct in corporate governance’ (2013) 31 Singapore Law Review 227, 234

75

Onyeka K Osuji, ‘Corporate social responsibility, juridification and globalisation: ‘inventive interventionism’ for a ‘paradox’’ (2015) 3 International Journal of Law in Context 265, 278

76 77 78

ibid India Companies Act 2013, Section 135(5)

Onyeka K Osuji, ‘Corporate social responsibility, juridification and globalisation: ‘inventive interventionism’ for a ‘paradox’’ (2015) 3 International Journal of Law in Context 265, 278

79

Surya Deva, ‘Socially Responsible Business in India: Has the Elephant Finally Woken Up to the Tunes of International Trends’ (2012) 4 Common Law World Review 299

80 81

ibid 308 ibid

71

‘tick box’ behaviour, tokenism or even corruption, and masking of data to avoid having to comply”.82 Nevertheless, it was expected that the percentage requirement would apply to about 8,000 companies and result in a total annual spending of US$2 billion on CSR activities.83 Two years on, the jury is still out on the effectiveness of the requirement84, though some remain hopeful.

CSR IN SINGAPORE As examples of the business case CSR approach85 and philanthropy CSR approach,86 CSR regulations passed in the UK and India respectively have both their advantages and disadvantages. By boldly mandating CSR, India sparked debate as to what the role of government is, particularly in relation to CSR-related regulation.87 Before any discussion of whether Singapore should encourage CSR through a similar regulation, it would be wise to consider if mandating CSR is effective or advisable.

It should in fact be observed that societal pressure does not always lead to positive outcomes. It has been argued that activist organisations may simply target the “most visible or successful” corporations to achieve their goal of drawing public attention to an issue.88 This strategy may in fact neglect to achieve any significant or relevant change while possibly bullying the targeted company into implementing policies that may not align with their business goals, which is neither effective nor sustainable. Regulation, like social and media pressures, may distort market forces and “penalise productive companies”,89 making it more difficult

82

Ashok Prasad, ‘India’s new CSR law sparks debate among NGOs and businesses’ The Guardian (London, 11 August 2014) <http://www.theguardian.com/sustainable-business/india-csr-lawdebate-business-ngo> accessed 25 April 2016

83

Chhavi Ghuliani, ‘India Companies Act 2013: Five Key Points About India’s ‘CSR Mandate’’ (Business for Social Responsibility, 22 November 2013) <http://www.bsr.org/en/our-insights/blog-view/ india-companies-act-2013-five-key-points-about-indias-csr-mandate> accessed 25 April 2016

It can thus be seen that an extreme stakeholder perspective is detrimental not only to firms that are forced into taking a philanthropy approach to CSR but also to the target community or cause. Over-regulation may also be harmful where it distorts market forces and results in less competitive companies. The effectiveness of regulation is also limited since companies may only comply with the letter of the law by “greenwashing” instead of engaging in genuine CSR activities. If firms are to be convinced, rather than bullied, into incorporating CSR policies in their business, CSR-related regulation should emphasise the symbiotic relationship between society and corporations. Porter and Kramer argued that to foster CSR, “we must root [CSR] in a broad understanding of the interrelationship between a corporation and society while at the same time anchoring

84

90 91

ibid

85

92 93

ibid 235

Peter ter Weeme, ‘One year into India’s CSR law: The jury’s still deliberating’ (Eco-business, 29 May 2015) <http://www. eco-business.com/opinion/one-year-into-indias-csr-law-the-jurys-stilldeliberating/> accessed 25 April 2016 Onyeka K Osuji, ‘Corporate social responsibility, juridification and globalisation: ‘inventive interventionism’ for a ‘paradox’’ (2015) 3 International Journal of Law in Context 265, 275

86 87 88

ibid 278 ibid 279

Michael E Porter and Mark R Kramer, ‘Strategy & Society: The Link Between Competitive Advantage and Corporate Social Responsibility’ (Harvard Business Review, December 2006) < https:// hbr.org/2006/12/strategy-and-society-the-link-between-competitiveadvantage-and-corporate-social-responsibility> accessed 25 April 2016

89

Michael E Porter and Mark R Kramer, ‘Strategy & Society: The Link Between Competitive Advantage and Corporate Social Responsibility’ (Harvard Business Review, December 2006) < https:// hbr.org/2006/12/strategy-and-society-the-link-between-competitiveadvantage-and-corporate-social-responsibility> accessed 25 April 2016

72

for companies to recover post-crisis. This will also affect competitiveness and create a vicious circle where companies lose opportunities to competitors, resulting in a loss of jobs and a further economic downturn.90 Hence, while regulation may be a common response to corporate governance failures, it is important to avoid “regulatory hubris and governance over-reach”.91 This may also result in companies complying merely with the letter of the law but not the spirit of the law, an important distinction in corporate governance.92 While the 2015 KPMG Survey of Corporate Responsibility Reporting found that it is now “standard practice” to include CSR information in annual reports,93 Amnesty and Global Witness also reported in 2015 that more than 80% of filings had “little useful information” and further, fell below “minimum due diligence requirements”.94 Another criticism is that CSR initiatives are almost never detailed in terms of impact but by the amount of money or volunteer hours spent.95 It is hence understandable that CSR activities have been met with cynicism, since it is difficult to distinguish genuine efforts from mere public relations exercises.

Further, even if efforts are made to promote greater CSR engagement through legislation, it is possible that they may be “circumvented or complied with in a perfunctory way”.96

Eugene KB Tan, ‘Corporate social responsibility as corporate soft law: mainstreaming ethical and responsible conduct in corporate governance’ (2013) 31 Singapore Law Review 227, 240 ‘Currents of Change: the KPMG Survey of Corporate Responsibility Reporting 2015’ <https://assets.kpmg.com/content/ dam/kpmg/pdf/2016/02/kpmg-international-survey-of-corporateresponsibility-reporting-2015.pdf> accessed 25 April 2016

94

Onyeka K Osuji, ‘Corporate social responsibility, juridification and globalisation: ‘inventive interventionism’ for a ‘paradox’’ (2015) 3 International Journal of Law in Context 265

95

Michael E Porter and Mark R Kramer, ‘Strategy & Society: The Link Between Competitive Advantage and Corporate Social Responsibility’ (Harvard Business Review, December 2006) < https:// hbr.org/2006/12/strategy-and-society-the-link-between-competitiveadvantage-and-corporate-social-responsibility> accessed 25 April 2016

96

Eugene KB Tan, ‘Corporate social responsibility as corporate soft law: mainstreaming ethical and responsible conduct in corporate governance’ (2013) 31 Singapore Law Review 227, 235

it in the strategies and activities of specific companies.”97 In order to do so, both governments and corporations should avoid thinking of corporate growth and social welfare as a “zero-sum game”.98 Instead of legislating to interfere bluntly with a corporation’s business strategy, regulations should ideally encourage corporations to make appropriate organisational changes, re-structure incentives and proactively seek out ways to incorporate CSR principles in their business. By encouraging a shift from “a fragmented, defensive posture to an integrated, affirmative approach”,99 governments and corporations can work together to create shared value by integrating both business and social needs, which will result in long-term and sustainable success of the business and thereby a healthy society.

Nevertheless, while CSR may be in line with the “communitarian ethos” of many Asian societies100 including Singapore,101 it is unlikely that the conclusions drawn so far in the CSR debate will be easily applied to the region. Like much of the world, civil society and governments in the region are under pressure to find “an effective countervailing force” to the vast influence of multi-national corporations.102 However, the approach to CSR remains largely based on the philanthropic model and relies on companies to take voluntary action.103 As such, Eugene Tan argues for a wider conception of CSR in Asia104 while emphasising that it has to be conceptualised and that there is “no one-size-fits-all approach”.105 It is important to note that ‘social goods’ are “functions of both individual and cultural values”, which means there may be drastic differences between societies and stakeholder groups as to what they are.106 As such, the Singapore context should be examined before considering

97

Michael E Porter and Mark R Kramer, ‘Strategy & Society: The Link Between Competitive Advantage and Corporate Social Responsibility’ (Harvard Business Review, December 2006) < https:// hbr.org/2006/12/strategy-and-society-the-link-between-competitiveadvantage-and-corporate-social-responsibility> accessed 25 April 2016

98

Eugene KB Tan, ‘Corporate social responsibility as corporate soft law: mainstreaming ethical and responsible conduct in corporate governance’ (2013) 31 Singapore Law Review 227, 242

99

Michael E Porter and Mark R Kramer, ‘Strategy & Society: The Link Between Competitive Advantage and Corporate Social Responsibility’ (Harvard Business Review, December 2006) < https:// hbr.org/2006/12/strategy-and-society-the-link-between-competitiveadvantage-and-corporate-social-responsibility> accessed 25 April 2016

100 101

ibid 234

how CSR should be encouraged.

Singapore’s economy is very much tied to the global market. As a result, the global financial crisis directly affected Singapore’s economy and revealed its vulnerability to external shocks.107 It is hence suggested that CSR may help to address the underlying problems that led to the crisis and shield trade-dependent Singapore from future crises. However, while the concept of CSR is not new either in Asia or Singapore,108 there remains a “considerable lack of consistent research”.109 There is little debate and understanding of CSR in Singapore’s context110 and this is perhaps reflected in Singapore’s “relatively low level of CSR penetration” that has been remarked upon in Chappel and Moon’s study of CSR reporting across seven Asian countries.111 This finding is perhaps more striking since Singapore is ranked first in terms of economic development but is only middling for CSR reporting and second-last for extensive coverage,112 as seen in the table re-produced below.

Penetration (Rank Order)

Extensive Coverage (Rank Order)

India

72% (1)

36% (1)

South Korea

52% (2)

27% (3)

Thailand

42% (3)

14% (7)

Singapore

38% (4)

16% (6)

Malaysia

32% (5)

25% (4)

Philippines

30% (6)

36% (2)

Indonesia

24% (7)

18% (5)

Seven Country Mean

41%

27.1%

Table 1: The Ranking and Correlation of CSR Penetration and Coverage113 As it stands, the Singapore government is largely responsible for the development of CSR practices locally. In a 2004 keynote address by then-Minister of State for Trade and Industry, and National Development, Dr. Vivian Balakrishnan, it was noted that CSR has “become more than an exercise in corporate communications and traditional philanthropy”

107

Shandre M Thangavelu ‘Global Financial Crisis: Impact on Singapore and ASEAN’ 29 November 2008 EABER Working Paper 49

Eugene KB Tan, ‘Molding the nascent corporate social responsibility agenda in Singapore: of pragmatism, soft regulation, and the economic imperative’ (2013) 2 Asian J Bus Ethic 185, 189

108

Bindu Sharma, Contextualising CSR in Asia: Corporate Social Responsibility in Asian economies (Lien Centre for Social Innovation, 2013) 11

Bindu Sharma, Contextualising CSR in Asia: Corporate Social Responsibility in Asian economies (Lien Centre for Social Innovation, 2013) 8

102 103 104

ibid 13

Eugene KB Tan, ‘Corporate social responsibility as corporate soft law: mainstreaming ethical and responsible conduct in corporate governance’ (2013) 31 Singapore Law Review 227, 234

105 106

ibid 229

Linda S Munilla and Morgan P Miles, ‘The Corporate Social Responsibility Continuum as a Component of Stakeholder Theory’ (2005) 4 Business and Society Review 371, 373

Eugene KB Tan, ‘Molding the nascent corporate social responsibility agenda in Singapore: of pragmatism, soft regulation, and the economic imperative’ (2013) 2 Asian J Bus Ethic 185, 186

109 110

Eugene KB Tan, ‘Molding the nascent corporate social responsibility agenda in Singapore: of pragmatism, soft regulation, and the economic imperative’ (2013) 2 Asian J Bus Ethic 185, 186

111 112

ibid 187

113

ibid 22

Bindu Sharma, Contextualising CSR in Asia: Corporate Social Responsibility in Asian economies (Lien Centre for Social Innovation, 2013) 21

73

and that a structured approach to CSR is “fast becoming an indispensable principle of corporate management and an invaluable business strategy”.114 Emphasis was placed on the “negative commercial implications” if social values were ignored.115 Mr. Heng Chee How, the next Minister of State for Trade and Industry, also took the business case approach in speaking about CSR at the 2005 launch of the Singapore Compact for Corporate Social Responsibility, recently renamed Global Compact Network Singapore (Global Compact). He explained, “CSR is about doing good even as companies seek to do well” and noted that the social and economic goals are “complementary rather than contradictory”.116 These statements demonstrate the government’s perspective that CSR is a “sound business approach”117 and perhaps explain its focus on building Singapore as the “philanthropy hub of Asia”.118

(NTI on CSR)124 was formed in 2004 to “embrace CSR as a coordinated national initiative”, which founded the Global Compact in 2005.125 As Singapore’s national society for CSR, the latter aims to “play a pivotal role in defining the direction and landscape of CSR in Singapore” by providing strategic direction while helping small and medium enterprises (SMEs) adopt CSR principles.126 This hybrid approach ensures the government’s “influence, if not control and authority, over how CSR is perceived, promoted, and regulated”.127 The tripartite model also promotes stakeholder collaboration, which “sensitises” them to the challenges CSR poses to different parties.128 The “officially endorsed CSR movement” is hence collaborative and suggests that socio-economic interests will take precedence over any party’s specific interests.129 As such, Eugene Tan observed that:

Singapore has observed that CSR represents the symbiotic relationship between businesses and their wider operating environment,119 which is in line with both the “communitarian ethos espoused by Singapore’s political leadership” and the conception of Singapore as a stakeholder society.120 Accordingly, the government has promoted the CSR agenda through “quasi-government entities” and the “historical tripartite (government-business-trade union) model”.121 This “hybrid model”122 has the Singapore National Employers Federation and Singapore Business Federation represent employers, the National Trade Union Congress represent trade unions and the Ministry of Manpower and relevant statutory boards represent the government.123 Additionally, the National Tripartite Initiative on CSR

“The CSR endorsement by the state, while not taking a legislative framework and still very much a private sectordriven initiative, is in accord with Singapore’s political and cultural values where the promotion of social responsibility (individual and group), harmony, cohesion, and stability in a multi-racial, multi-religious, and multi-lingual society are very much valued.”130

114

‘Speech by Minister of State Vivian Balakrishnan’ (National Archives of Singapore, 23 February 2004) <http://www.nas.gov.sg/ archivesonline/speeches/record-details/786f3f62-115d-11e3-83d50050568939ad> accessed 25 April 2016

115 116

ibid

‘Speech by Mr Heng Chee How, Minister of State for Trade and Industry’ (National Archives of Singapore, 26 January 2005) <http:// www.nas.gov.sg/archivesonline/speeches/record-details/792cf59b-115d11e3-83d5-0050568939ad> accessed 25 April 2016

124

Eugene KB Tan, ‘Molding the nascent corporate social responsibility agenda in Singapore: of pragmatism, soft regulation, and the economic imperative’ (2013) 2 Asian J Bus Ethic 185, 189

125

117 118

Bindu Sharma, Contextualising CSR in Asia: Corporate Social Responsibility in Asian economies (Lien Centre for Social Innovation, 2013) 21

Stakeholders involved in the NTI on CSR also include the Consumers Association of Singapore, the National Cooperative Federation and the Singapore Institute of Directors.

Eugene KB Tan, ‘Molding the nascent corporate social responsibility agenda in Singapore: of pragmatism, soft regulation, and the economic imperative’ (2013) 2 Asian J Bus Ethic 185, 188

‘Speech by Minister of State Vivian Balakrishnan’ (National Archives of Singapore, 23 February 2004) <http://www.nas.gov.sg/ archivesonline/speeches/record-details/786f3f62-115d-11e3-83d50050568939ad> accessed 25 April 2016

126 127 128 129 130

Eugene KB Tan, ‘Molding the nascent corporate social responsibility agenda in Singapore: of pragmatism, soft regulation, and the economic imperative’ (2013) 2 Asian J Bus Ethic 185, 189

131

119

120 121

Bindu Sharma, Contextualising CSR in Asia: Corporate Social Responsibility in Asian economies (Lien Centre for Social Innovation, 2013) 27

122

Eugene KB Tan, ‘Molding the nascent corporate social responsibility agenda in Singapore: of pragmatism, soft regulation, and the economic imperative’ (2013) 2 Asian J Bus Ethic 185, 186

123 74

However, if the goal is to ensure Singapore remains businessfriendly, greater CSR engagement may be necessary. There are two forms in which Asian businesses have encountered CSR: as Asia-based supply chains to multinationals and Asiabased firms expanding overseas.131 As such, firms have found that they need to meet expectations of global stakeholders and comply with external regulatory standards132 or face CSR activism by NGOs and civil society.133 Across Asia, CSR has acquired “renewed vigour”134 and in response, “culturallyspecified CSR concepts” have emerged ranging from China’s ‘harmonious society’ construct, Thailand’s ‘Sufficiency

ibid 189

ibid ibid 186 ibid 190 ibid

Eugene KB Tan, ‘Molding the nascent corporate social responsibility agenda in Singapore: of pragmatism, soft regulation, and the economic imperative’ (2013) 2 Asian J Bus Ethic 185 Bindu Sharma, Contextualising CSR in Asia: Corporate Social Responsibility in Asian economies (Lien Centre for Social Innovation, 2013) 12

132 133

ibid 30

134

ibid 186

Eugene KB Tan, ‘Molding the nascent corporate social responsibility agenda in Singapore: of pragmatism, soft regulation, and the economic imperative’ (2013) 2 Asian J Bus Ethic 185, 190

Economy’ philosophy and Malaysia’s Vision 2020135 to legislation in Indonesia.136 While a lack of CSR knowledge is seen as a possible obstacle to Singapore’s “trade potential and development”,137 CSR regulation in Singapore remains minimal and there are no plans for legislation.138 A barrier to greater CSR engagement is the perception that CSR is possibly a “double-edged sword”.139 Despite tacit support for CSR, the government is aware that it can create business costs and has therefore refrained from taking a legislative approach, preferring instead to allow firms to practise CSR voluntarily.140 Mr. Lee Yi Shyan, Senior Minister of State for Trade and Industry, expressed his doubts in a 2014 speech that linking CSR with a company’s branding strategy would create “business benefits”.141 Nevertheless, he encouraged businesses to undertake “meaningful CSRs in the areas they have passion for”.142 However, this has meant that CSR in Singapore has so far been limited to corporate philanthropy and volunteerism, without engaging issues such as discrimination, labour and sustainability,143 and response to existing schemes “remains lukewarm at best”.144 Given the fundamental importance of economic activity in Singapore, corporate governance is critical and more can, and should, be done on the CSR front in order for Singapore to keep up with the growing importance of CSR globally. Having noted that societal forces driving CSR are relatively weak in Singapore, it is understandable that the government has taken on the role of promoter and practitioner.145 Nevertheless, considering Singapore’s “distinctively non-legalistic ethos” in relation to CSR146 and the government’s reservations due to the business costs incurred, it is unlikely Singapore will follow in India’s path to mandate CSR. Even the UK’s approach may be considered a “radical reform”, given that there is similarly no obvious

135

Bindu Sharma, Contextualising CSR in Asia: Corporate Social Responsibility in Asian economies (Lien Centre for Social Innovation, 2013) 13

136

Eugene KB Tan, ‘Molding the nascent corporate social responsibility agenda in Singapore: of pragmatism, soft regulation, and the economic imperative’ (2013) 2 Asian J Bus Ethic 185, 186

137 138 139 140 141

ibid 198 ibid 192 ibid 202 ibid 198

‘Speech by Mr Lee Yi Shyan Senior Minister of State for Trade and Industry’ (Ministry of Trade and Industry Singapore, 6 March 2014) <https://www.mti.gov.sg/NewsRoom/Pages/SPEECH-BY-MRLEE-YI-SHYAN-SENIOR-MINISTER-OF-STATE-FOR-TRADEAND-INDUSTRY-DURING-THE-COMMITTEE-OF-SUPPLYDEBATE-UNDER-HEAD-.aspx> accessed 25 April 2016

142 143

ibid

144 145

ibid 200

146

ibid 202

Eugene KB Tan, ‘Molding the nascent corporate social responsibility agenda in Singapore: of pragmatism, soft regulation, and the economic imperative’ (2013) 2 Asian J Bus Ethic 185, 189 Eugene KB Tan, ‘Molding the nascent corporate social responsibility agenda in Singapore: of pragmatism, soft regulation, and the economic imperative’ (2013) 2 Asian J Bus Ethic 185

precursor in Singapore as in the UK.147 It is hence likely that even if a regulatory framework were introduced, it would be characterised by regulatory norms as opposed to mandatory laws.148 An existing example in Singapore would be the 2012 Code of Corporate Governance (CG Code), which, although not mandatory, uses the comply-or-explain requirement to encourage firms to consider sustainability issues. The CG Code also states that the board should, over and above statutory requirements, identify key stakeholders and recognise that their perceptions affect the company’s reputation. Non-compliance is not an offence itself but may subject the corporation to civil penalties. Though slow, progress is being made in expanding the board’s role to consider sustainability issues and the Singapore Exchange (SGX) has launched a review in 2015 of how locallylisted companies are abiding by the comply-or-explain requirement. This is motivated by the belief that companies with good governance will add to reserves of shareholder trust and confidence. It is expected that the findings will be made public and the SGX has stated that it will engage with relevant companies to ensure that any shortcomings identified will be addressed.149 Additionally, steps are being taken to include a comply-orexplain requirement to the SGX’s Guide to Sustainability Reporting for Listed Companies (Sustainability Reporting Guide). In a Policy Statement accompanying the Sustainability Reporting Guide, sustainability reporting is defined as the “publication of environmental, social and governance information in a comprehensive and strategic manner that reflects the activities and outcomes across these three dimensions of an organisation’s performance”.

Additionally, the SGX stated that it expects sustainability to become an accepted operating principle and for companies to commit to it. The Sustainability Reporting Guide also encourages corporations to use internationally accepted reporting frameworks such as GRI’s G4 Guidelines and provide disclosure on material sustainability issues. In 2016, the SGX conducted a consultation exercise for new requirements including a comply-or-explain regime to be introduced in 2017,150 and will be working with the Global

147

Andrew Keay, ‘Enlightened shareholder value, the reform of the duties of company directors and the corporate objective’ (2006) Lloyd’s Maritime and Commercial Law Quarterly 335, 361

148

Eugene KB Tan, ‘Molding the nascent corporate social responsibility agenda in Singapore: of pragmatism, soft regulation, and the economic imperative’ (2013) 2 Asian J Bus Ethic 185, 192

149

Ann Williams ‘SGX reviewing companies compliance with corporate governance code’ The Straits Times (Singapore, 12 October 2015) <http://www.straitstimes.com/business/companies-markets/sgxreviewing-companies-compliance-with-corporate-governance-code> accessed 25 April 2016

150

Lawrence Loh, ‘Total system approach needed to push sustainability reporting’ The Business Times (Singapore, 31 March 2016) <http://www.businesstimes.com.sg/hub/sustainability-and-goinggreen/total-system-approach-needed-to-push-sustainability-reporting> accessed 25 April 2016

75

Compact for “training and capability building”.151 The update of the rules are motivated by “growing global interest in sustainability information” and the desire to build on the “transparency and governance for which Singapore is internationally recognised”.152 This is a welcome move, as it was found in 2013153 that only 29.8% of companies did “some form of sustainability”.154 Moving beyond voluntary guidelines is therefore expected to be “a boost to promulgate and root the practice of sustainability reporting”.155 Other ongoing efforts include those by the Global Compact, another key player in pushing the CSR agenda in Singapore as the national society for CSR and the main link to the international CSR network through its strong ties with the UN Global Compact.156 The Global Compact helps distinguish CSR in Singapore from that practised elsewhere and prevents external parties from influencing Singapore’s CSR agenda,157 in alignment with the government’s objective to formulate CSR measures that are “transparent internationally but based on local conditions”.158 It has also organised events to help organisations enhance profitability and achieve competitive advantage through “Green Productivity”159 and facilitated training to guide firms through the <IR> Framework.160 The Ministry of Finance

151

‘SGX seeks public feedback on proposed rules for sustainability reporting’ Channel News Asia (Singapore, 5 January 2016) <http://www.channelnewsasia.com/news/business/singapore/sgx-seekspublic-feedback/2400092.html> accessed 25 April 2016

152 153

ibid

The ASEAN CSR Network and the Centre for Governance, Institutions and Organisations at National University of Singapore Business School are jointly completing the benchmark studies for the year 2015 and the results expected in July 2016.

also recently announced a pilot scheme to provide tax deductions for businesses that send employees to volunteer at, and provide services, to qualifying charities.161 The Business and Institutions of a Public Character Partnership Scheme (BIPS) is aimed at boosting CSR and will offer qualifying businesses a 250% tax deduction on wages and incidental expenses, with more details to be released closer to its start date of 1 July 2016.162 This may be helpful, given that government funding can “help test the waters” where the “path to profitability isn’t clear”.163 CONCLUSION Therefore, it can be observed that the economic imperative coupled with the need for international expansion in Singapore’s trade-dependent economy has made it necessary for local businesses to be aware of the global CSR movement.164 With the government’s influence in shaping the CSR agenda, it has largely been confined to corporate philanthropy and volunteerism. Nevertheless, CSR’s potential as a sound business approach has been identified and it is argued that greater CSR engagement in Singapore is beneficial, particularly as it is aligned with Singapore’s political and cultural values. Indeed, there seems to be a move towards introducing a regulatory framework based on a comply-or-explain regime instead of a purely voluntary approach and it is argued that this should be welcomed in order for Singapore to keep up with global trends not only to protect its economy but also to further economic development.

154

Lawrence Loh, ‘Total system approach needed to push sustainability reporting’ The Business Times (Singapore, 31 March 2016) <http://www.businesstimes.com.sg/hub/sustainability-and-goinggreen/total-system-approach-needed-to-push-sustainability-reporting> accessed 25 April 2016

155

Lawrence Loh, ‘Total system approach needed to push sustainability reporting’ The Business Times (Singapore, 31 March 2016) <http://www.businesstimes.com.sg/hub/sustainability-and-goinggreen/total-system-approach-needed-to-push-sustainability-reporting> accessed 25 April 2016

156

Eugene KB Tan, ‘Molding the nascent corporate social responsibility agenda in Singapore: of pragmatism, soft regulation, and the economic imperative’ (2013) 2 Asian J Bus Ethic 185, 193

157 158

ibid 190

‘Speech by Minister of State Vivian Balakrishnan’ (National Archives of Singapore, 23 February 2004) <http://www.nas.gov.sg/ archivesonline/speeches/record-details/786f3f62-115d-11e3-83d50050568939ad> accessed 25 April 2016

159

‘Green Productivity and the opportunity it presents for your business’ <http://www.csrsingapore.org/c/component/ jevents/eventdetail/1216/23/%7C22/%7C21/%7C20/%7C19/ green-productivity-and-the-opportunity-it-presents-for-yourbusiness?Itemid=261&filter_reset=1> accessed 25 April 2016

160

‘Integrated Reporting (IR) Training’ <http://www.csrsingapore.org/c/component/jevents/ eventdetail/1212/23/%7C22/%7C21/%7C20/%7C19/integratedreporting-ir-training?Itemid=261&filter_reset=1> accessed 25 April 2016

76

161

Neo Chai Chin, ‘Tax breaks for firms that engage in charitable work’ Today (Singapore, 24 March 2016) <http://www. todayonline.com/singapore/boosting-csr-budget> accessed 25 April 2016

162

Neo Chai Chin, ‘Tax breaks for firms that engage in charitable work’ Today (Singapore, 24 March 2016) <http://www. todayonline.com/singapore/boosting-csr-budget> accessed 25 April 2016

163

Mark Pfitzer, Valerie Bockstette and Mike Stamp, ‘Innovating for Shared Value’ (Harvard Business Review, September 2013) <https://hbr.org/2013/09/innovating-for-shared-value> accessed 25 April 2016

164

Eugene KB Tan, ‘Molding the nascent corporate social responsibility agenda in Singapore: of pragmatism, soft regulation, and the economic imperative’ (2013) 2 Asian J Bus Ethic 185

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77

INVESTOR-STATE DISPUTE SETTLEMENT IN THE TRANS-PACIFIC PARTNERSHIP PA R A J U D I C I A L O R P R E J U D I C I A L ?

by Jonathan Koh “As express promises and engagements should be inviolable, every wise and virtuous nation will be attentive to examine and weigh a commercial treaty before she concludes it, and to take care that she be not thereby engaged to any thing contrary to the duties which she owes to herself and others” - Emmer de Vattel1

INTRODUCTION Investor-state dispute settlement (ISDS) mechanisms allow investors to bring international arbitral proceedings against foreign governments if they can sufficiently prove that such

1

The Law of Nations ( 1797) Book II Chapter II Para 28 (http://www.constitution.org/vattel/vattel_02.htm)

78

governments have actually or potentially caused financial detriment contrary to treaty obligations. Such mechanisms find their legitimacy in inter-state treaty agreements, of which there are almost 3,000 to date that include ISDS.2 Most recently, the finalised Trans-Pacific Partnership (TPP) trade agreement was released3 and this, too, included an ISDS mechanism. The agreement was made between 12 Pacific Rim member states – most notably the United States, Australia, Japan and Singapore.

ISDS may be seen as a privatised extension of rights to

2

United Nations Conference on Trade and Development, ‘Recent Developments in Investor-State Dispute Settlement’ (UNCTAD, May 2013) <http://unctad.org/en/PublicationsLibrary/ webdiaepcb2013d3_en.pdf> accessed 21 February 2016

3

Trans-Pacific Partnership Agreement (put up for signatures and ratification in November 2015)

Source: National Observer

private investors stemming from public international law between nations. Its main aim is to provide a neutral and efficient platform for investors to protect their interests against member states who threaten them by way of breaching treaty obligations. ISDS also provides a great deal of flexibility, in that member states in treaties can craft the concerned clauses to fit their needs at the given time.

Naturally, this has become an ambitious and contentious legal development in international law, giving rise to a variety of criticisms. In this Article, the validity of such criticisms are examined and weighed against the aim of ISDS. More specifically, key criticisms will be categorised as either systemic or circumstantial in this Article â&#x20AC;&#x201C; this is important in isolating the most persistent and inherent problems while also identifying the problems that can be solved by careful drafting of future treaty provisions. In the light of this, the TPP agreement will be scrutinised and it will be determined if it has sufficiently tackled the common circumstantial problems through clause-crafting.

The systemic problems will then be weighed alongside the alleged benefits of ISDS to produce a conclusion.

What must be noted here, however, is that the ISDS as a mechanism has only gained traction relatively recently due

to the continuing popularity of foreign direct investments and the trend of globalisation as a whole. The ISDS landscape, therefore, can be seen as a work in progress â&#x20AC;&#x201C; the decisions made in arbitration tribunals influence the manner in which future treaty provisions between states are sculpted. In this sense, it is necessary to view ISDS provisions as a dynamic tool that is responsive to how past provisions have played out in tribunals. Therefore, the examination of the TPP should not only prove to be rewarding due to its practical influence as a trade agreement per se, but also as the most recent ideological and intellectual culmination of past experiences member states have had.

CRITICISM ONE: THE SUBVERSION EFFECT OF ISDS MECHANISMS ON THE INTERNAL RULE OF LAW Lawyers can proudly claim that they began the trend of industry deregulation and the outsourcing of services long before the likes of Uber and Airbnb saw the light of day; where the latter two rose in prominence due to their potential in displacing traditional players like cab drivers 79

and landlords, arbitration mechanisms allowed many parties to settle their legal disputes without once appearing before a court judge. The entire arbitration framework hinges upon the core notion that its tribunals consist of arbitrators picked by parties to the dispute.

The potential problem with this, however, is that most tribunals – regardless of how they were decided – stay away from the purview of the courts, the constitutionally significant institutions that are supposed to serve as the country’s key adjudicator of legal disputes. This issue is strikingly similar to the lasting debate on whether public services ought to be privatised, with many on the opposition raising points questioning the accountability and performance of privatised institutions. Along the same vein, it would be natural to be wary of arbitration tribunals as the privatisation of national courts. This issue is exacerbated in the context of ISDS, where an entire state is a party to the dispute. How, then, can one trust such privatised institutions to handle legal matters concerning national sovereignty?

There is an intuitive distinction between national courts holding in favour of the foreign private investor and an international arbitration panel doing the same – the former is regarded as a fair exercise of constitutional duty while the latter signals an undermining of the state’s sovereignty and legal system.

Unfortunately, to equate judicial review with arbitration mechanisms, and to assume that the latter is merely a substitute for the former, is a fallacy. One must consider several areas in which the two are different and realise that such differences are purposeful and instrumental to each fulfilling their differing objectives: First, arbitration exists for the sake of efficiency and expertise. The International Chamber of Commerce notes that arbitration “offers a clear advantage in terms of limiting time and costs”4 as compared with court judgements. This can be attributed to the fact that investment disputes can be highly technical and can range across multiple industries and professional disciplines. Most arbitrators, therefore, are selected based on their history of doing specialised work pertaining to the relevant industry that the dispute is concerned with. This can be juxtaposed against most court judges who are specialists only in areas of law. While this would be fine if parties were looking to domestic law in the solving of disputes, most parties who chose arbitration in the first place do so because of the procedural flexibility offered to them in outlining the course that the resolution of their dispute ought to take.5 In this sense, parties are not looking for pre-existing principles of law to dictate the course of their dispute resolution but instead hope to steer the dispute in a manner pre-arranged by both parties through their private agreement. The specialism of

4

ICC, ‘Arbitration’ (International Chamber of Commerce) <http://www.iccwbo.org/products-and-services/arbitrationand-adr/arbitration/> accessed 21 February 2016

5

A survey carried out jointly by Queen Mary University of London and PWC found that the most number of respondents chose international arbitration for resolving cross border disputes because of its flexibility. See QMUL and PWC, ‘International Arbitration: Corporate Attitudes and Practices 2006’ (QMUL School of International Arbitration, 2006) <http://www.arbitration.qmul.ac.uk/ docs/123295.pdf> accessed 21 February 2016

80

arbitrators is especially important when arbitrators have to untangle the messy technical factual matrix of a given case and decide if a member state had indeed breached its treaty obligations. This also leads back to the point about efficiency – non-specialists in the given area of dispute would almost certainly take a longer time to reach a decision. An extended period of judicial decision-making is not ideal for both the claimants and the respondent state, given that legal fees accrue and the effort could be better placed in improving their respective businesses and nations.

Second, many domestic courts may be seen as being exposed to home ground bias which lowers the confidence of parties seeking to resolve disputes. The doctrine of deference may not be an overt influence that guides judicial decisionmaking, but it is nonetheless a strong one that rears its head from time to time. Judges are generally under a duty to give hefty consideration and leeway to Parliamentary sovereignty and governmental action, even where internal sources of law affirm the judicial authority to challenge and specify the circumstances in which the court is allowed to do so. This is best exemplified by the British case of R (on the application of Nicklinson and another) (Appellants) v.

Ministry of Justice (Respondent),6 where the majority ruled that it would be ‘inappropriate’ to issue a Declaration of Incompatibility to declare that a law passed by the UK Parliament was incompatible with the human rights granted by the Human Rights Act 1998, despite the fact that this was exactly what the courts were empowered and obligated to do under statute. Such ‘invisible’ doctrines would not only be manifestly unfair to foreign claimants in domestic courts because they are subject to a higher judicial standard by sheer virtue of jurisdiction, but also because this forces external investors to conform to a judicial standard that could only be perceived as an expression of bias. This manifested in the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) case of Loewen Group, Inc. and Raymond L. Loewen v. United States,7 where the tribunal held that the Canadian claimant’s earlier domestic case in front of a United States court was unfair because the judge had allowed the opposition’s attorney to appeal to “antiCanadian, racial and class biases” of its Mississippi jury. The key issue here is not whether or not the tribunal’s decision was justified, but the fact that the case highlights an evident disconnect between international arbitration and litigation before the national courts that is likely to be taken by future investors as another reason to arbitrate.

It seems quite clear then that the distinct separation between international arbitration and litigation, despite potentially undermining domestic legal frameworks, is not only systemic and inherent but also intentional and purposeful.

However, this is not to say that there is absolutely no way of incorporating the domestic justice system in a framework of international law. In the leaked working version of the TPP agreement, there was a clause which required the investorclaimant to pursue its claim for a minimum year’s duration in a “forum designated for dispute settlement”, likely a domestic court, before arbitration could be adopted.8

6 7 8

[2014] UKSC 38 ICSID Case No. ARB(AF)/98/3 WikiLeaks Trans-Pacific Partnership Investment Chapter II

This seemed to be an attempt in respecting domestic legal systems and acknowledging they have a role to play amidst the hype of international arbitration. However, this clause was removed in the finalised version of the TPP agreement.

Consequently, in its place in the finalised version is a ‘claimants’ choice’ exclusion clause that applies only to foreign investors in Chile, Peru, Mexico and Vietnam.

The clause states that the investor claimant must choose between submitting its claim in the domestic forum or the international forum through the TPP exclusively.9 This seems to be a compromise in reaffirming the legitimacy and definitiveness of domestic court decisions and prevents international arbitration from becoming an appellate mechanism. However, most interestingly, it must be noted that the four member states to which the clause applies also happen to be four of the bottom five TPP member states (the fifth being Malaysia) ranked in terms of the World Justice Project Rule of Law rankings.10 Curiously, it is the member states that investors would have the least confidence in pursuing a domestic claim that subscribe to such an ultimatum clause. This could perhaps have been an attempt at reaffirming these member nations’ commitment to establishing a respectable legal system. Nonetheless, a deeper question looms – why would not all the member states subscribe to such a clause? After all, the clause seems to be an excellent mechanism in affirming the jurisdictional superiority of domestic courts. The answer could perhaps lie in the simple fact that the member nations do not wish for their investors to be limited to a single avenue of legal recourse; foreign investors in states with developed legal systems would be more likely to resort to domestic courts to seek recourse at first instance and the ultimatum clause would dead-end such claims should they fail. Ultimately, it has to do with each member state seeking the best interests for its investors seeking to invest overseas. This being the case, the omission of the eight remaining member states in the subscription to the ultimatum clause was intentional, having weighed the benefits of affirmation of domestic judicial legitimacy with the potential downside of limiting investors’ judicial options.

Even if the attempts to downplay the subversion effect of the ISDS mechanism on the respective member states’ internal rule of law did not ultimately materialise, there is a need to keep in mind that such attempts were still part of the negotiations and taken sufficiently seriously to have surfaced in drafts of the Agreement. This indicates that each member state weighed the value of domestic judicial legitimacy against the long-term benefits that the Investment Chapter could yield. While this does not mean that the subversion effect of the ISDS mechanism is entirely unproblematic, it would be more constructive to view it as a necessary systemic feature that translates to material benefits. At the same time, one must also keep in mind that this subversion effect in the TPP is limited only to cases of investor-state disputes; the legitimacy of domestic courts will ultimately remain largely intact in other areas of the law – specifically those that they are, and always have been, equipped to deal with.

Section B Art.II.18 s.3

9 10

Trans-Pacific Partnership Investment Chapter Annex 9-J

World Justice Project, ‘Rule of Law Around the World’ (World Justice Project, 2015) <http://worldjusticeproject.org/rule-lawaround-world> accessed 21 February 2016

CRITICISM TWO: THE INFRINGEMENT OF ISDS MECHANISMS ON NATIONAL SOVEREIGNTY Following from the theme of the undermining of the judiciary, it would only be natural to extend that line of argument to the infringement of national sovereignty at large. Critics argue that the increasingly popular fixture of ISDS mechanisms in the international legal landscape is a threat to national sovereignty in that it undermines the supremacy of the highest legislative authority in the nation and pre-emptively threatens law-makers into adopting second-rate legislation in order to comply with the whims of self-interested private investors. The most popular example raised is Phillip Morris Asia Limited v. The Commonwealth of Australia11 where a Phillip Morris, a tobacco company, challenged ‘plain-packaging’ polices that required tobacco products to carry warning signs to discourage smoking.

Phillip Morris claimed that such policies constituted an ‘expropriation of its Australian investments in breach of Article 6 of the [1993 Agreement between the Government of Australia and the Government of Hong Kong for the promotion and Protection of Investments].12 The target was not only drawn on the back of Australian law-makers – Philip Morris also filed a similar claim against Uruguay in Philip Morris Brand Sàrl (Switzerland), Philip Morris Products S.A. (Switzerland) v. Oriental Republic of Uruguay.13 This seemed to be the banner under which critics of ISDS choose to gather – it seemed intuitively inappropriate and morally offensive that a tobacco company could so selfrighteously challenge a legislation passed by Parliament that was clearly meant to discourage the public vice of smoking and improve public health.

Preserving the sovereign liberty of each member state to govern in key areas therefore became of particular significance to critics and states alike. Nobel laureate economist Joseph Stiglitz was also keen to point out that such undesirable consequences could move on to any other area where public policy threatened the profits of foreign investors, especially in recent efforts to combat climate change.14 Is this really the case? Unfortunately, the answer depends on the optimism of the respondent. Examination of the TPP will reveal that the tobacco debacle was not for naught – most notably, Article 9.15 of the Investment Chapter protects all parties’ rights and ability to adopt policies to ‘ensure that investment activity in its territory is undertaken in a manner sensitive to environmental, health or other regulatory objectives.’15 This was raised by the Australian trade minister as proof of commitment to protecting the ability to legislate in environmental aspects in response to the Philip Morris

11 12

UNCITRAL, PCA Case No. 2012-12

13 14

ICSID, ARB/10/7

Attorney-General’s Department, Australia, ‘Tobacco Plain Packaging - Investor-State Dispute Settlement’ (Australian Government Attorney-General’s Department) <https://www.ag.gov.au/ tobaccoplainpackaging> accessed 21 February 2016 See transcript at Democracy Now: http://www. democracynow.org/2015/10/27/joseph_stiglitz_under_tpp_polluters_ could

15

Trans-Pacific Partnership Agreement Investment Chapter Article 9.15

81

case.16 One would also notice that the environmental clause is not the only one that excludes national liability; Singapore, for instance, has its own specific limitation clause regarding the expropriation of land, given the fact that land scarcity is a key issue of concern for the state. Such clauses can be classified as ‘hard’ attempts at protecting national sovereignty. What is important, however, is not to view these clauses as flimsy or makeshift solutions to the problem of infringement of national sovereignty. These clauses were crafted and inserted based on past experiences with ISDS as well as a self-examination of each nation’s needs and priorities. This is the real advantage that ISDS has to offer – reflexivity; member states directly tailoring their own terms but at the same time providing investment security through a robust legal framework. Unfortunately, this does not mean the current state of the TPP is henceforth immune to situations such as the Philip Morris debacle.

The reflexivity of ISDS agreements is both its strength and its weakness; parties to the treaty can only specify areas of negative exception that subtract from the right of investors to bring actions, as opposed to providing an exhaustive list of positive grounds on which they can do so. The pertinence of this lies in the fact that the drafting of such agreements is ultimately a retrospective process and cannot effectively weed out all future unsavoury claims by investors.

On top of these, there are also ‘soft’ attempts at protecting national sovereignty – most prominent of which in the TPP is the escalation framework put in place. It is possible to reduce the risk of infringement on national sovereignty by detailing the due process and instituting a gradual escalation framework that increases the number of opportunities before the claimant comes before an adjudication panel. This maximises the chances for the respondent nation to resolve a dispute on its own terms. This is also probably why most member states chose not to subscribe to the aforementioned Annex 9-B ultimatum clause, as they wish to encourage claimants to first go through domestic proceedings. This is coupled with an explicit encouragement by the TPP that parties should ‘seek to resolve the dispute through consultation and negotiation.’17 Although, admittedly, the leaked working version of the TPP shows that legislators first considered the possibility of making both mediation and pursuit of the claim in a domestic forum mandatory before opening the possibility for arbitration.18 19 This would have been a better escalation mechanism albeit at the cost of lengthening the potential duration of an investorstate dispute.

Ideologically, ensuring that legislative authorities have the freedom and right to pass legislation for the wellbeing of its people is undoubtedly a good thing. However, as with many other issues, it is a matter of extent. One must take into account the fact that treaty obligations as part of international law are not only voluntary by nature but are

16

http://www.theguardian.com/business/2015/nov/06/andrewrobb-defends-tpp-after-full-release-of-trade-deal-document

17

Trans-Pacific Partnership Agreement Investment Chapter Article 9.17.1

18

WikiLeaks Trans-Pacific Partnership Investment Chapter II Section B Art.II.17 s.1-2

19 82

ibid.18 s.3

also capable of substantively benefitting member states.

The commitment to treaties is not a new phenomenon that began with ISDS – nations have always had to balance such commitments and the protection of their sovereignty.

However, in many treaties including the TPP, there must be a breach of treaty obligations or private investment obligations by the respondent nation to avail ISDS. Therefore, the real issue is whether critics are supportive of a nation being held to its own obligations or would rather deem their nation infallible and undermine government accountability. In the case of Yukos Universal Limited (Isle of Man) v. The Russian Federation,20 the arbitration tribunal found Russia guilty of acting in bad faith in domestic proceedings against Yukos that led to the company’s bankruptcy. Evidently, the Russian legal system fell short of providing due recourse and it was the ISDS system that brought justice. Strangely, the argument for accountability in many cases is strengthened by the fact that such a mechanism caters to foreign investors; it is the responsibility of nations that open doors to foreign investors and choose to reap benefits to also make good their own commercial obligations. Thus, ISDS acts as an impetus in promoting responsible law-making by weighing the cost of reneging on state obligations. It is also important to note how Yukos has scarcely been adopted as an example of the infringement on national sovereignty despite being the arbitration case that has paid out the greatest amount of damages (US$50 billion) to a private investor. To the author’s mind, this is the best evidence that ISDS has an important role to play in maintaining justice in international investment law in providing a forum in which private investors have suitable recourse that would otherwise have been available against a misbehaving state.

Coming back a full circle to the Philip Morris case, while one might have thought that this would have been a watershed decision that highlighted the fallibility of ISDS mechanisms, the case was decided in Australia’s favour based purely on a point of jurisdiction rather than substantive law. Given that the law thus far has not come up with an indication of how it intends to deal with future cases of a similar nature, one can only refrain from drawing hasty conclusions. . However, the writer believes that even if the case was decided in Philip Morris’ favour, this would be unsustainable in the long-term landscape of stark political reality – the member states’ willingness to participate in ISDS obligations is underpinned by a cost-benefit analysis. That the politicians in treaty negotiations are no fools is a fact most know but few are willing to acknowledge. Players understand ISDS partially surrenders sovereignty but persist because the key to real economic growth in a globalized world is instituting liberal but secure mechanisms that ensure each other’s accountability to both the TPP and private obligations.

If the winds blow too much in the favour of limiting the powers of state bodies to carry out their purposes, the entire ISDS mechanism as it stands will inevitably become a selfdefeating one as member nations begin to withdraw from such treaties. First-world nations such as the US may have a higher threshold of tolerance to ISDS decisions adverse to the state enterprise than countries such as Bolivia that instantly retract from ISDS obligations the moment they lose an ISDS case, but there is most certainly a threshold

20

UNCITRAL, PCA Case No. AA 227

nonetheless.

Ultimately, it must be kept in mind that the terms set out in ISDS are dictated by its member nations, not investors.

Given that these terms are created in a free and calculated forum, it would be incorrect to claim that ISDS as an entire concept must be an outright infringement of sovereignty.

What critics really mean is that nations very often tailor the terms in a manner that compromises their freedom to govern in an unforeseeable and unintended fashion. It must be said that this stance is more nuanced, and better reflects the political and legal reality of the situation; ISDS is capable of being a double-edged sword. The correct way, then, to wield this sword to each nation’s advantage is by blunting one of its edges with both ‘hard’ and ‘soft’ methods such as those mentioned above, not abandon the useful tool completely.

CRITICISM THREE: THE EXCLUSIVITY OF ISDS TO MAJOR CORPORATIONS The public perception of corporations seems to be at a low point given recent events such as the financial crisis.21 This seems to have snowballed into a general distrust of mechanisms provided to corporations for the seeking of legal recourse, particularly ISDS.22 The argument is that there is no sufficiently good reason for corporations to be granted a unique legal avenue to seek recourse when wrongs are done to it by foreign governments.23 This is apparently exacerbated by the typical Most Favoured Nation (MFN) and Fair and Equitable Treatment (FET) clauses that are typically weaved into treaties such as the TPP agreement.24 25 MFN clauses make it obligatory for signatories to treat each other in terms of international trade at the highest standard relative to other nations. FET clauses, on the other hand, may be seen as a minimum customary standard of international law.26 Its exact meaning, understandably, is unclear and subject to a variety of interpretations.27 Although seemingly innocuous, both varieties of clauses have become the cornerstones of ISDS cases. FET clauses seem to have been interpreted more broadly in arbitration tribunals as opposed to simply linking it to customary international law.28 This broader scope of interpretation tilts the balance in the favour of investors who claim that they had not been

21

http://www.scribd.com/doc/240502296/CNBC-BursonMarsteller-Corporate-Perception-Indicator-2014

22 23

http://www.citizen.org/Page.aspx?pid=5411

24

Trans-Pacific Partnership Agreement Investment Chapter

25 26

Ibid. Article 9.6

http://kluwerarbitrationblog.com/blog/2013/01/07/brewingstorm-over-isdr-clouds-trans-pacific-partnership-talks-part-i/ Article 9.5

“Draft Convention on the Protection of Foreign Property and Resolution of the Council of the OECD on the Draft Convention”, OECD, pp.13-15, 1967.

treated in accordance to the FET clause. In fact, 17 out of 23 ISDS claims under free-trade agreements and bilateral investment treaties under the United States have found one form or another of FET violations that undoubtedly had in some way affected the eventual decision of the arbitration tribunal.29 MFN clauses, on the other hand, have the practical effect of allowing investors of Nation A to bring an action against Nation B by basing that claim on a more favourable term found in a treaty between Nation B and Nation C, a third party. This creates a web of obligations where treaties between the respondent nation and third parties may be invoked in the course of arbitration. Critics have likened this web of obligations to the tax law concept of the ‘Dutch sandwich’30 which refers to foreign investors who use the wide web of Dutch tax treaties with other countries to minimise tax liabilities.

To determine if the MFN and FET clauses are really a problem, there is a need to first reassess the initial purpose behind inserting them into treaties in the first place. Trade and investment treaties do not exist in a vacuum – they are formed in the context of cross-border economic and political dynamics. The modern MFN clause really sprung into popularity after the World Trade Organisation required members to grant one another MFN status as a commitment to free trade.31 From there on, it became the norm to include MFN clauses in bilateral and regional treaties to signal parity and good faith. More importantly as an economic concept, MFN clauses represent the demolishing of barriers to free trade and the opening up of economies in a formalised, legal and substantive way. On the other hand, while FET clauses may seem to have been granted broad interpretation by tribunals and therefore seem subjective, these clauses are not exactly rarities in domestic law. For instance, although the man on the Clapham omnibus has always been deemed an objective standard in English law, the fact of the matter remains that the exact determination of what such a man would do given particular circumstances may be split amongst judges and juries alike. Likewise, while FET clauses may seem open to interpretation, they remain grounded in fundamental principles such as fairness and transparency in dealings between state bodies. Furthermore, given the flexible nature of international treaties, it remains possible for parties to provide instructions on the interpretation of FET clauses for better intended effect. This was indeed the case in the drafting of the TPP, where Article 9.6 of the Investment Chapter maintains that foreign investors are afforded the “minimum standard of treatment of aliens as the standard of treatment to be afforded to covered investments”32 and, more importantly, that “the mere fact that a Party takes or fails to take an action that may be inconsistent with an investor’s expectations does not constitute a breach.”33 Thus, although MFN and FET clauses do indeed play an inextricably large role in tribunal

29 30

http://www.citizen.org/documents/MST-Memo.pdf

G. Kahale III, The New Dutch Sandwich: The Issue of Treaty Abuse, 48 Columbia FDI Perspectives, Oct 10, 2011

27

31

28

32

Trans-Pacific Partnership Agreement Investment Chapter

33

ibid

http://www.oecd.org/daf/inv/investment-policy/WP2004_3.pdf M. Porterfield, “The Standard for “Fair and Equitable Treatment” Should be Clarified in the Investment Chapter of the TPPA” Georgetown University Law School, Feb. 28, 2012

https://www.wto.org/english/thewto_e/whatis_e/tif_e/ fact2_e.htm Article 9.6

83

decisions and the mechanics of ISDS, they cohere to general principles of free trade and fair treatment while also being capable of being conscientiously restrained by careful treaty drafting. When examined through an objective lens, these clauses are simply necessary components for the proper functioning of the arbitral mechanism as a whole and do little for critics to claim that they provide too much in the form of legal leverage to foreign investors.

It is true that foreign investors are ultimately self-interested entities that will seek recourse through the ISDS mechanism if it maximises profits – however, the key then is to create a robust ISDS mechanism that ensures that only claims with merit are favoured in tribunals. Ironically, this strengthens the case for MFN and FET clauses, which promote parity between parties regardless of their statuses as individuals or states.

The question remains – why do only foreign investors get a unique avenue of legal recourse? After all, if there are states with weak legal systems, would it not be favourable for its citizens to also be able to seek recourse through an external arbitration system? As with most issues of international law, this Article suggests the answer is as much a political one as it is a legal one. There is a limit to the extent to which states are willing to surrender their sovereignty, especially given the potentially slim rewards in allowing local individuals to bring actions against the state in an external legal system.

While one could draw parallels to international entities such as the European Union, aptly pointing out that European Union law and the European Convention of Human Rights are exactly such systems that allow individuals to bring actions against states, one must keep in mind that in those cases, the member states share strong cultural, political and historical links and even then only came to being through initial mercantilist aims of creating a common market.34 Such political and cultural solidarity can hardly be found in the case of a disparate group of nations such as those in the TPP. In this sense, the creation of an arbitral system that catered to the claims of local individuals against member states was never an option to begin with given the circumstances. When one keeps in mind the impossibility of such an option, the argument against foreign investors having legal recourse through ISDS is reduced to a sad claim of “because we cannot have it, they cannot too”.

CRITICISM FOUR: PROCEDURAL UNFAIRNESS This category of criticism is really a residual one that comprises of issues that are simultaneously dissimilar in nature and yet linked by the common thread of being capable of chipping away at the perception of procedural reliability and fairness of ISDS. This Article has chosen three particular issues that are particularly pertinent: the duality of arbitrators, the ‘initiator’s advantage’ and the lack of an appellate mechanism.

First, arbitrators have been described as “hardly neutral guardians […] with a financial interest in the existence of

34 84

Article 2, The Treaty of Rome

investment arbitration.”35 This is due to the fact that most of them play dual roles of lawyers participating in cases as well as arbitrators on tribunals. This is exacerbated by two further factors – first, “the analogies and paradigms invoked by arbitrators […] are influenced by their backgrounds, training, and interests.”36 The problem with this is the fact that arbitrators can easily be split into factions of ideology where tribunal outcomes can be predicted not based on merit of law and fact but on the makeup of the tribunal panel. Second, the process to disqualify an arbitrator is a practically difficult one – the ICSID Convention states that an equal number or more of the arbitrators must decide a proposal for the disqualification of a fellow arbitrator37 and that the nominee for disqualification must have demonstrated a “manifest lack”38 of “high moral character and […] independent judgment.”39 As pointed out, the nominee is unlikely to eventually be disqualified due to the high bar set on the disqualification standards, eventually leading to “the case resumed with all three arbitrators in a less than harmonious atmosphere.”40 These factors lead to the possible lack of faith in arbitrators, especially in an ISDS setting where cases are politicised and more is at stake.

However, the TPP tries to solve this dilemma by installing a transparency clause via Article 9.23 of the Investment Chapter that hopes to increase the accountability of arbitrators. More importantly, Article 9.21 further states that parties will provide guidance in the form of a Code of Conduct for Dispute Settlement Proceedings that will shape the arbitration process. While it is obviously unclear whether such clauses will prove to be sufficient in countering the persistent notion of arbitrator duality, any alternative short of removing the entire ISDS system seems to be nowhere in sight. After all, the flexibility of being able to appoint arbitrators who, being lawyers, are appreciative of speedy dispute resolution is the fundamental purpose of ISDS. The only way, then, is to follow the path of the TPP and place hard restrictions on the arbitration process and increase its transparency.

Second, investors could possibly have an inherent tactical advantage right from the start given that they are the ones who initiate the arbitral process. While this may not seem important on the surface, the reality of the matter is that investors get to build their case on their own pace before launching a case against the respondent state. Once the respondent state receives notice, the trigger is squeezed and the clock begins to run – many arbitration rules call for the respondent to appoint an arbitrator within 30 days of receipt of the request for arbitration.41 Fortunately, the TPP states that the claimant “shall deliver to the respondent a written request for consultations”42 and only after the dispute “has

35

p.35.

Corporate Europe Observatory, Profiting from Injustice

36

A. Roberts, Clash of Paradigms: Actors and Analogies Shaping the Investment Treaty System, p.54

37 38 39 40 41 42

Article 58 ICSID Convention, Regulations and Rules Article 57 ibid.

Article 14 ibid.

G. Kahale III, Is Investor-State Arbitration Broken? P.8 See the UNCITRAL and ICC Arbitration Rules

Trans-Pacific Partnership Agreement Investment Chapter Article 9.17

not been resolved within six months of the receipt by the respondent of a written request for consultations”43 can the claimant submit to arbitration. To prevent the claimant investor from unexpectedly submitting to arbitration after the six months had lapsed, Article 9.18 also requires that he deliver a notice of intent to the respondent state.

In theory, this ought to level the playing field and allow for the respondent state to make preparations up to a sufficient standard. However, there have been cases such as BG Group Plc v. The Republic of Argentina44 where the claimant disregarded the arbitration rules that required the claimant to first submit a dispute to a local court and ended up winning the case in front of the tribunal. To add insult to injury, upon appeal the United States Supreme Court found that the arbitrators were within their treaty rights to hold for the claimant despite the non-compliance.45 This creates a most significant hurdle for the reputation of ISDS as a fair mechanism that coheres to its treaty rules – after all, if claimants do not need to follow the due procedure set out in the relevant treaty to win a case, this could render it highly unfair for the respondent state. More importantly, this undermines the entire notion of careful treaty drafting being capable of taming ISDS and shaping it into a productive and fair mechanism. While there is no easy way out of this inconsistency, one can only hope that domestic courts re-examine the fundamental underpinnings of the ISDS principles and come to a different conclusion in the future. Also, Article 9.18 of the Investment Chapter in the TPP allows for respondent states to make counterclaims “in connection with the factual and legal basis of the claim.”46 While this may not directly change the fact that the tribunal could enable claimants who refuse to comply with treaty procedure, counterclaims could potentially cast a spotlight on the issue at an early stage of proceedings and be an influencing factor on the eventual decision.

TPP was clearly drafted in order to tackle such criticism – the possibility for the introduction of an appellate mechanism is provided for. While details, and thus potential strengths and weaknesses, of this appellate mechanism is obviously absent for the time being, this again remains a clear sign that the TPP is a responsive agreement that seeks to improve upon its predecessors.

CONCLUSION While the quote by de Vattel at the beginning of the article seems to be a sensible principle for all countries to follow, one cannot help but wonder if it remains a viable possibility given the interlocking nature of international agreements.

Contrary to possible expectations, this Article has not sought to argue that the TPP is a panacea capable of resolving most criticisms of ISDS in general. Instead, this Article hopes to have highlighted how some perceived problems with ISDS are also its raison d’être and the best course of action is to view TPP and its future counterparts as experimental instruments that test the waters of international investment protection rather than definitive solutions. Moreover in the grand scheme of ISDS, TPP will either be the vanguard of positive change in the mechanism – soon imitated and surpassed by future similar treaties – or simply another failed attempt at reforming a flawed system.

Third, ISDS treaties do not usually have appellate mechanisms because there is no judicial hierarchy in the arbitral system and the introduction of such mechanisms could create bloat in the arbitration procedures. In the place of appeals, arbitration rules such as the ICSID include the possibility of annulment.47 Where a request for an annulment has been made, the Secretary-General must appoint an ad hoc Committee of three further arbitrators to decide on the annulment. The possible grounds of annulment are, again, set to high bars of corruption, manifest exceeding of powers and serious departure from rules of procedure.

These render the chances of annulment very slim, as the ad hoc Committee is not tasked with weighing the merits of the case but an examination of their fellow arbitrators.

A potential criticism to such an arrangement is it leaves no room for ‘second thought’ on the facts and legal arguments of the case – which must also be recognised as a strength of arbitral proceedings given the emphasis on speed. On the other hand, Article 9.22 of the Investment Chapter in the

43 44 45

Ibid. Chapter Article 9.18 UNCITRAL Final Award 24 December 2007

BG Group Plc v. Republic of Argentina No. 12-138 March 5 2014. See also the dissenting judgement of Roberts CJ

46

Trans-Pacific Partnership Agreement Investment Chapter Article 9.18

47

Article 52 ICSID Convention, Regulations and Rules

85

PRIVATE SECTOR CORRUPTION - A NEW DAWN IN SENTENCING?

by Rishikeesh Wijaya

Source: bamieherickson.com

86

INTRODUCTION In the words of Chief Justice Sundaresh Menon in Public Prosecutor v. Syed Mostofa Romel, “sentencing, especially in the context of corruption, is an intensely factual exercise”.1 This is understandably so, given that sentencing options for offences under the Prevention of Corruption Act (PCA) may vary from a fine to a custodial sentence of up to seven years.2 It is also crucial to note that in Singapore jurisprudence, the main sentencing consideration in offences under the PCA is that of general deterrence.3 This is justified on the basis that one of the cornerstones of our governance and business eco-system is the intolerance of corruption, regardless of whether it is in the sphere of the public or private sector.4 It is generally accepted that in offences of corruption affecting the public service or involving public servants, a custodial sentence is generally warranted under what is commonly referred to as the “public service rationale”.5 Although the sentencing position is less certain in instances of private sector corruption, there is no presumption in favour of a non-custodial sentence for private sector corruption.6 This article will analyse whether the appellate decisions in Public Prosecutor v. Syed Mostofa Romel (herein referred to as “Syed Mostofa Romel”) and Public Prosecutor v. Marzuki bin Ahmad and another appeal (herein referred to as “Marzuki bin Ahmad”) have provided greater clarity as to the factors to be taken into account by sentencing courts in dealing with private sector corruption.7 Further to this, the article will assess the possibility of Singapore courts looking towards other jurisdictions for guidance in the field of sentencing pertaining to corruption and if this will provide greater consistency in sentencing.

STATUTORY PROVISIONS In the context of this article and in light of the case authorities that will be analysed, the scope of offences will be limited to Section 6 of the PCA that deals with corrupt transactions with agents.

In particular, s 6(a) deals with “any agent [who] corruptly accepts or obtains, or agrees to accept or attempts to obtain, from any person, for himself or for any other person, any gratification as an inducement or reward” while s 6(b) deals with individuals who give, “or agrees to give or offers any

1

Public Prosecutor v. Syed Mostofa Romel [2015] 3 SLR 1166, [2015] SGHC 117 at [31].

2 3

Prevention of Corruption Act (Cap 241, 1993 Rev Ed)

gratification to any agent as an inducement or reward”.8 However, s 7 adds a further qualification that a person who is convicted under s 5 or s 6 shall be liable on conviction to a fine not exceeding $100,000 or to imprisonment for a term not exceeding seven years or to both if the transaction in question deals with a contract or a proposal for a contract with the Government or any department thereof or with any public body.9 In addition to this, s 13(1) allows the court to impose a penalty on the accused if the gratification “is a sum of money or if the value of that gratification can be assessed”. This sum shall be equal to the amount of that gratification or in the opinion of the court, “the value of that gratification”.10

PRIVATE SECTOR CORRUPTION- THE NUMBERS Bearing in mind that the main sentencing consideration in corruption is that of general deterrence,11 it is imperative to consider statistics in relation to offences under the PCA. This is because statistics would reflect the general trend in the occurrence offences and provides a rough indication of whether the courts should enhance existing sentencing benchmarks. The approach of the courts is similar to that of the English position as highlighted in the seminal case of R v. Wellburn and Nurdin where Lawton LJ said: “The courts must do what they can to stop the spread of corruption in public and commercial life. All they can do is to show by the sentences passed that the giving and accepting of bribes will not be tolerated in this realm. This must mean in most cases severe sentences.”12 However, it is also crucial to note that Singapore has always taken a tough stance towards combating corruption and as such, it cannot be said that there should be a direct correlation between offence statistics and sentencing benchmarks.

The Annual Report of The Corrupt Practices Investigation Bureau in 2014 notes that out of the 736 complaints received, 136 cases were registered for investigation and this is the lowest number of cases registered in the past three decades.13 However, 85% of the cases registered in 2014 involved private individuals giving, offering or receiving bribes.14 It is crucial to note that this proportion has increased from 84% and 77% in 2013 and 2012, respectively.15 Hence it can be taken on face value that the instances of private sector corruption are either on the rise, or the proportion of cases involving the private sector has increased relative to those involving the public sector.

8 9 10 11

Prevention of Corruption Act (Cap 241, 1993 Rev Ed)

Public Prosecutor v. Ang Seng Thor [2011] 4 SLR 217, [2011] SGHC 134 at [39].

12 13

R v. Wlelburn and Nurdin (1979) 1 Cr App R (S) 64

Public Prosecutor v. Syed Mostofa Romel [2015] 3 SLR 1166, [2015] SGHC 117; Public Prosecutor v. Marzuki bin Ahmad and another Appeal [2014] 4 SLR 623, [2014] SGHC 166.

14 15

Ibid., at page 8.

Practitioners’ Library, Sentencing Practice in the Subordinate Courts (3rd Edition, Volume II, LexisNexis 2013) 1355.

4

K Shanmugam, “The Rule of Law in Singapore” [2012] Singapore Journal of Legal Studies 357, 357.

5

Practitioners’ Library, Sentencing Practice in the Subordinate Courts (3rd Edition, Volume II, LexisNexis 2013) 1355.

6 7

Prevention of Corruption Act (Cap 241, 1993 Rev Ed) Ibid.

Practitioners’ Library, Sentencing Practice in the Subordinate Courts (3rd Edition, Volume II, LexisNexis 2013) 1355.

Annual Report 2014 (The Corrupt Practices Investigation Bureau) at page 7.

Ibid.

87

FACTORS GENERALLY TAKEN INTO ACCOUNT

BY SENTENCING COURTS There is a list of non-exhaustive factors that courts may take into account when sentencing accused persons under the PCA: i. Size of Bribes In the seminal case of Public Prosecutor v. Ang Seng Thor (herein referred to as “Ang Seng Thor”), V K Rajah JA (as he then was) notes that “the size of the bribes in a corrupt gratification offence is not only linked to the culpability of the offender” but also “to the harm caused by the offence”.16 Rajah JA points out that the important factors contributing to the harm caused by a corruption offence are the size of the bribe and the importance of the transaction so influenced.17 This is simply due to the fact that the larger the amount of a bribe, the greater the corrupt influence exerted on the receiver and thus, the greater degree of harm arising from the offence.18 With specific regard to the issue of culpability that needs to be taken into consideration in sentencing along with harm, Rajah JA considers the fact that larger bribes “are almost always given to obtain greater illegitimate advantages over the receiver, which normally reflects more personal gain sought by the giver”.19 This is an indication of the motivation of the offender behind the commission of the offence and consequently, culpability.

It may be of pertinence to note that in Ang Seng Thor, the offender was involved in one of the largest cases of private sector corruption where he corruptly gave gratifications amounting to $2 389, 322.47 over 80 separate occasions.

The total sentence was 12 weeks’ imprisonment and a $50,000 fine.20 However, cases where the size of the bribe becomes significant in warranting a custodial sentence occur when the amount of gratification exceeds that of $30,000.21This does not give rise to the presumption that offences where the gratification is less than $30,000 warrants a non-custodial sentence.22 Regardless, it is argued that the size of bribes is the first indication of the sort of sentence that the court should impose on the offender and subsequently the degree of the punishment, be it a fine, custodial sentence or in some cases, a combination of both. However, this like all sentencing factors does not operate in isolation.

16

Public Prosecutor v. Ang Seng Thor [2011] 4 SLR 0217, [2011] SGHC 134 at [46].

17

Public Prosecutor v. Ang Seng Thor [2011] 4 SLR 0217, [2011] SGHC 134 at [46].

18 19 20

Ibid.

21 22

Ibid., 1375.

Ibid., at [47].

Practitioners’ Library, Sentencing Practice in the Subordinate Courts (3rd Edition, Volume II, LexisNexis 2013) 1420.

Public Prosecutor v. Syed Mostofa Romel [2015] 3 SLR 1166, [2015] SGHC 117 at [20].

88

ii. Position of Trust It would be argued that the factor of being in a position of trust should not merely be isolated to the offender’s seniority and position within the organisation, which is his principal for the purposes of s 6(a), but also the nature of the duty owed to that organisation and if that duty was compromised by the offender’s corrupt act.23 This was the case in Marzuki bin Ahmad (which will be discussed in greater depth later) where the accused was not in a senior position but held a position of trust and had a duty to report the very matters that he failed to report.24 A similar position of trust was abused in Sundara Moorthy Lankatharan v. Public Prosecutor (herein referred to as “Sundara Moorthy”).

In the case of Sundara Moorthy, the offender was a Higher Technician employed by the Housing and Development Board who obtained gratification in the form of a loan of $4,000.25 This was inducement for forbearing to show disfavour to the company in the course of overseeing safety aspects of construction work that the company was doing.

The offender was sentenced to three months’ imprisonment after trial. His corrupt acts could have potentially affected public safety and CJ Menon found similarities with this case in Marzuki bin Ahmad.26 It is fairly evident why a position of trust would be an important factor to be taken into consideration during sentencing. In the case of an offender who holds a senior position within an organisation, a light sentence would indicate that his actions are condoned and thus sets a bad example for the rest of the employees and/or industry.

This ‘trickle-down’ effect would expand the web of corruption causing it to be rampant within the organisation and perhaps even the industry involved. Where the offender is in a position of trust as in Sundara Moorthy, it is important that the individual does not abuse his position and carries out the duty owed to the principal in full, without fear or favour. This is especially so in the public sector where a large degree of trust is placed by members of the public on employees in the civil service and other statutory boards. iii. Multiple Offences It would be argued that multiple offences in the context of general sentencing factors would relate to multiple offences of corruption that the offender is being charged with at that time, and not prior convictions. It is submitted that the greater number of corruption offences an accused person is being charged for, the greater degree of culpability and harm arises from the said offences.

23

Public Prosecutor v. Marzuki bin Ahmad and another Appeal [2014] 4 SLR 623, [2014] SGHC 166 at [28].

24 25

Ibid., at [32].

Sundara Moorthy Lankatharan v Public Prosecutor [1997] 2 SLR(R) 253.

26

Public Prosecutor v. Marzuki bin Ahmad and another Appeal [2014] 4 SLR 623, [2014] SGHC 166 at [38].

For example, in Ang Seng Thor, the court takes into consideration the number of people “drawn into the web of corruption” especially since the accused corruptly gave gratifications over 80 separate occasions.27

public servants and officers of public bodies is now being expanded. Hence, an increasing number of private sector corruption cases that involve public services or contracts may engage this factor in the course of sentencing.

iv. Offences Committed Over Lengthy Period

However, the role of the public service rationale in sentencing will be expounded on during the discussion of Syed Mostofa Romel later in this article.

When the corruption offences are committed over a lengthy period of time, this would indicate that the person providing the bribes has a greater and more extensive influence over the receiver of the bribes. This was evident in the case of Public Prosecutor v. Tan Ah Peng & 3 Ors where the four offenders pleaded guilty to five counts of corruptly receiving $1,900 fortnightly with 61 other similar charges taken into consideration.28 The gratification there was received over a period of two years and 9 months. v. Serious Consequences Chan Sek Keong CJ in the case of Zhao Zhipeng v. Public Prosecutor (herein referred to as “Zhao Zhipeng”) cites with approval, Sentencing Practice in the Subordinate Courts (LexisNexis, 2nd Ed, 2003) which states: “In deciding if the custody threshold has been breached, the main detriment would be the mischief or likely consequence of the payment or acceptance of the bribe (eg did the corruption undermine the administration of justice, etc).”29 In Zhao Zhipeng, the case involved match-fixing and it was taken that the acts of the Appellant undermined the integrity of the S.League.30 The seriousness of the offences would include whether or not the public service rationale should be invoked in the particular facts and circumstances of the case. Yong CJ in the case of Lim Teck Chye v. Public Prosecutor (herein referred to as “Lim Teck Chye”) states that public servants and officers of public bodies who commit a corruption offence in the course of their duties would have breached the public service rationale.31 However, Yong CJ recognises that not only public servants or officers of public bodies may run afoul of the public service rationale in corruption offences. For example, he accepts that the public service rationale may be directly or indirectly infringed by private organisations that may be awarded tenders for a government contract in relation to the provision of public services.32 Even from the time of Lim Teck Chye, it can be seen that the public service rationale which previously only involved

27

Public Prosecutor v. Ang Seng Thor [2011] 4 SLR 0217, [2011] SGHC 134 at [32].

vi. Givers and Receivers of Bribes It is crucial to note that the established principle is that givers of corrupt gratification generally share equal culpability to receivers and this was stated by Yong CJ in Chua Tiong Tiong v. Public Prosecutor (herein referred to as “Chua Tiong Tiong”).33 However, Yong CJ also notes that a giver may in certain instances bear greater culpability than the receiver and “this is when the giver intends to corrupt the establishment of law and order for his private gain, and/or gives or offers bribes to pervert the course of justice.”34 The offender in Chua Tiong Tiong fell squarely within that scope but it should be noted that while he was charged under s 6(b) of the PCA, he had made bribes to a public servant.

It is also crucial to read Yong CJ’s judgment in Chua Tiong Tiong in light of his earlier decision in Lim Poh Tee v Public Prosecutor (herein referred to as “Lim Poh Tee”). The offender in Lim Poh Tee was the recipient of the gratification given by the offender in Chua Tiong Tiong which was the same corrupt transaction.35 CJ Menon in Marzuki bin Ahmad qualified this principle of parity of sentencing between the giver and the recipient of the gratification in saying that it “cannot be viewed or applied as an inflexible and rigid rule”.36 In applying this, CJ Menon concludes the discussion by stating that courts must always have the flexibility to depart from an earlier sentence imposed on a counterparty in the same corrupt transaction where it “is the appropriate course of action to take”.37 One example where a deviation from the strict application of the rule is perhaps when the giver of the bribe initiates the corrupt transaction. While this does not necessarily mean that the recipient of the bribe should be punished less severely, it remains a good starting point for courts to take into consideration when sentencing.

PUBLIC PROSECUTOR v. MARZUKI BIN AHMAD38 i. Facts The accused was employed as an assistant property executive

28

33

29

34 35 36

Ibid.

37 38

Ibid.

Practitioners’ Library, Sentencing Practice in the Subordinate Courts (3rd Edition, Volume II, LexisNexis 2013) 1399.

Zhao Zhipeng v. Public Prosecutor [2008] 4 SLR(R) 879; [2008] SGHC 125 at [32].

30

Zhao Zhipeng v. Public Prosecutor [2008] 4 SLR(R) 879; [2008] SGHC 125 at [32].

31

Lim Teck Chye v. Public Prosecutor [2004] 2 SLR(R) 525; [2004] SGHC 72 at [66].

32

Ibid., at [67].

Chua Tiong Tiong v. Public Prosecutor [2001] 2 SLR (R) 515; [2001] SGHC 182 at [21].

Lim Poh Tee v. Public Prosecutor [2001] 1 SLR(R) 241.

Public Prosecutor v. Marzuki bin Ahmad and another Appeal [2014] 4 SLR 623, [2014] SGHC 166 at [45].

Public Prosecutor v Marzuki bin Ahmad and another Appeal [2014] 4 SLR 623, [2014] SGHC.

89

by Jurong Town Corporation (JTC) and was tasked to conduct periodic checks and inspections at premises leased out by JTC. This was to ensure that the lessees complied with laws and regulations as well as the terms of their leases.

The accused was obliged to report any such infringements.

In this case, dormitories failed to obtain certain approvals from the Singapore Civil Defence Force and Urban Redevelopment Authority but continued to house foreign workers.

The accused informed the manager of dormitories that he was in need of money and the two came to an agreement that the accused would forbear to report non-compliances in exchange for the receipt of loans. Over the period of a year, the accused received $31,500 by way of loans attempted to obtain a further loan of $5,000. The District Judge sentenced the accused to a total of eight month’s imprisonment and ordered the accused to pay a total of $25,000 under s 13(1) of the PCA. Both the Prosecution and the accused appealed against the sentence, with the accused appealing against the penalty order made under s 13(1) of the PCA and the Prosecution appealing against the District Judge’s decision not to make a penalty order under s 13(2). ii. Judgment CJ Menon sitting in this Magistrate’s Appeal, notes several sentencing factors for such offences after reviewing the sentencing precedents. This non-exhaustive list includes those mentioned earlier and further to this, whether the offence was committed by a public servant and the level of control enjoyed by the offender over whether any action would be taken or forborne to be taken as a result of his corrupt act.39 From the onset, it is important to note that in the case of Marzuki bin Ahmad, the offender was considered as a public servant since JTC is a body corporate established by statute pursuant to s 3 and s 10 of the Jurong Town Corporation Act.40 Specifically, CJ Menon notes that while the actions of the offender did not constitute the perversion of the course of justice by undermining the law enforcement process, they had the potential to affect public safety.41 Furthermore, the accused was not in a position that had direct involvement with the law enforcement process such as police officers that received bribes, where the givers of the gratification were able to avoid detection or punishment for their criminal activities. The accused in Marzuki bin Ahmad was not empowered to decide on any enforcement action against lessees who breach terms of their leases and/or other applicable statutory provisions.42

39

Public Prosecutor v Marzuki bin Ahmad and another Appeal [2014] 4 SLR 623, [2014] SGHC 166 at [28].

40 41 42 90

Ibid., at [29].

Ibid., at [31].

Ibid., at [34].

On the whole, CJ Menon takes into account the various factors as set out above and the fact that this was the first offence committed by the accused and that he had done so at an advanced stage of his life, as well as the sentence that was imposed on the giver of the gratification.43 Consequently, the aggregate sentence by the District Judge of eight months’ imprisonment was found to be neither manifestly excessive nor manifestly inadequate and was thus not disturbed.44

PUBLIC PROSECUTOR v. SYED MOSTOFA ROMEL45 i. Facts The accused was a trainee associate consultant whose job was to inspect vessels seeking to enter an oil terminal by issuing inspection reports. The defects identified were categorised into low, medium and high risk. A vessel with a high-risk defect would only be allowed to enter after defects had been rectified.

The accused was charged with three offences under s 6(a) of the PCA, with two charges being proceeded with and one charged being taken into consideration for sentencing. On one of the charges, high-risk defects were highlighted to the captain of a ship. The captain thought these were minor risks that were easily rectified and in return for a payment that the accused solicited, the vessel was allowed to enter the oil terminal.

The total sum of bribes involved was US$7,200 and the District Judge sentenced the accused to two months’ imprisonment for the two proceeded charges with the sentences running concurrently. The Prosecution appealed against these sentences. ii. Judgment The judgment of CJ Menon in this Magistrate’s Appeal debunks the perception that public sector corruption typically attracts custodial sentences while private sector corruption typically attracts only the imposition of a fine, reasserting the position of V K Rajah JA (as he then was) in Ang Seng Thor.46 CJ Menon also reasserts the position on sentencing factors that are taken into consideration, specifically where private sector agents are concerned. He points out succinctly that it is critical to be sensitive to the specific nature of corruption that one is concerned with.47 Where private sector corruption involves a significant amount of gratification that is received over a lengthy time or a compromise of one’s duty or a serious betrayal of trust, the starting point is likely to be a custodial sentence.48

43 44 45

Ibid., at [47].

46 47 48

Ibid., at [17] and [21].

Ibid.

Public Prosecutor v. Syed Mostofa Romel [2015] 3 SLR 1166, [2015] SGHC 117.

Ibid., at [20].

Ibid., at [23].

Most significantly, the judgment draws three broad and non-exhaustive factual categories that emerges from the prevailing case law prior to Syed Mostofa Romel at [26]: “(a) First, where the receiving party is paid to confer on the paying party a benefit that is within the receiving party’s power to confer, without regard to whether the paying party ought properly to have received that benefit. This is typically done at the payer’s behest. (b) Second, where the receiving party is paid to forbear from performing what he is duty bound to do, thereby conferring a benefit on the paying party. Such a benefit typically takes the form of avoiding prejudice which could be occasioned to the paying party if the receiving party discharged his duty as he ought to have. This also is typically done at the payer’s behest. (c) Third, where a receiving party is paid so that he will forbear from inflicting harm on the paying party, even though there may be no lawful basis for the infliction of such harm. This is typically done at the receiving party’s behest.”49 The factual matrix in the first category of cases is similar to that of Ang Seng Thor and the court notes that whether the custodial threshold is crossed depends on specific facts.50 The second category of cases frequently attracts custodial sentences while in the third category of cases, the receiving party can generally expect a custodial sentence and this was where the accused in Syed Mostofa Romel fell in.51 The third category of cases is where the corruption involves the interference with or deprivation of a person’s legitimate rights unless a bribe is paid and CJ Menon placed this in context by asserting that “this kind of corruption is antithetical to everything that Singapore stands for”.52 It is submitted that these three categories cannot and must not be taken as strict categories in which sentencing courts attempt to distil the facts of each case into. This is simply because there remains a possibility of these categories overlapping one another or even for a factual matrix to fall outside the scope of these categories.

Aside from this, the judgment makes significant headway with the public service rationale alluded to in Ang Seng Thor and noting that there may be an intersection of public and private sector corruption, as mentioned earlier. Hence, courts deal with this at the sentencing stage where the public service rationale applies to private agents who supply public services or handle public money.53 CJ Menon in this case points out that the public service rationale “is not determinative of whether the custodial threshold is crossed in a case of private sector corruption and the custodial threshold may be crossed whenever the

49 50 51

Ibid., at [26].

52 53

Ibid., at [30].

Ibid., at [28].

Public Prosecutor v. Syed Mostofa Romel [2015] 3 SLR 1166, [2015] SGHC 117 at [28], [30] and [32].

Ibid., at [24].

facts warrant it”.54 In simple terms, the corrupt transaction not involving an employee of the public service or a public services contract is not a litmus test of whether the custodial threshold is crossed because there are varied circumstances or factors which may cause the custodial threshold to be crossed.

While the public service rationale was unsuccessfully argued by the Prosecution in this case, the court took the safety risks present as an aggravating factor which the District Judge failed to appreciate.55 In totality, CJ Menon took into account four key aggravating factors which warranted more than a short custodial sentence: 56 (i). Offending acts were carried out over a period of three months and involved a sum totalling US$7,200; (ii). Maritime industry was a strategic one and the potential loss of confidence should corruption take root; (iii). Safety of the terminal and the workers at the terminal were compromised; (iv). Acts were premeditated and deliberate.

Thus, the Accused was sentenced to a term of six months’ imprisonment for each of the two charges, which were to run concurrently.

GREATER CLARITY OR MORE CONFUSION? It is without a doubt that the judgments in Marzuki bin Ahmad and specifically, Syed Mostofa Romel have provided greater clarity to sentencing courts. Marzuki bin Ahmad has restated previous principles of sentencing specific to PCA offences while Syed Mostofa Romel has restated the previous position that there is no presumption in favour of noncustodial sentences for private sector corruption offences.

In particular, the public service rationale has undergone development in light of the growing complexity in public and private sector relations where there is an increase in outsourcing of public services and awarding of public service contracts to private companies. Hence the public service rationale alluded to in Ang Seng Thor is not a fixed concept but may be invoked where the particular facts and circumstances warrant it. In addition, it is relevant to point out again that invoking the public service rationale is not the only way in which the threshold for a custodial sentence may be crossed as pointed out by CJ Menon. There are many factors and an amalgamation of various factors and circumstances may lead to a breach of the said threshold even if the public service rationale is not invoked.

However, it goes without saying that in certain cases the

54 55 56

Ibid., at [39].

Ibid., at [45].

Ibid., at [51].

91

public service rationale will be engaged more directly than in others. For example, a policeman may receive a bribe of a certain amount from a pimp in return for not checking the immigration statuses of a number of prostitutes as compared to a middle management executive in a private company who takes a bribe when dealing with a contract for public services. The former would definitely engage the public service rationale more vigorously than the latter.

This is accentuated by the fact that in the case of the police officer, he is holding a position of trust as a public servant and a high standard is expected.

under by using a table that takes into account the degree of harm and culpability.58

While sentencing factors in relation to private sector corruption and corruption under s 6(a) of the PCA generally remain the same, it would be worthy to note that the courts have taken a tough stance against offenders who place public safety in jeopardy or risk, and where this may potentially impact a particular strategic industry. This was particularly so in the case of Syed Mostofa Romel and Marzuki bin Ahmad although the court did not give weight to that consideration in the latter case. It would be safe to say that while corrupt transactions in specific industries that may not be seen as strategic will not warrant lighter or non-custodial sentences, where the corrupt transaction has the potential to jeopardise the safety of individuals and place them in harmâ&#x20AC;&#x2122;s way, the courts will come down harder on offenders.

With regard to harm, consequences such as the serious undermining of proper function of government or substantial financial gain would place an offender at the highest category of harm (Category 1) caused. The next category of harm considers other factors in addition to the risk of Category 1 harm. The lowest rung of harm would be Category 4 harm, which is based on the risk of Category 3 harm. The Guideline makes it clear to note that the risk of harm involves consideration of both the likelihood of harm occurring and the extent if it does but it would not be appropriate to downplay the risk of harm if the potential harm is particularly high.60

While the three categories provided by CJ Menon in Syed Mostofa Romel is a useful starting point for sentencing courts and does promote greater structure in the sentencing process, it is pivotal to recognise that these categories while not arbitrary, are too broad. Ultimately the specific facts and circumstances need to be distinguished in each case and applied with the general sentencing factors alluded to above. There will still be certain corrupt transactions that fall out of these broad categories and the courts would be more inclined to focus on factors and principles in sentencing rather than placing excessive emphasis on these broad categories expounded by CJ Menon.

WHERE DOES SINGAPORE JURISPRUDENCE GO FROM HERE? The question remains whether Singapore jurisprudence can look towards other jurisdictions in order to obtain a clearer structure and approach towards sentencing in relation to private sector corruption, bearing in mind the varying facts and circumstances from case to case which exists in all areas of the law.

In the United Kingdom, corruption offences would fall under the ambit of the Bribery Act 2010. The Sentencing Council for England and Wales is an independent, non departmental public body of the Ministry of Justice that issues guidelines which sentencing courts must follow unless it is in the interests of justice not to do so.57 In a Definitive Guideline for Fraud, Bribery and Money Laundering offences published by the Sentencing Council, the court determines the category which the offence falls

57

Sentencing Council: https://www.sentencingcouncil.org.uk/ about-us/ (last accessed 16 February 2016).

92

The first step is determining the individual level of culpability and harm arising from the offence. The level of culpability is based on certain factors similar to those used in Singapore courts such as abuse of position, sustained period of corrupt activity and premeditation.59 Such factors would place the offender under the category of high culpability.

The court may then refer to the corresponding table that takes into account both harm and culpability in order to formulate a starting point. For example, the highest category of culpability with Category 1 harm has a starting point of seven years in custody while the lowest category of culpability with Category 4 harm has a starting point of a medium level community order.61 The table also has a category range for an imprisonment term for the courts to take into account.

The next step taken by the court would be to take into account various aggravating and mitigating factors as well as the number of offences, with consecutive sentences for multiple offences being appropriate where large sums are involved.62 The court finally takes into account whether a guilty plea was made by the offender and takes into consideration the totality principle in sentencing, amongst other factors such as time spent on bail.63 It is submitted that the approach of sentencing courts in England and Wales that take into account such guidelines are far more structured in comparison to Singapore, while taking into account various sentencing factors, both generally and specific to corruption or bribery. While there should not be a â&#x20AC;&#x2DC;one system fits allâ&#x20AC;&#x2122; approach, it would be useful for the Singapore courts to look in the direction of England and Wales in order to obtain a more determinative

58

Sentencing Council: Fraud, Bribery and Money Laundering Offences Definitive Guide (Effective from 1 October 2014), pages 4243.

59 60

Ibid., page 42.

Sentencing Council: Fraud, Bribery and Money Laundering Offences Definitive Guide (Effective from 1 October 2014), page 42.

61

Sentencing Council: Fraud, Bribery and Money Laundering Offences Definitive Guide (Effective from 1 October 2014) page 43.

62 63

Ibid, page 44.

Ibid.

approach in sentencing, balancing this with the need for deterrence.

It remains to be argued that the sentencing options available to the courts under the PCA in Singapore are intentionally flexible in order for them to deal with a myriad of cases, facts and circumstances. Hypothetically speaking, should corruption be on the rise in Singapore, courts may be more inclined to raise the sentencing benchmarks even for offences with low levels of culpability and degree of harm. Hence this purported lack of structure in terms of sentencing may in fact provide Singapore courts with an advantage in dealing with changing circumstances, rather than being shackled by a somewhat rigid framework.

CUSTODIAL SENTENCES IN PRIVATE SECTOR CORRUPTION- VIRTUAL CERTAINTY? It would be inherently wrong to suggest that on the basis of precedent and even after these two seminal cases of Marzuki bin Ahmad and Syed Mostofa Romel, that a custodial sentence is a virtual certainty in cases of private sector corruption.

While the courts have always taken a tough approach towards corruption both in the public and private sector, it would be argued that the courts are taking an increasingly tough stance against the latter. This is evident in the cases of Public Prosecutor v. Hong Meng Choon and Public Prosecutor v. Yong Hock Guan Dennis in the State Courts.64 While the scope of the public service rationale has expanded over the years and may have well drawn more private sector corruption cases into the custodial threshold, the courts are beginning to notice the increasingly varied risks that may arise either directly or indirectly through corrupt transactions such as in public safety.

The battle against both public and private sector corruption, like many criminal offences, does require the efforts of various enforcement agencies especially the CPIB, but the courts do play an important role in promoting deterrence through the punishments meted out. The courts need to keep up with the evolving nature of corruption offences in light of their complexity and potential to erode the nature of commercial dealings in our society. Ultimately, sentencing and particularly in the area of private sector corruption â&#x20AC;&#x153;is an intensely factual exerciseâ&#x20AC;? and sentencing courts need to scrutinise the facts and circumstances of each individual case in line with general sentencing factors and factors specific to corruption offences, to arrive at the appropriate sentence, custodial or not.65

64

Public Prosecutor v. Hong Meng Choon [2015] SGDC 246; Public Prosecutor v Yong Hock Guan Dennis [2016] SGDC 12.

65

Public Prosecutor v. Syed Mostofa Romel [2015] 3 SLR 1166, [2015] SGHC 117 at [31].

93

PROMISSORY ESTOPPEL IN SINGAPORE T I M E T O B E U S E D A S A ‘ S W O R D’ ?

by Rishikeesh Wijaya

Source: deviantart

94

INTRODUCTION The doctrine of promissory estoppel was expounded upon

by Denning J in the well known case of Central London Property Trust Ltd v. High Trees House Ltd,1 following the more obscure but leading case of Hughes v. Metropolitan Railway Co.2 One of the most well-known features of the doctrine is that it cannot be used to establish an independent cause of action i.e. it can only be used as a ‘shield’, and not a ‘sword’. However, there have been significant developments to the doctrine in the United Kingdom courts since then; in cases such as Collier v. P & M J Wright (Holdings) Ltd.3 The Australian High Court in Waltons Stores (Interstate) Ltd v. Maher altered the traditional position that originated in the UK courts,4 allowing the doctrine to be used as a ‘sword’ as well.

This article seeks to trace the justification for the doctrine being used as an independent cause of action by comparing the position taken by the appellate courts in the UK, Hong Kong and, Australia. This article will further assess the suitability of adopting this ‘modern’ approach on promissory estoppel taken by the Australian High Court, in Singaporean courts.

PROMISSORY ESTOPPEL- THE DOCTRINE AND ITS ORIGINS Lord Cairns in Hughes v. Metropolitan Railway Co rejected the claim of the landlord to forfeit the lease on the ground that the tenant did not perform repairs. This was on the basis that if one party leads the other “to suppose that the strict rights arising under the contract will not be enforced, or will be kept in suspense or held in abeyance, the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable having regard to the dealings which have thus taken place between the parties”.5 In essence, the doctrine stipulates that if within an existing legal relationship, A has made a promise to B not to exercise a strict legal right against B, and B has relied on that promise to his detriment, equity will restrain A from resiling from that promise to the extent that it would be inequitable for A to do so.6 This doctrine applies to arrangements which might have in the past been regarded as variations ineffective at common law for want of consideration.7

In summary, the doctrine of promissory estoppel has the following key requirements:8 i. There must be a “clear” or “unequivocal” promise of representation; ii. The promisee must have relied upon the promise; and iii. It must be inequitable for the promisor to go back on the promise.

Further, the burden of proving the necessary facts is on the promisee.9 Aside from this, it has been suggested that the doctrine can apply where there is no legal relationship giving rise to rights and duties between parties, or where there may only be a putative contract between them.10 However, Chitty (2015) submits that these suggestions “mistake the nature of the doctrine, which is to restrict the enforcement by the promisor of previously existing rights against the promisee.

Such rights can arise only out of a legal relationship existing between these parties before the making of the promise or representation.”11 To apply the doctrine where there is no such relationship would contravene the rule from Combe v.

Combe that the doctrine does not create any new rights.12 There has often been said to be a further requirement of the promisee suffering some “detriment” in reliance on the promise but this is based on the analogy of estoppel by representation.13 There need not be detriment as long as the promisee has altered his position in reliance on the promise so that it would be inequitable to allow the promisor to act inconsistently with it.14 The effect of promissory estoppel is generally suspensory and this was evident in Hughes v. Metropolitan Railway Co where the landlord was not forever prevented from enforcing the covenant.15 This was also stressed in Tool Metal Manufacturing Co Ltd v. Tungsten Electric Co Ltd.16 The reason for this rule is that in equity, the effect of the said representation is to give courts the discretion to do what is equitable in all circumstances and in the two cases discussed, it would not be equitable or in accordance with the intention of the parties to wholly extinguish the representor’s or promisor’s rights.17 However, subsequent events may give promissory estoppel an extinctive effect and this leads to the result where it is impossible for the promisee to perform his original obligation, as in Birmingham & District Land Co v.

8 9 10

Ibid at paragraphs 3-081 – 3-085

11 12 13

Ibid.

The Post Chaser [1981] 2 Llyod’s Rep. 695 at 701.

6

14 15 16

7

17

1

Central London Property Trust Ltd v. High Trees House Ltd [1947] KB 130.

2 3

Hughes v. Metropolitan Railway Co (1877) 2 App Cas 439.

4 5

Waltons Stores (Interstate) Ltd v. Maher (1988) 164 CLR 387.

Collier v. P & M J Wright (Holdings) Ltd [2007] EWCA Civ 1329; [2008] 1 WLR 643.

448.

Hughes v. Metropolitan Railway Co (1877) 2 App Cas 439 at

Yeo Tiong Min, “The Future of Promissory Estoppel in Singapore Law” (2012) Yong Pung How Professorship of Law Lecture.

Edwin Peel, Treitel: The Law of Contract (14th Edn, Sweet & Maxwell 2015) at paragraph 3-077.

Habib Bank Ltd v. Tufail [2006] EWCA Civ 374 at [21].

H.G. Beale, Chitty on Contracts (32nd Edn, Sweet & Maxwell 2015) at paragraph 4-089.

Combe v. Combe [1951] 2 K.B. 215.

Meng Long Development Pte Ltd v. Jip Hong Trading Co Pte Ltd [1985] A.C. 511 at 524; Edwin Peel, Treitel: The Law of Contract (14th Edn, Sweet & Maxwell 2015) at paragraph 3-084.

Hughes v. Metropolitan Railway Co (1877) 2 App Cas 439

Tool Metal Manufacturing Co Ltd v. Tungsten Electric Co Ltd [1955] 1 W.L.R. 761.

Edwin Peel, Treitel: The Law of Contract (14th Edn, Sweet & Maxwell 2015) at paragraph 3-087.

95

L. & N.W. Ry.18 The defensive nature of promissory estoppel and the expression by saying that it operates as a shield and not as a sword arose in Combe v. Combe.19 The normal effect of promissory estoppel is to protect the promise against enforcement of the original obligation but the metaphor has misled by suggesting that the equitable doctrine can assist a claimant no less than a defendant.20 The equitable doctrine can also assist the promisee as claimant by preventing a promisor from relying on a defence which would have been available to him, but for the promise.21 The effect of the doctrine is to merely prevent the promisor from relying on some circumstance which would, if the promise had not been made, destroy the promisee’s original cause of action.22 A plaintiff cannot rely solely on promissory estoppel to sue and by relying on an independent cause of action, can use promissory estoppel to prevent the defendant from denying an element of the claim or from asserting an element of defence.23

DEVELOPMENT OF THE DOCTRINE IN ENGLISH LAW The case of Collier v. P & M J Wright (Holdings Ltd) (herein referred to as “Collier v. Wright”), reflects the current thinking of the English judiciary with respect to promissory estoppel.24 From the onset, it is crucial to recognise that all that was decided by the Court of Appeal in that case is that there was a triable issue i.e. promissory estoppel is arguable based on the facts.

The facts of that case was similar to that of Foakes v. Beer where it was held that the part payment of a debt cannot be considered as good consideration for the discharge of the entire debt.25 The Court of Appeal in Collier v. Wright was also bound by the decision in Re Selectmove Ltd, holding that the reasoning of practical benefits constituting good consideration from Williams v. Roffey could not apply to a Foakes v. Beer scenario.26 In Collier v. Wright, Arden LJ did not think that the application of the doctrine was inconsistent with a Foakes

18

Birmingham & District Land Co v. L. & N.W. Ry (1888) 40 Ch. D. 268.

19 20

Combe v. Combe [1951] 2 K.B. 215 at 224.

21 22 23

Ibid.

Edwin Peel, Treitel: The Law of Contract (14th Edn, Sweet & Maxwell 2015) at paragraph 3-089.

Ibid.

Yeo Tiong Min, “The Future of Promissory Estoppel in Singapore Law” (2012) Yong Pung How Professorship of Law Lecture.

24

Collier v. P & M J Wright (Holdings) Ltd [2008] 1 WLR 643; [2007] EWCA Civ 1329.

25 26

Foakes v. Beer (1884) 9 App Cas 605.

Re Selectmove Ltd [1995] 1 WLR 474; Williams v Roffey Bros & Nicholls (Contractors) Ltd [1990] 2 WLR 1153.

96

v. Beer factual situation.27 Most significantly, Arden LJ relies on the dictum of Lord Denning MR in the case of D & C Builders Ltd v. Rees in holding that there is an arguable case for promissory estoppel:28 “Where there has been a true accord, under which the creditor voluntarily agrees to accept a lesser sum in satisfaction, and the debtor acts upon that accord by paying the lesser sum and the creditor accepts it, then it is inequitable for the creditor afterwards to insist on the balance.”

Professor Yeo Tiong Min (2012) argues that the approach of Lord Denning MR from that passage in D & C Builders Ltd v. Rees “conflates the principles of promissory estoppel with the principles of contract law”.29 He argues further that while reliance may be a condition for enforcement, “the interest protected appears to be the expectation endangered by the promise, not the harm ensuing from the reliance”.30 Collier v. Wright does not raise the issue of whether promissory estoppel can be used to create an independent cause of action and English law is settled on the traditional view. This was evident in Baird Textiles Holdings Ltd v. Marks & Spencer plc where the Court of Appeal noted that only the House of Lords (now known as the Supreme Court) could decide if promissory estoppel can be used to raise an independent cause of action.31 Thus, it is settled in England and Wales that promissory estoppel cannot create an independent cause of action, and only the Supreme Court will be able to change the status quo.

MODERN APPROACH IN AUSTRALIAN COURTS Every law student would be familiar with the famous case from the High Court of Australia in Waltons Stores (Interstate) Ltd v. Maher (herein referred to as “Waltons v. Maher”).32 In essence, the parties were involved in negotiations for a leasing and construction project. The claimant was the owner of land which he had hoped to lease out to the defendants. Negotiations reached an advance stage with contracts being sent to the defendants which the claimant believed would shortly be exchanged and completed. Due to this belief and the urgent nature of the project, the claimant began to demolish the building on his land whilst the defendants started to have second thoughts and instructed their solicitors to ‘go slow’ despite being aware that work had begun onsite.

After a substantial amount of work had been completed,

27

Collier v. P & M J Wright (Holdings) Ltd [2008] 1 WLR 643; [2007] EWCA Civ 1329 at [30].

28

Collier v. P & M J Wright (Holdings) Ltd [2008] 1 WLR 643; [2007] EWCA Civ 1329 at [39]; D & C Builders Ltd v. Rees [1966] 2 QB 617 at 625.

29

Yeo Tiong Min, “The Future of Promissory Estoppel in Singapore Law” (2012) Yong Pung How Professorship of Law Lecture at [17].

30 31

Ibid., at [19].

32

Waltons Stores (Interstate) Ltd v. Maher (1988) 164 CLR 387.

Baird Textiles Holdings Ltd v. Marks & Spencer plc [2002] 1 All ER 737 at [39], [55], and [99].

the defendants informed the claimant that they had decided to withdraw from the project. The claimant sought a declaration that a binding agreement had existed between parties and consequential relief but the difficulty was that “no exchange had ever taken place”.33 However, the claimant argued that the defendants were estopped from withdrawing from their implied promise to complete the said contract.34 The defendants countered this by saying that estoppel could not be used to create a cause of action and that there was no pre-existing legal relationship between the parties.

The High Court held by a majority that promissory estoppel in appropriate circumstances, create a cause of action, acting as a sword as well as a shield. The High Court also rejected the argument that a pre-existing legal relationship between parties needs to be established before estoppel could be invoked. Both these findings by the majority has radically expanded the scope of promissory estoppel.

It may be of interest to note that the English Court of Appeal in the earlier mentioned case of Baird Textiles Holdings Ltd v. Marks & Spencer plc considered Waltons v. Maher but did not apply the principles. Mance LJ observed that the English court could have reached the same decision as in Waltons v. Maher “but on a different reasoning” by referring to the “assumption of an existing fact or right rather than a promise”.35

‘HIDDEN BLADE’ APPROACH IN HONG KONG The Hong Kong Court of Final Appeal adopted an interesting “hidden blade” approach while purporting to apply the doctrine as a “shield” in the traditional sense, in the case of Luo Xing Juan v. Estate of Hui Shui See (herein referred to as “Luo Xing Juan”).36 On the facts, the Court of Final Appeal invited parties to submit on promissory estoppel and later dismissed the appeal on the basis of the doctrine.37 The court also found that “neither common intention constructive trust nor proprietary estoppel could work on the facts”.38 The judgment of Ribeiro PJ acknowledges the distinction between promissory and proprietary estoppel but also notes that the two share many common elements.39 Most

33

Ewan McKendrick, Contract Law (11th Edition, Palgrave Law Masters 2015), 99.

34 35

Ibid.

Baird Textiles Holdings Ltd v. Marks & Spencer plc [2002] 1 All ER 737 at [98]; Yeo Tiong Min, “The Future of Promissory Estoppel in Singapore Law” (2012) Yong Pung How Professorship of Law Lecture at [25].

36 1.

Luo Xing Juan v. Estate of Hui Shui See (2009) 12 HKCFAR

37

Yeo Tiong Min, “The Future of Promissory Estoppel in Singapore Law” (2012) Yong Pung How Professorship of Law Lecture at [34].

38 39

1 at [55].

Ibid.

Luo Xing Juan v. Estate of Hui Shui See (2009) 12 HKCFAR

significantly, in observing the divergence between English and Australian law on the issue, he points out that the Hong Kong courts were “presently inclining towards the English approach”.40 The requirement for a pre-existing legal relationship to invoke promissory estoppel needed to involve “enforceable or exercisable rights, duties or powers” which would then allow equity to restrain the power of the promisor to act in a manner that is inconsistent with his promise to the promisee.41 This is the “hidden blade” that turns promissory estoppel into an independent cause of action.”42 Ribeiro PJ adopted the pattern of proprietary estoppel instead of promissory estoppel in the remedial analysis, protecting the claimant’s expectations while noting that the court will not grant relief beyond the minimum necessary in order to do justice.43 This is in line with the approach of Walker LJ in Jennings v. Rice.44 According to Professor Yeo Tiong Min (2012), the analysis in Luo Xing Juan “in terms of the restraint of power goes beyond the traditional bounds of promissory estoppel in restraining A’s legal right against B”.

Yet, Professor Yeo Tiong Min (2012) in his lecture has noted that Luo Xing Juan “has been criticised” for reasons including the “awarding a very generous remedy compared to the quantum of detriment suffered”.45

PROMISSORY ESTOPPEL IN SINGAPORE While the leading authority on promissory estoppel of Lam Chi Kin David v. Deutsche Bank AG (herein referred to as “Lam Chi Kin”) made no reference to the English authority of Collier v. Wright, it was mentioned in passing by the same court in Gay Choon Ing v. Loh Sze Ti Terence Peter (herein referred to as “Gay Choon Ing”) where the Court of Appeal suggested timely reform for the doctrine of consideration.46 Professor Yeo Tiong Min (2012) has noted that there are similarities between the practical effects of Collier v. Wright and Lam Chi Kin “to the extent that it promotes the use of promissory estoppel as a substitute for consideration to enforce promises”.47 At the same time, Collier v. Wright may

40 41 42

Ibid., at [72].

43

Luo Xing Juan v. Estate of Hui Shui See (2009) 12 HKCFAR

44

Jennings v. Rice [2003] 1 P & CR 8 (CA), [2002] EWCA Civ

Ibid., at [50].

Yeo Tiong Min, “The Future of Promissory Estoppel in Singapore Law” (2012) Yong Pung How Professorship of Law Lecture at [37].

1 at [75].

159.

45

Yeo Tiong Min, “The Future of Promissory Estoppel in Singapore Law” (2012) Yong Pung How Professorship of Law Lecture at [40].

46

Lam Chi Kin David v. Deutsche Bank AG [2011] 1 SLR 800, [2010] SGCA 42; Collier v. P & M J Wright (Holdings) Ltd [2008] 1 WLR 643, [2007] EWCA Civ 1329; Gay Choon Ing v. Loh Sze Ti Terence Peter [2009] 2 SLR(R) 332, [2009] SGCA 3.

47

Yeo Tiong Min, “The Future of Promissory Estoppel in

97

go further than Lam Chi Kin to undermine the doctrine of consideration by using reliance to justify enforcement of an agreement which practically eliminates the need for consideration, perhaps at least in the context of contract modification.48

of consideration by supplementing gaps in promises where there is insufficient or no consideration is provided, arguments against using it as a ‘sword’ rest on the worries that this would allow parties to enforce promises without consideration.

This may be in line with the position of Singapore courts in the dilution of consideration which can be shown through the Court of Appeal case in Rainforest Trading Ltd v. State Bank of India Singapore which endorsed the statement of VK Rajah JC (as he then was) in Chwee Kin Keong v.

Digilandmall.com Pte Ltd in that the “modern approach in contract law requires very little to find the existence of consideration”.49 This was also the position of willingness by the Singapore Court of Appeal in Gay Choon Ing.

However, this worry would not be justified and that there is no real threat to the doctrine of consideration.

This is because consideration deals with the upholding of promises by providing it with a ‘badge of enforceability’ while promissory estoppel centres around the avoidance of detriment by providing a remedy. This should be reflected in difference in the damages awarded in claims relating to contract and promissory estoppel, the former resulting in expectation damages and the latter in reliance damages.

The Court of Appeal in Lam Chi Kin took an approach that promissory estoppel may be used as a tool to enforce promises, contrasting the more traditional position of the High Court in the same case that estoppel should play the equitable role of preventing or removing harm that may arise from reliance.50

Despite criticism that the use of promissory estoppel as a ‘sword’ will undermine the doctrine of consideration in contract, the judgment in The Commonwealth of Australia v.

Verwayen (herein referred to as “Verwayen”) has been keen to stress that the “driving force” behind equitable estoppel is the prevention of “unconscionable conduct”- a noncontractual objective of equity.54 This was also reiterated in Waltons v. Maher by Brennan J.55

Professor Yeo Tiong Min (2012) argues that the Court of Appeal’s approach that is reminiscent of a “benefit/ detriment analysis of the doctrine of consideration” is flawed because of the lack of authority in supporting benefit-based estoppel since equity is to protect detrimental reliance.51 He further asserts that the Court of Appeal’s approach brings the doctrine of promissory estoppel closer to fulfilling the role of a substitute for consideration in the enforcement of a promise.52

TIME TO BE USED AS A ‘SWORD’?

There has been significant criticism of the Australian decision in Waltons v. Maher, most significantly it has been argued that there is a “misconceived intermingling of the principles of promissory estoppel and proprietary estoppel leading to the unwarranted transplant of the use of estoppel as a cause of action from proprietary to promissory estoppel”.53 Further criticism lies in the fact that the use of promissory estoppel as a ‘sword’ may undermine the common law of contract, specifically that of consideration. While promissory estoppel may be said to mitigate the harshness Singapore Law” (2012) Yong Pung How Professorship of Law Lecture at [18].

48 49

Ibid., at [19].

Rainforest Trading Ltd v. State Bank of India Singapore [2012] SGCA 21 at [38], referring to Chwee Kin Keong v. Digilandmall.com Pte Ltd [2004] 2 SLR(R) 594 at [139].

50

Lam Chi Kin David v. Deutsche Bank AG [2011] 1 SLR 800, [2010] SGCA 42 at [35] and [40]; Lam Chi Kin David v. Detusche Bank AG [2010] 2 SLR 896, [2010] SGHC 50 at [57].

51

Yeo Tiong Min, “The Future of Promissory Estoppel in Singapore Law” (2012) Yong Pung How Professorship of Law Lecture at [12] and [13].

52 53

Ibid., at [14].

Yeo Tiong Min, “The Future of Promissory Estoppel in Singapore Law” (2012) Yong Pung How Professorship of Law Lecture at [22].

98

However, as mentioned earlier, the Singapore courts are leaning towards the dilution of the doctrine of consideration.

While Lam Chi Kin indicates that courts may use the doctrine of promissory estoppel as a tool to enforce promises, this does not necessary entail that it may be used as a ‘sword’ to establish an independent cause of action or as a complete substitute for consideration in promises. Further, Lam Chi Kin also states that even if a promisee is unable to show detrimental reliance, the fact that a promisor may have received an advantage from the reliance may be adequate to invoke the doctrine of promissory estoppel.56 While proprietary estoppel may be used to establish an independent cause of action, it is difficult to argue why promissory estoppel may only be used defensively. The primary concern according to Professor Yeo Tiong Min (2012) is that there would be the undermining of the law of contract “if promises unsupported by consideration can be enforced”.57 An alternative argument would be that the use of promissory estoppel as only a shield may be based upon the origins of estoppel as a procedural rule whereby a person estopped is debarred from denying his representation.58 In addition, the courts are more inclined to use proprietary estoppel as a ‘sword’ since its origins lie in mistakes or assumptions as to rights.59 There is also a separate argument where the remedy in

54

The Commonwealth of Australia v. Verwayen (1990) 170 CLR 394 at 407, per Mason CJ.

55

Waltons Stores (Interstate) Ltd v. Maher (1988) 164 CLR 387 at 419-420.

56

Yeo Tiong Min, “The Future of Promissory Estoppel in Singapore Law” (2012) Yong Pung How Professorship of Law Lecture at [44].

57 58

Ibid., at [45].

59

Ibid.

162.

Roger J. Smith, Property Law (8th Edition, Pearson 2014),

proprietary estoppel is often more closely related to the detriment of the claimant than the promisor’s promise.

Estoppel remedies the inequity resulting from the promisor’s encouragement or acquiescence in the claimant’s detriment. Thus, unless promissory estoppel can employ a similar discretionary remedy, there may be justification for a distinction between the two remedies.60 In any event, arguments supporting the use of promissory estoppel as both a ‘sword’ and a ‘shield’ will inevitably lead to the unification of proprietary and promissory estoppel under a single umbrella.

On the issue of remedies, it is interesting to note that while the reasoning of the majority in Waltons v. Maher supports the reliance measure of damages in equitable estoppel (the umbrella term for promissory and proprietary estoppel), the owner was awarded damages in lieu of specific performance of the lease, a remedy protecting his expectation interest.61 A solution to this would be to see promissory estoppel as primarily tortious in nature and remedy, a position adopted

by JD Davies (2000).62

estoppel could be used as a cause of action by itself.65 The question of whether promissory estoppel can be used as a ‘sword’ in Singapore courts is not an easy one to answer.

The legal issues involved are complex especially since the equitable doctrine may well undermine a contractual doctrine of consideration. It would be argued that while in theory it is tempting for promissory estoppel to be used as an independent cause of action, the potential ramifications in practice make it a problematic route to take.

Lastly, while Singapore courts may be leaning towards the dilution of the doctrine of consideration, this would not necessary entail that the courts are ready to use promissory estoppel as a ‘sword’. Without a doubt, this is an area that requires careful treading by the courts and in particular, the Court of Appeal in the future.

The implications of using the doctrine of promissory estoppel to establish an independent cause of action are potentially wide. According to Professor Yeo Tiong Min (2012), if promissory estoppel can be used as a ‘sword’ and operate beyond pre-existing legal relationships, should the model of detrimental reliance in proprietary estoppel be followed instead?63 On another face, if Singapore courts are ready to use promissory estoppel to invoke an independent cause of action, the practical reality of this would be that commercial parties are more likely to make attempts to exclude the operation of the doctrine in contracts through carefully drafted terms. This would be exacerbated by the fact that there may not be statutory controls at present time to deal with such exclusion clauses.

WHERE CAN SINGAPOREAN JURISPRUDENCE GO FROM HERE? In the recent case of Corinna Chin Shu Hwa v. HewlettPackard Singapore (Sales) Pte Ltd (herein referred to as “Corinna Chin”), the plaintiff made arguments on the basis of estoppel in the High Court.64 However, Edmund Leow JC found for the plaintiff on the point of interpretation and thus was not required to decide whether promissory

60 61

Ibid., at 163.

62 63

JD Davies, “Promises in Equity” [2000] SJLS 162.

Waltons Stores (Interstate) Ltd v. Maher (1988) 164 CLR 387 at 390; Donal Nolan, “Following in their Footsteps: Equitable Estoppel in Australia and the United States” (2000) 11 King’s College Law Journal 202 at 210.

Yeo Tiong Min, “The Future of Promissory Estoppel in Singapore Law” (2012) Yong Pung How Professorship of Law Lecture at [46].

64

Corrina Chin Shu Hwa v. Hewlett-Packard Singapore (Sales) Pte Ltd [2015] SGHC 204.

65

Ibid., at [62].

99

PREST v. PETRODEL - THE WAY FORWARD FOR VEIL PIERCING?

by Kang Su-Lin

A foundational principle of company law is that an incorporated company is seen as a legal entity on its own, distinct from its members. This principle, known as the doctrine of separate corporate personality, was established in the United Kingdom (UK) case of Salomon v. Salomon1, and codified in Section 19(5) of the Companies Act in Singapore.

With the principle’s roots in Joint Stock Companies, the rule in Salomon has arguably come a full circle, now being most commonly applied to the modern large private company.

While this does fulfil its original purpose of protecting shareholders and thus allowing business risks to be taken, this doctrine may be misused and cause manifest injustice.

Thus, in some exceptional cases, courts have been willing

1 100

Salomon v. Salomon [1896] UKHL 1

to disregard separate corporate personality and pierce the corporate veil, so that ‘a wrongdoer cannot benefit from his dishonest misuse of a corporate structure for improper purposes”.2.

However, the grounds for veil piercing are far from clear.

Acknowledged by the courts that the cases surrounding veil piercing are characterised by “incautious data” and “inadequate reasoning”3, many have questioned whether there really is such a doctrine4. These criticisms apply both

2 3 4

Prest v. Petrodel Resources Ltd [2012] EWCA Civ. 1395 Prest v. Petrodel Resources Ltd [2013] UKSC 34 [19] VTB Capital Plc v. Nutritek [2013] 1 BCLC 179, [117-118

United Kingdom The doctrine of veil piercing is an extremely convoluted one, and a historical analysis of this doctrine shows the evolution of the many different grounds used to justify it.

One of the grounds of veil piercing that courts have adopted is ‘where justice requires’, as employed in Creasey5. However, it was subsequently rejected in Ord6 as a “wrong adoption of the principle of piercing the corporate veil”, and is now a defunct ground. When asserting jurisdiction to piercing the veil between parent and subsidiary companies, courts have adopted several grounds in the past. The agency exception – where there is an agency relationship between a parent and subsidiary company – was employed in Smith, Stone and Knight7. But as it was difficult to establish, it was criticised and rejected by Toulson J in Yukong8. Similarly, Lord Denning’s argument in DHN9 that corporate groups should be treated as a single economic unit was rejected in Adams v. Cape10. Instead, the court accepted the ‘mere façade’ argument. This argument – first articulated by Lord Keith in Woolfson11 - gave the courts discretionary jurisdiction to pierce the corporate veil where special circumstances existed indicating that the company was a mere façade concealing the true facts. Until recently, this seemed to be the dominant ground of veil piercing, accepted and applied in the subsequent cases of Gilford12, Jones13, Gencor14 and Trustor15.

Ben Hashem16 provided further guidance, as Munby J ruled that other than being used as a ‘façade or device, the “twin features of control and impropriety” had to be present.

However, despite the popularity of this ground, Lord Sumption in Prest stated that “reference to a ‘façade’ or ‘sham’ (begs) too many questions to provide a satisfactory answer.”17 Ultimately, the doctrine of veil piercing has been heavily criticised for being “unprincipled, unpredictable and arbitrary”,18 conferring judges with wide discretion and resulting in “uncertainty and lack of predictability,

Source: Lim Xiao Wei

in the UK and Singapore. While Singapore’s case law on veil piercing has diverged from UK law, it has similarly developed in an equally convoluted manner. However, hope for a clear approach may be found in the recent UK Supreme Court case of Prest v. Petrodel Resources Ltd. While Prest has proved to be an important case, it does not seem to sufficiently clarify the case law on veil piercing. Thus, it is submitted that the approach taken by Singapore courts, building on Prest, instead offers a better way forward for this messy area of company law.

I. DEVELOPMENT OF THE DOCTRINE OF VEIL PIERCING

5 6 7

Creasey v. Breachwood Motors Ltd [1993] BCLC 480 Ord v. Belhaven Pubs Ltd [1998] 2 BCLC 447

Smith, Stone and Knight Ltd v. Birmingham Corporation [1939] 4 All ER 116

8

Yukong Lines Ltd of Korea v. Rendsburg Investments Corporation of Liberia, The Rialto No 2 [1998] 1 WLR 294

9

Distributors Ltd v. Tower Hamlets London Borough Council [1976] 1 WLR 852

10 11 12 13 14 15 16 17 18

Adams v. Cape Industries plc [1990] Ch 433 Woolfson v. Strathclyde Regional Council [1978] UKHL 5 Gilford Motor Co Ltd v. Horne [1933] Ch 935 Jones v. Lipman [1962] 1 WLR 832 Gencor ACP Ltd v. Dalby [2000] EWHC 1560 Trustor AB v. Smallbone (No 2) [2001] EWHC 703 Ben Hashem v. Ali Shayif [2008] EWHC 2380 (n 3) [28]

David Cabrelli, ‘The Case Against ‘Outside Reverse’ Veil Piercing in Company Law, University of Edinburgh School of Law Working Paper No. 2010/03

101

increasing transaction costs.”19 Also, there have been few reported successful cases of veil piercing in previous years, with a clear trend in English company law to limit the grounds upon which the corporate veil may be disregarded. This culminated in VTB, a Supreme Court case decided a few months before Prest, in which the judges questioned whether veil piercing actually exists.

Prest v. Petrodel In view of the incoherence and confusion surrounding the doctrine of veil piercing, the House of Lords, in recent case of Prest, attempted to form a coherent doctrine in this area of law. Affirming the existence of the doctrine, this guidance - albeit imperfect - does provide some clarification, and is the leading case with regards to veil piercing.

In this case, Ms Yasmin Prest issued a claim for ancillary relief against her husband, the sole owner of a number of complexly structured offshore companies. She alleged that her husband had used the company to hold legal title to properties that belonged beneficially to him. However, Mr Prest failed to comply with orders for the full and frank disclosure of his financial position, and the company, which were joined as parties to the proceedings, failed to file a defence and refused to comply with orders for disclosure.

The court refused to pierce the veil, and instead used trust law to remedy the situation, achieving the same result as they would have had they pierced the veil.

In so doing, the court laid down the principle that veil piercing should be used as a last resort. In most cases, the same result can be enforced with other legal mechanisms.

Undertaking a re-examination of past veil piercing cases, the court identified different sorts of ‘relationships’ that led to the result – agency, trust (the Prest case itself ); deceit and conspiracy (VTB Capital Plc v. Nutritek International Corp); so-called ‘knowing receipt’ (Gencor and Trustor); and tortious liability (Chandler v. Cape).

However, Lord Sumption went one step further and explained that when deciding whether or not to pierce the veil, the term ‘façade’ or ‘sham’ was too vague. Instead, cases should be distinguished based on whether there was concealment or evasion. Only in evasion cases – where the company was interposed to deliberately evade an existing legal obligation – could the corporate veil be pierced. The court could then disregard the corporate veil and deprive the company or its controller of the advantage they would have otherwise obtained by the company’s separate corporate personality.

Singapore

19

Stephen M Bainbridge, ‘Abolishing Veil Piercing’ (2001) 26 Journal of Corporate Law 470-535

102

Similar to pre-Prest English company law, there is conflicting case law and a lack of rigorous reasoning for judicial veil piercing in Singapore20, making it extremely difficult to ascertain any clear principles. However, textbooks and academics have distinguished certain commonly accepted grounds of veil piercing. These grounds include evading existing legal obligations (Children’s Media Ltd21), agency (Win Line22), façade or sham (Children’s Media, NEC Asia23), alter ego (TV. Media v. De Cruz24, NEC, Tjong25), and the possible ground of the controller acting unconscionably and in bad faith (Raffles Town Club26). Furthermore, it must be highlighted that the latter two grounds – the alter ego exception, and cases where the controller is acting unconscionably in bad faith – are unique to Singapore.

More focus would be placed on the alter ego ground, as it is arguably where Singapore’s law on veil piercing has most notably diverged from English law.

II. THE GROUND OF ALTER EGO Alwie Handoyo v. Tjong Very Sumito Decided at about the same time as Prest, the court in Tjong did not have the opportunity to refer to the principles laid down in that case. However, it is interesting to note how the two cases reveal the extent to which Singapore law on veil piercing has diverged from UK law.

The case of Tjong concerned the payment of the purchase price of shares in an Indonesian company by the parties involved. The particular transaction involved was made convoluted due to the interposition of layers of legitimate transactions, thus apparently masking the true nature of the transaction. Tjong, the plaintiff, then claimed that the purchase price should be paid to him personally, instead of the companies Overseas Alliance Financial Limited (OAFL) and Aventi, who were third party beneficiaries. In so doing, he sought to get the court to pierce the corporate veil of OAFL, and hold Alwie personally liable. In the High Court (reported under Tjong Very Sumito v. Chan Sing En27), the veil was pierced on the basis that Alwie was OAFL’s alter ego, and it was said that there were two justifications for piercing the corporate veil: “first, where the evidence shows

20

Puchniak, Varottil and Wee, National University of Singapore Law Faculty Part A Bar Course 2014 6

21

Singapore Tourism Board v. Children’s Media Ltd and Others [2008] 3 SLR 981

22

Win line (UK) Ltd v. Masterpart (Singapore) Pte Ltd [2002] 2

23

NEC Asia Pte Ltd v. Picket & Rail Asia Pacific Pte Ltd [2011]

24

TV. Media Ptd Ltd v. De Cruz Andrea Heidi [2004] 3 SLR

25 26

Alwie Handoyo v. Tjong Very Sumito [2013] 4 SLR 308

27

Tjong Very Sumito v. Chan Sing En [2012] 3 SLR 953

SLR 98 2 SLR 565 543

SLR 374

Raffles Town Club Pte Ltd v. Lim Eng Hock Peter [2013] 1

that the company is not in fact a separate entity; and second, where the corporate form had been abused for an improper purpose.”28 The High Court’s decision was affirmed in the Court of Appeal, which clarified that the veil was pierced on the ground of alter ego, not because OAFL was a mere device, sham or façade used by Alwie. In the next sentence, the court went on to clarify that “the ground of alter ego is distinct from that based on façade or sham, and the key question that must be asked whenever an argument of alter ego is raised is whether the company is carrying on the business of its controller.”29

Attempts to Reconcile Prest and Tjong While there was some initial confusion as to whether alter ego was a separate ground to façade/sham, Tjong seems to clarify that the Singapore courts consider it an independent ground. Tjong thus affirms past cases like TV. Media and NEC, and moves away from the traditional veil piercing grounds in English jurisprudence.

However, Yeo Hwee Ying and Ruth Yeo30 argue that this “perceived inconsistency” can be resolved in various ways: by arguing that the term ‘ground’ was used loosely, and the court had not intended to make alter ego a proper, separate ground for veil piercing; that alter ego may be seen as agency ground; that alter ego may be subsumed under the concealment ground as articulated by Lord Sumption in Prest; or that by following the ratio in Prest and first looking to alternative approaches to achieve the desired result, invoking the alter ego ground may be unnecessary and limited. It is thus submitted that the argument that the alter ego ground should be subsumed under concealment is the most compelling one.

Applying Lord Sumption’s evasion/concealment analysis in Prest, the two Singaporean veil-piercing grounds of façade/ sham and alter ego – as explained in Tjong – could possibly be re-categorised as evasion and concealment of legal obligations respectively.

In light of Prest, the alter ego exception seems to fit in cases of concealment, as there are striking similarities between the case of Gencor - the example Lord Sumption gave of a case that fell under the concealment category – and Tjong.

In Gencor, Dalby, in breach of his fiduciary duties, had diverted business opportunities that had come to him in his capacity as a director. The company then sought to recover profits that had been paid to an offshore company owned wholly by Dalby. The court found that the company had

28 29 30

(n 27) [67] (n 25) [96]

Yeo Hwee Ying and Ruth Yeo, ‘Revisiting the ‘Alter ego’ exception in corporate veil piercing’ (2015) 27(1) Singapore Academy of Law Journal 177-206

“no sales force, technical team or other employees capable of carrying on any business.”31 It was “simply the alter ego through which Dalby enjoyed the profit which he earned in breach of his fiduciary duty”32. Not only does the court in Gencor use the term ‘alter ego’, but the facts of Tjong are similar to that of Gencor, in that OAFL was incorporated ‘for the sole purpose of receiving payment under the first SPA’33. Thus, alter ego seems to fall under the concealment category, and thus does not warrant veil piercing. Instead, following Lord Sumption’s re-evaluation of Gencor in Prest, the case of Tjong could perhaps have been addressed on the basis of knowing receipt and is not a true veil piercing case.

On the other hand, the ground of façade/sham could perhaps be rephrased as the evasion principle, and this encapsulates cases where the company structure has been “abused for an improper purpose”. This would take into account Lord Sumption’s criticism that the term ‘façade/ sham’ was too vague.

III. AN ALTERNATIVE? However, it must be acknowledged that Lord Sumption’s analysis in Prest is not without its criticisms. Lord Sumption’s concealment/evasion analysis is strictly obiter. Lord Clarke alone argued that because this distinction was not discussed in the submissions, it was not appropriate to definitively adopt it34. Furthermore, academics such as Grantham have argued that Lord Sumption’s definition of abuse was “rather thin and arguably artificial”,35 with Lady Hale expressing uncertainty as to whether all cases could be classified neatly into either category36. This means that there may be inherent flaws in his analysis that might prove problematic in practice.

Thus, there have been attempts in Singapore to improve on Prest by attempting to elucidate a general, clearer principle of veil piercing. The most recent Singaporean case on veil piercing, Manuchar Steel,37 took a big picture interpretation of Lord Sumption’s judgement in Prest instead. Albeit the fact that this case concerned the single economic entity argument, which was emphasised as being distinct from veil piercing38, there was important and considerable reasoning on the principle of veil piercing. In his judgment, Lee Kim Shin JC acknowledged that “the precise circumstances in which the courts will pierce the corporate veil under common law are not exactly uniform or settled in many

31 32 33 34 35

(n 14) [26]

36 37

(n 3) [92]

38

(n 37) [125]

ibid (n 25) [97] (n 3) [103]

Grantham, ‘The Corporate Veil – An Ingenious Device’ (2013) 32 University of Queensland Law Journal 311 Manuchar Steel Hong Kong Limited v. Star Pacific Line Pte Ltd [2014] SGHC 181

103

common law jurisdictions – there is ‘no common, unifying principle’ as such”. However, he went on to propose that there is “a general thread that runs through all the authorities in support of the piercing of the corporate veil: the presence of abuse.”39 He based this on Lord Sumption’s judgment in Prest, that “the recognition of a limited power to pierce the corporate veil in carefully defined circumstances is necessary if the law is not to be disarmed in the face of abuse”,40 and went on to affirm Lord Sumption’s definition of ‘abuse’ as cases where the company uses its separate corporate personality “to evade the law or to frustrate its enforcement.

It is not an abuse to cause a legal liability to be incurred by the company in the first place. It is not an abuse to rely upon the fact (if it is a fact) that a liability is not the controller’s because it is the company’s.”41 This abuse principle may also better give effect to the policy underlying the doctrine of separate corporate personality. While it is difficult to establish parliament’s intended limits of separate corporate personality, Tan Cheng Han SC affirmed that “the idea of abuse (or misuse) of the corporate form is apposite because even if one cannot formulate all the purposes for legislation relating to companies, it is at least possible in certain cases to establish what is clearly not within such legislative intent.”42 However, some may still criticize this notion of abuse as being too subjective. Tan Zhong Xing thus proposes that ‘abuse’ should not only mean that the company is being used for purposes other than that for which the benefits of incorporation are granted, and should not only be limited to evasion cases. Also, the degree of ‘abuse’ should be a “fact-specific inquiry, depending on how the controller has utilized various aspects of the corporate vehicle to assist in the perpetration of the relevant wrongdoing.”43 Overall, this thus seems like a better guidance, and works around the weaknesses Lord Sumption’s concealment/evasion principle, offering a good compromise between flexibility and precision.

IV. CONCLUSION In conclusion, in the aftermath of Salomon, company law has been seeking to balance the sanctity of the corporate form with safeguards to ensure that this separate legal personality is not abused. Common law veil piercing has been one of the methods developed by the courts as a result. While Prest has sought to limit its scope, the courts are reluctant to abolish it, seeing it as “potentially valuable juridical tool to undo wrongdoing in some cases”.44 Thus, this leaves a vacuum as

39 40 41 42

(n 37) [94] (n 3) [27] (n 37) [95]

Tan Cheng Han, ‘Veil Piercing: a fresh start’ (2015) Journal of Business Law 20-36

43

Tan Zhong Xing, ‘The new era of corporate veil-piercing: Concealed cracks and evaded issues?’ (2016) 28(1) Singapore Academy of Law Journal 209-241

44 104

(n 3) [80]

to the circumstances – if any – that warrant veil piercing.

While Lord Sumption’s evasion/concealment analysis tries to expound on the gap that has inevitably resulted, it is flawed. Instead, the method propounded by Singapore courts and academics seem more fitting, and it is submitted that this analysis should be adopted instead.

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KEEPING INTERNATIONAL COMMERCIAL ARBITRATION ON TOP OF ITS GAME J U D I C I A L D E V E LO P M E N T S I N S I N G A P O R E

by Tara Puri

The need for a pro-arbitration stance in Singapore has never been stronger. 90%1 of businesses have indicated that arbitration is their preferred method of resolving crossborder disputes. Alongside London, Paris, Hong Kong and Geneva, Singapore features as one of the five most preferred and widely used arbitration seats in the world.

International Arbitration Centre (SIAC) and the SICC deal with cross-border commercial disputes, there were concerns2 that its inception could pose a threat to the SIAC. This is especially so given the SICC’s lower administration costs which, unlike arbitrator’s fees, are not pegged to a proportionate rate to the sum in dispute.

This article will explore the effect of judicial developments in Singapore on its position as an international commercial arbitration hub. It will first address the launch of the Singapore International Commercial Courts (SICC).

This will be followed by an assessment of the restrictive mechanisms through which parties can have recourse against arbitral awards, as well as the courts’ pro-arbitration stance when dealing with such applications. Crucially, this essay will shed light on the courts’ policy of minimal curial intervention with reference to some recent case law.

Fortunately, a number of features place the SIAC in an advantageous position. Firstly, arbitral awards rendered by the SIAC are more universally enforced and recognized.

While the SICC judgments are only enforceable in Commonwealth countries by virtue of them having a status of High Court judgments,3 the SIAC’s arbitral awards are enforceable by way of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards in 156 signatory countries. Secondly, unlike the SICC judgments, arbitral awards offer default confidentiality which often appeals to commercial entities. Finally, the SIAC has a both a regional and global reputation that cannot be paralleled by the SICC.

SICC: A NEW PLAYER ON THE INTERNATIONAL DISPUTE RESOLUTION SCENE January 2015 saw the launch of the Singapore International Commercial Courts (SICC). Given that both the Singapore

1

6th International Arbitration Survey by Queen Mary University of London’s School of International Arbitration.

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2

“The SICC: Competitor, Companion or Captain?” [2015] Law Gazette, July Issue <http://www.lawgazette.com.sg/2015-07/1339. htm>.

3

Singapore International Commercial Court Note on Enforcement of SICC Judgments, 9 December 2015 <http://www.sicc. gov.sg/documents/docs/SICC_Enforcement_Guide.pdf>.

Source: Wikimedia Commons

In fact, the introduction of the SICC could even bolster international commercial arbitration in Singapore. A full gamut of dispute resolution options is likely to encourage more parties to bring their disputes to Singapore.

RECOURSE AGAINST ARBITRAL AWARDS One of the main attractions of arbitration is the finality in proceedings. Unlike judgments rendered in the High Court, international arbitral awards cannot be appealed against on an error of law or fact. The final and binding nature of arbitral awards brings much sought-after certainty in commercial disputes, but is often a source of aggravation for the losing party.

A dissatisfied party may attempt to avoid being an awarddebtor by taking advantage of a few limited avenues for recourse. Firstly, it may apply to set aside the award.

Secondly, it may seek a court’s refusal to recognise or enforce an arbitral award. Finally, it could attempt to dispute the arbitral tribunal’s jurisdiction to render the award so as to invalidate it.

With respect to the first and second challenges, Singapore courts have strictly advocated a policy of minimal curial intervention. This means that it will not concern itself

with the substantive merits of a case and it will only review procedural breaches.

The main considerations underscoring the policy of minimal curial intervention are the respect for party autonomy, the efficacy of arbitration as an alternative dispute resolution method as well as the recognition of the technical expertise for which arbitrators are chosen.

PROCEDURE FOR SETTING ASIDE AND REFUSING TO RECOGNISE OR ENFORCE AN ARBITRAL AWARD Governing Rules Singapore is a signatory to two significant international conventions; the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) and the UN Commission on International Trade Law’s Model Law on International Commercial Arbitration (Model Law). While the scope of the New York Convention only covers the enforcement of awards, the Model Law extends to setting aside awards as well. The overarching scheme of these conventions is to harmonize the treatment of international arbitration awards across 107

the world by de-emphasising the importance of the seat of arbitration.

Article 34 of the Model Law set out grounds for which an applicant can set aside an award, with Section 24B of the International Arbitration Act (IAA) allowing for additional grounds. An application to set aside an award can only be made in a court in the country of the arbitration seat.

Section 19 of the IAA provides for the refusal to enforce or recognise a foreign award. Unlike the setting aside procedure, an application to refuse to enforce or recognise an award can be made in any country where enforcement is sought.

Does Singapore offer a “choice of remedies”?

Section 3(1) of the IAA gives effect to the Model Law with the exception of Chapter VIII. This means that Article 36 of the Model Law, which governs the enforcement of arbitral awards, does not have direct force of law in Singapore.

However, the Court of Appeal in PT First Media v. Astro4 articulated that it remains open to the courts to align the exercise of discretion under section 19 of the IAA with the grounds under Art 36 of the Model Law. The appellant in PT First Media v. Astro sought to resist enforcement of an award by arguing that the exclusion of Chapter VIII meant that Singapore did not offer a “choice of remedies”. By this, the appellant suggested that the setting aside of jurisdictional challenges (discussed later) were exclusive routes through which a party could challenge an award.

“Choice of remedies” refers to the two options a party has against an award. The first is an “active remedy” which consists of taking positive steps to invalidate the award such as by an application to challenge a preliminary jurisdiction ruling under Article 16(3) or setting aside an award on the grounds set out in Article 34(1) of the Model Law. The second is a “passive remedy” against the award by resisting enforcement where and when the award is sought to be enforced.

The Court of Appeal in PT First Media v. Astro emphasised that the system of a “choice of remedies” was at the heart of the design of the Model Law5 and that section 3(1) of the IAA could not be understood as derogating from that clear philosophy. It alluded to Parliament’s specific objective in excluding Chapter VIII, which was to enable the enforcement of foreign awards to be governed by only one set of rules, namely, the New York Convention.

Furthermore, the Court iterated its pro-arbitration stance it in its interpretation of the IAA. It held that there would be potentially far-reaching implications on the practice and flourishing of arbitration in Singapore if parties were compelled to engage their active remedies for fear of not

4

PT First Media TBK v. Astro Nusantara International BV & others [2014] 1 SLR 372.

5 108

ibid [65].

having a passive remedy.6

Result Of A Successful Claim To Set Aside An Award There can be two possible results that arise from a worthy claim to set aside an award. The court may use its discretion under Art 34(4) to suspend the setting aside proceedings to remit the matter to the arbitral tribunal for amendments, or it may set aside the award. Recent cases have discussed issues relating to both potential outcomes.

The Court of Appeal in BLC v BLB7 dealt with the question of whether a court could exercise its power of remission to the arbitral tribunal where the party had not made use of the opportunity to bring up the matter to the arbitral tribunal itself under Article 33(3).

The Court weighed up two sides of the argument. On one hand, Article 33(3) would be rendered toothless if the court could exercise its power of remission despite the party not attempting to first bring up the matter before the arbitral tribunal.8 This would go against the court’s desire to respect the autonomy of the arbitral process by leaving matters to be resolved by the arbitral tribunal where possible. On the other hand, the Model Law placed no obligation on parties to invoke article 33(3) and to derogate from this would impede harmonisation.

Eventually a middle ground was found between the two seemingly disparate positions by recognising that whilst a party was not obliged to invoke Art 33(3), he took the risk that the court would not exercise its discretion to set aside any part of the award or invoke the powers of remission under Art 34(4) of the Model Law.9 Where the power of remission is not exercised, a successful claim can lead to the award being set aside. The Court of Appeal in AKN v ALC10 clarified that the consequence of this is that the Court no longer has the power to remit the matter to the same tribunal. Thus, once an award has been set aside, parties must commence fresh proceedings before a new tribunal.

GROUNDS FOR SETTING ASIDE OR NONENFORCEMENT OF AWARD The grounds for setting aside an award under Article 34 essentially mirrors the grounds for non-enforcement or recognition as found in Article 36 of the Model Law.

6 7 8 9

ibid [90].

10

AKN and another v. ALC and others and other appeals [2015]

[116].

SGCA 18.

BLC and others v. BLB and another [2013] 4 SLR 1169. ibid at [110].

BLC and others v. BLB and another [2013] 4 SLR 1169,

There are two types of grounds11 for setting aside or refusing to enforce an award – (i) grounds to be proven by one party and (ii) grounds that a court may consider of its own initiative. The violation of public policy or non-arbitrability of a matter falls within the latter category. The lack of capacity of parties, lack of valid arbitration agreement, inability of a party to present its case and the award dealing with matters not covered by submissions all fall within the first category which requires parties to submit.

Section 24(b) of the IAA provides for an additional ground – whether a breach of the rules of natural justice occurred in connection with the making of the award by which the rights of any party have been prejudiced.

The approach of the courts in dealing with applications to set aside or refusal to enforce has been in the spirit of minimal curial intervention.

The Court of Appeal in the oft-cited case of Soh Teng Bee12 highlighted three important considerations underpinning the policy of minimal curial intervention. Firstly, the recognition of the autonomy of the arbitral process by encouraging finality is essential so that its advantage as an efficient alternative dispute resolution process is not undermined.13 Secondly, having opted for arbitration, parties must be taken to have acknowledged and accepted the attendant risks of having only a very limited right of recourse to the courts.

It would undermine party autonomy if a dissatisfied party could easily seek the assistance of the court to intervene as though it was discharging an appellate function.14 Finally, the parties often appoint an arbitrator who is himself an expert in the field of law and/or trade that is the subject of dispute. In so doing, they, inter alia, intend to rely on his expertise to obtain a sound and expeditious judgment. It would therefore be wrong for the courts to blindly contest every conclusion of the arbitrator.15 Breach of Natural Justice The test for a breach of natural justice, or the John Holland16 test, is four-fold. Firstly, there must be claim of breach of one of the two principles of natural justice; audi alteram partem (the right to be heard) or nemo judex in causa sua (the right to an impartial and independent tribunal).

justice. Thirdly, a causal nexus between the breach and the making of the award must be drawn. Last but not least, the applicant must show how the breach prejudiced the applicant’s rights.

When dealing with allegation of breach of natural justice, courts are weary to go into the substantive merits of the case. Breaches of natural justice are procedural in nature and the policy of minimal curial intervention restrains the courts from using its primordial instinct to second-guess other tribunals17.

The Court of Appeal in TMM v. Pacific Richfield18 warned that courts ought not to sift through the entire record of the arbitral proceedings with a fine-tooth comb19 or nitpick at the award20. Such an interventionist approach, as was cautioned in Soh Teng Bee, could lead to indeterminate challenges, cause indeterminate costs to be incurred and lead to indeterminate delays21.

Audi alteram partem – Right to be heard The right to be heard as embodied in the Model Law differs in formulation from the same principle found in the Arbitration Act (AA). Article 18 of the Model Law states that each party must be allowed a “full opportunity” to present its case, whereas section 22 of the AA uses the term “reasonable opportunity of presenting his case”.

At first blush, Singapore’s adaptation of the principle in domestic arbitration appears to be wider. However, it was pointed out in Soh Teng Bee, they are identical in substance.

It was also pointed out in Soh Teng Bee that the right to be heard must be read in the context of the current judicial climate which dictates that courts should not without good reason interfere with the arbitral process, whether domestic or international.

This sentiment was echoed by Sundaresh Menon CJ in L W Infrastructure,22 where merely technical or inconsequential breaches did not suffice and there had to be a real as opposed to fanciful chance of making a difference to the arbitrator’s deliberations.23

Secondly, the applicant is required to identify the specific acts by the tribunal that resulted in a denial of natural

17

11

Explanatory note by the UNCITRAL Secretariat on the Model Law on International Commercial Arbitration, B.7(a)45.

12

Soh Beng Tee & Co Pte Ltd v. Fairmount Development Pte Ltd [2007] SGCA 28.

13 14 15 16

ibid [59]. ibid [65]. ibid [63].

John Holland Pty Ltd (formerly known as John Holland Construction & Engineering Pty Ltd) v Toyo Engineering Corp (Japan) [2001] 1 SLR(R) 443.

Soh Beng Tee & Co Pte Ltd v. Fairmount Development Pte Ltd [2007] SGCA 28, [62].

18

TMM Division Maritima SA de CV v. Pacific Richfield Marine Pte Ltd [2013] 4 SLR 972.

19 20 21

ibid [42]. ibid [45].

Soh Beng Tee & Co Pte Ltd v. Fairmount Development Pte Ltd [2007] SGCA 28, [62].

22

L W Infrastructure Pte Ltd v. Lim Chin San Contractors Pte Ltd [2014] 1 SLR 1221.

23

ibid [54].

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Nemo Judex Causa Sua – Right To An Impartial And Independent Tribunal The driver behind this principle is the strong public interest in ensuring public confidence in the administration of justice. The test for apparent bias was set out in Re Shankar24 as whether the circumstances gave rise to a reasonable suspicion or apprehension in a fair-minded reasonable person with the knowledge of the relevant facts that the tribunal was biased.25

The High Court in PTCI v. Franciscus Wongso26 recognised that a finding of an arbitrator’s apparent bias under Article 12 of the Model Law is likely to have an effect on subsequent setting aside proceedings. As impartiality and independence of an arbitrator constitutes one of the two pillars of natural justice, such a breach would amount to a breach of natural justice under s24(b) of the IAA. It may also warrant setting aside under the Model Law as it could give rise to public policy concerns under Art 34(2)(b)(ii) or could be seen as “not in accordance with the agreement of the parties” under Art 34(2)(a)(iv).

Arbitrator Acting In Excess Of His Jurisdiction An important recent Court of Appeal decision shedding light on Article 34(2)(a)(iii), which is concerned with awards dealing with issues falling beyond the scope of the arbitral tribunal’s powers, is the case of TMM v. Pacific Richfield.27 In this case, the Court helpfully identified four duties of arbitrators acting within their jurisdiction, as well as the standards of those duties. Two, in particular, highlight the court’s reluctance to intervene and its willingness to leave matters up to the arbitral tribunal.

With respect to the duty not to look beyond submissions, the court held that arbitrators could decide on an unargued premise if it flows reasonably from an argued premise.

Permitting arbitrators to only decide on premises put forward by the parties would be to straightjacket arbitrators28 and ignore the reality that commercial parties appoint arbitrators for their expertise and experience, technical, legal or otherwise.

The court also observed that it would be neither realistic nor practical to place a duty on the arbitrator to deal with every argument presented. This duty is only limited to all essential issues, giving tribunals fair latitude to determine the meaning of “essential”.29

24 25 26 27

Re Shankar Alan s/o Anant Kulkarni [2007] 1 SLR 85 PT Central Investindo v. Franciscus Wongso [2014] 4 SLR 978.

28

TMM Division Maritima SA de CV v. Pacific Richfield Marine Pte Ltd [2013] 4 SLR 972, [65].

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Other Grounds Other grounds for setting aside or non-enforcement or recognition include the lack of capacity of parties and the lack of valid arbitration agreement (Article 34(2)(a)(i)), the composition of the arbitral tribunal or the arbitral procedure not being in accordance with the agreement of the parties (Article 34(2)(a)(iv), the non-arbitrability of the subject matter (Article 34(2)(b)(i)) and the award’s conflict with of public policy of the state (Article 34(2)(b)(ii)).

In Dexia Bank,30 Judith Prakash J astutely resisted an expansive construction of the term “public policy” so as to avoid providing “a fertile basis for attacking arbitration awards”. The difficulty of proving violations of public policy was recently highlighted in Coal & Oil Co LLC v. GHCL Ltd 31 where the High Court describe public policy ground as “the last refuge of the desperate” as far as applications to set aside arbitral awards are concerned.

JURISDICTIONAL CHALLENGES A final route available to parties trying to avoid an unfavourable award is to challenge an arbitral tribunal’s jurisdiction to decide on the matter. The arbitration agreement is key to arbitral tribunal’s jurisdiction.

Arbitration agreements can take the form of a clause in a contract or a separate independent written agreement.

While judges in domestic courts establish their jurisdiction to resolve disputes from national legislation or constitutions, arbitral tribunals derive their jurisdiction to preside over arbitral proceedings from the consent of the parties reflected in the arbitration agreement.

Jurisdictional challenges attack the foundation, content and extent of its mandate and power of an arbitral tribunal.

Such challenges can be brought before the arbitral tribunal during arbitral proceedings, or before a court under s10 of the IAA or Article 16(3) of the Model Laws.

The principle of Kompetenz-Kompetenz,32 embodied in Article 16(1), provides that the arbitral tribunal has the competence to determine its own jurisdiction as a preliminary ruling. However, parties may subject this to court control under Article 16(3).

ibid [91].

TMM Division Maritima SA de CV v. Pacific Richfield Marine Pte Ltd [2013] 4 SLR 972.

29

The court’s restrained approach to the duties was justified by a foundational principle that it ought not to lose sight of.

The principle was that parties who chose arbitration as their preferred system of dispute resolution had to live with the decision of the arbitrator, good or bad. Commercial parties appointed arbitrators for their expertise and experience, technical, legal, commercial or otherwise. Party autonomy, too, had to be respected.

ibid [74].

30

PT Asuransi Jasa Indonesia (Persero) v. Dexia Bank SA [2007] 1 SLR(R) 597.

31 32

Coal & Oil Co LLC v. GHCL Ltd [2015] SGHC 65.

Explanatory note by the UNCITRAL Secretariat on the Model Law on International Commercial Arbitration, B.4(a)25.

Parties could potentially abuse this to delay the progress of the proceedings. As such, three procedural safeguards have been placed in the Model Law33 and the IAA34 to reduce the risk and effect of such tactics. These safeguards are the short 30-day period for resort to court, the court’s decision being unappealable and the arbitral tribunal’s discretion to continue proceedings and make an award while the matter is pending before the court.

CONCLUSION The judiciary has, over the past decade and in recent years, shown a commitment to preserving Singapore’s reputation for international commercial arbitration.

This is evident from its policy of minimal curial intervention played out in action in recent cases such as TMM and L W Infrastructure. The pro-arbitration, pro-enforcement stance embraced by the judiciary in recognising a “choice of remedies” propels Singapore further in the right direction.

In this judicial climate, where there exists procedural fairness but there is no room for abuses of the system, international commercial arbitration continues to flourish.

Singapore is on top of its “A” Game when it comes to arbitration and does not seem to be shaken by the incoming of the SICC, which is likely to prove more complementary than competitive.

33

Article 16(3), UN Commission on International Trade Law’s Model Law on International Commercial Arbitration.

34

Article 10, International Arbitration Act (Cap 143A).

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CRIMINAL LAW IN SINGAPORE A N I N T E R V I E W W I T H T W O O F S I N G A P O R Eâ&#x20AC;&#x2122; S L E A D I N G C R I M I N A L L AW Y E R S

by Ho Sheng Yung

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Many young lawyers nowadays are often drawn to the legal industry by the grandeur and modern spectacle that the corporate world lends itself to. In contrast, the practice of criminal law is not viewed by young lawyers with the same type of attractiveness. Nevertheless, criminal law forms an integral albeit underrated part of society, with the layman being introduced to both the legal industry and societal issues through his exposure to its practice. As such, this interview has been undertaken with the purpose of shedding light on the inner workings of criminal law in Singapore. Two of Singapore’s leading criminal lawyers, Mr Sunil Sudheesan and Miss Diana Ngaim have obliged us with their informative view on what it means to be a criminal lawyer.

MR SUNIL SUDHEESAN Criminal lawyer Mr Sunil Sudheesan is the Head of the Criminal Department at Quahe Woo & Palmer LLP. He handles the entire gamut of criminal law cases including traffic offences, capital cases, corporate crime, drug offences and corruption offences.

Sunil has had the privilege of being mentored by the storied Subhas Anandan for more than 10 years since 2004.

Consequently, Sunil has been involved in close to 1,000 criminal cases since starting practice. Some notable ones include: • Eu Lim Hoklai v Public Prosecutor [2011] SGCA 16: Secured acquittal in a murder case on appeal to the Court of Appeal. Established defence of grave and sudden provocation and sudden fight. Twthe client was eventually sentenced to 10 years’ imprisonment; • Public Prosecutor v Azman bin Mohamed Sanwan and others [2010] SGHC 196: Appeared as lead counsel for the accused in a capital drug trafficking case in the High Court; • Tan Chor Jin v Public Prosecutor [2008] 4 SLR(R) 306: Assisted in the appeal of the infamous One-eyed Dragon; and • Leong Siew Chor v Public Prosecutor [2006] SGCA 38: Assisted in the trial and appeal of the Kallang Body Parts case.

Sunil’s passion is criminal defence litigation. He is currently the Acting President of the Association of Criminal Lawyers of Singapore (“ACLS”). Sunil is actively involved in pro bono work and attends regularly at the ACLS Legal Clinics in Chong Pang and Hougang. He is also a volunteer lawyer with the Criminal Legal Aid Scheme, a non-profit initiative by the Law Society of Singapore to provide legal assistance to needy defendants in criminal cases. For his efforts, Sunil was awarded one of the two Subordinate Courts’ Volunteer of the Year (Advocate and Solicitor category) awards in 2010. Currently, Sunil is one of 3 criminal lawyers assisting in the Enhanced Guidance for Plea Scheme in the State Courts (“EGPS”). Colleague and fellow criminal lawyer Diana Ngiam assists the EGPS together with Sunil.

Sunil is on the panel of Lead Counsel under the Supreme Court’s Legal Assistance Scheme for Capital Offences (“LASCO”). Sunil has handled and assisted with a number of capital trials and appeals to the Court of Appeal under this scheme. Sunil has also sat on a number of joint committees set up by the Ministry of Law and the Attorney-General’s Chambers. Some committees include the committee to reform the law of homicide and the committee on assisting persons with mental disabilities.

Sunil is into his second year as a member of the Council of the Law Society of Singapore. He is one of three members placed on the Council by the Ministry of Law. MS DIANA NGIAM Ms Diana Ngiam’s practice is primarily in criminal defence litigation. She handles and assists in matters ranging from road traffic offences, to capital cases, as well as blue-collar and white-collar offences.

Diana was admitted to the Singapore Bar in July 2012 and pupilled under Mr. Subhas Anandan, whose values and approach to criminal defence work continue to guide Diana in her practice. Diana has assisted in a wide range of criminal trials and criminal appeals both in the State Courts, the High Court and the Court of Appeal.

Diana believes strongly in the need for fair representation as every accused person should be given the chance to have his or her voices heard.

Diana is the Secretary of the Association of Criminal Lawyers of Singapore (“ACLS”). As a member of the ACLS, Diana volunteers at the ACLS legal clinics in Chong Pang and Hougang. Diana is also a volunteer lawyer with the Criminal Legal Aid Scheme, an initiative by the Law Society of Singapore. Diana is also on the panel of assisting counsel under the Supreme Court’s Legal Assistance Scheme for Capital Offences (“LASCO”).

What do you do as a criminal lawyer? Take us through the process and procedures involved in taking on a case?

Sunil: I spend my life bargaining. With the Prosecution, with Judges and with the clients. It is a manipulative exercise to achieve what I feel is the best compromise for all concerned. It is also hard to bargain when you inevitably have the weaker hand. Notions of justice often get thrown out the window because there is so much more at stake than just guilt or innocence. So I have shed my romantic and idealistic notions of justice sometime back and in its place is a healthy sense of scepticism, pragmatism and anger.

Conceptually, we look to see what the client’s problems are For more information on Mr Sunil Sudheesan’s and Ms Diana Ngiam’s practice area, please visit <http://www.quahewoo.com/> 1

115

and we explore solutions. Most of the time we go through fixed processes and arrive at solutions which the client can accept. In that sense, a major feature would be the management of expectations.

Diana: I climb up and down the stairs of the State Courts and shuffle between Courts to handle our matters on a (almost) daily basis. When I am not in Court, I will usually be back in the office to meet prospective clients or speaking to existing clients to keep our clients updated of what is going on with their matters. A significant portion of my time is therefore spent on client management. Apart from Court work and client management, there would of course be the actual getting up to do for our cases which typically involve drafting of letters of representations to the Prosecution, research, drafting of submissions and mitigation pleas etc..

The first thing we do when we take on a case is to get detailed instructions from our client before advising our client. We will attend Court (if the client has been charged) and we will adjourn the matter in Court so that we can convene meeting(s) with the Prosecution to discuss the evidence and sentence in each case. A lot of what we advise our client depends on what is shared at the meeting(s) with the Prosecution i.e. about the nature, strength and type of evidence the Prosecution has against our client. A lot of negotiations take place between the Prosecution and Defence at the pre-trial stage to see whether the matter can be resolved amicably without the need for a trial. If however, the matter cannot, then the matter goes for trial.

Trial will then involve days of cross-examining witnesses in Court and the number of days of trial will depend on how many witnesses there are and how complex the case is.

What made you decide to specialise in criminal law?

Sunil: Romantic and idealistic notions of Justice… But in truth, it was my late uncle’s example of fighting for the underdog. That was inspiring. And I think our justice system always needs good people to step forward to defend underdogs.

Diana: I’ve always thought (and still do) that people are born good and that no one is inherently evil. People therefore find themselves committing offences because of reason(s) that stem from deep-seated issues that are usually beyond their control. I have been told I am idealistic and naïve though. I decided to specialise in criminal law, and specifically in criminal defence work because I wanted to be the voice for these accused persons to help tell their side of the story – things are not always black and white. It’s not about changing the world, but about changing someone’s life (hopefully for the better), one at a time.

What are the key moments in your experience of practising criminal law? Is there a particular encounter that has left a lasting impact on you?

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Sunil: Losing my first capital case after I was called. It was Took Leng How’s (“Took”) case and I was third chair.

Took was convicted of murdering a young girl. He was sentenced to death in the High Court and on appeal, the Court of Appeal affirmed the decision to convict him 2 to 1. Singapore had the mandatory death penalty for offences under Section 300(c) at the material time. If the Court had the power to exercise its discretion (as it does now), I remain confident that they would not have opted to hang this man with an IQ of 72 (or thereabouts).

The dissenting judgement in the CA was penned by Justice Kan Ting Chiu. Justice Kan (rightly in my opinion) found that there remained doubts over the cause of death of the victim. For me, the most telling thing was that Took did manage to escape to Malaysia but opted to return to Singapore because his father told him to return if he did not do it. Why return to Singapore to face a capital charge unless you honestly felt that you were not guilty.

That loss still grates and perhaps that was when I truly moderated my expectation of the meaning of the phrase “beyond a reasonable doubt”.

Diana: I remember one particular accused person – one of the first few accused persons that I had gone to visit at Changi Prisons because he was in remand. This was when I had just started out as a trainee. The accused was a young boy who had killed his brother during an incident when his brother became violent towards the accused because the brother’s psychiatric condition had acted up. The accused therefore pinned his brother down on the floor and had used excessive force on the brother and caused his brother’s death. The accused had called the police for help before resorting to using force on his brother. When I saw the accused in remand together with Sunil, I still remember how reserved and withdrawn the accused was – he was always looking down and avoided eye contact.

I could feel how sorry he was for causing the death of his own brother. I remember almost tearing up before Sunil told me to leave the room. That was a very emotional moment for me. I am glad that the Prosecution and the Court recognised the very unique and unfortunate circumstances the offence and eventually, the accused was ordered to undergo probation.

We understand that you are the acting President of the ACLS. What is it that the ACLS does and how does that aid or impact the legal system and industry? (To Sunil) Sunil: The Association of Criminal Lawyers of Singapore (“ACLS”) was set up in a time where many in the criminal bar felt the Law Society was not doing enough for the criminal bar. Further, the ACLS is not a creature of statute and there is no impediment to it commenting on changes in the law or existing legislation.

Things are quite different now. The Law Society’s Criminal

Practice Committee has been properly helmed in recent times and many of the ACLS’s members sit on the CPC. The ACLS does a number of things: 1) We assist the Court in the Enhanced Guidance for Plea Scheme where unrepresented accused persons (mostly in remand) are given legal advice and are sometimes given proper representation in their matters; 2) We conduct legal clinics once every 2 months in Hougang; 3) We organise seminars on occasion and our mainstay is the Public Lecture which is held around once every 2 years. This year’s lecture is fixed for 4 August 2016 and our tentative topic is “The role of intuition and deliberation in the courtroom”. Our guest lecturer is Presiding Judge of the State Courts Judicial Commissioner See Kee Oon. What motivates you to carry on in the ACLS and the Criminal Legal Aid Scheme?

Sunil: My legal career was always weighted heavily towards pro bono. When I started practice, I was privileged to handle numerous Community Court cases under the informal scheme the ACLS had with the Community Court. Both organisations still help a disenfranchised segment, so I am happy to lend my weight.

Diana: The nature of our work requires us to help the less fortunate and people at their most vulnerable. Sunil always says that the greatness of our society is measured by how we treat our weakest. Pro bono work through whichever forum/organisation gives me the opportunity to help out the needy and vulnerable. A little help can sometimes go a long way and it is the hope that my assistance will help someone get through the lowest point of his life that motivates me.

What are your views regarding the state of pro bono work in Singapore? Do you think that pro bono work should be made mandatory in Singapore?

Sunil: Pro bono is not mandatory for lawyers. It is mandatory for the local law school students. I am against mandatory pro bono as it should be voluntary. Nothing good comes from forcing people to do things.

Diana: Pro bono work has not been made mandatory in Singapore and I hope it is not made mandatory because doing so takes away the spirit of doing pro bono work. Pro bono is not something that should be taught or forced.

I’ve seen an increasing number of lawyers, especially young lawyers, take on pro bono work in recent years and I have learnt that it is the fear of not knowing what to do that has been preventing young lawyers from trying out pro bono work. What should be done to expand the reach of pro bono work is not to mandate it but to constantly improve the support structure available to guide young lawyers who are keen to try pro bono work but are afraid to do so

because of their lack of experience in the area.

What are some of the most pertinent issues in the practice of criminal law?

Sunil: Getting lawyers up to scratch to properly challenge the AGC. The AGC is an institution which employs a large number of lawyers. This gives them the benefit of virtually boundless resources and the ability to share information quite seamlessly. Criminal defence lawyers or defence counsel (“DCs”) are found in small pockets and do not organise themselves as effectively as those in AGC. DCs therefore are unable to benefit from the potential economies of scale out there to properly challenge the Prosecution. Further, criminal law is always about the individual versus the State. Make a wild guess as to who has greater resources.

This brings me to the next point. Criminal law does not pay as well as other areas of the law most times. Not all of us can pull in the “fat” client with boundless resources to fund a defence. So the fundamental question remains as to the sustainability of one’s practice. You need a constant supply of work to keep on doing what you do. One might therefore end up gravitating towards better paying areas of the law so as to pay your bills.

Diana: Managing your client’s expectations. Drawing a balance and managing your time between doing pro bono work and briefed work (which is essential to keep a sustainable practice). Not to get too emotionally involved.

Some emotion is good, but not too much because the ability to remain objective and reasonable is key to being a good defence lawyer (in my opinion).

How have you seen the practice of criminal law itself or the industry relating to criminal law change since you’ve started practice? What do you hope to see in its future in Singapore?

Sunil: I see greater cooperation between prosecutors and defence counsel in current times. I still feel that DPPs and DCs would clash less if the standard of investigations improved.

When I started practice in 2004, it seemed to me that Prosecutors and DCs were very wary of each other. It could well be a perception thing on my part but the perceived distrust seems to have dissipated somewhat. The advent of the Criminal Case Management System (“CCMS”) is a big step in promoting communication between the Prosecutors and DCs. CCMS sessions are held in virtually all the cases I handle now as there is nothing like obtaining insight into the Prosecution’s case so as to properly tell clients what the state of play is. It is true that we need to disclose facets of our defence, but I see that as a non-issue as the Prosecution is already in possession of my client’s statements.

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The continuum should shift firmly towards the gathering of objective evidence instead of statement-based investigations. This means criminal law is shifting towards forensic evidence and this can only be good for the system. I find statements the most unreliable pieces of evidence available in a criminal trial. Police officers will swear blind that they have accurately recorded what your client has said and clients will mention countless problems with the eventual recorded statement. The Judge is then faced with the task of essentially choosing whether to believe the client or the Police. Videotaping of interviews (whenever that happens, we hope soon) will hopefully cure a large lacuna in the system. There is no need for Judges to essential guess what happens in interview rooms.

Other examples of forensic evidence include DNA, fingerprint, CCTV evidence and other of similar ilk. The presence of irrefutable forensic evidence would trump any confession in my mind. The whole point is for the objectivity of the evidence to shine through.

Diana: We are moving, slowly, towards recognising and understanding that punishment through imprisonment is often not an effective sentence; that there are underlying causes of offending that require intervention and that imprisonment does little, or nothing, to help with these underlying causes.

I hope to see more involvement from the community when it comes to the reformation and rehabilitation of accused persons. The stakeholders of the criminal justice system should expand to include the community in which the accused person is in because the ultimate aim of an effective system is a proper reintegration of the accused person back to society. I also hope that we would mature as a society to be able to grasp and appreciate the many different psychiatric conditions that are plaguing some accused persons who offend as a result of such psychiatric conditions.

There have been an increasing focus on this area, particularly with the introduction of diversionary sentences, but I think more can be done to understand the effect of these psychiatric conditions and to tailor treatment programmes that target the root causes of their offending behaviour.

Amidst the economic slowdown and the glut of lawyers in Singapore, how is the practice of criminal law affected by these circumstances?

Sunil: Criminal work is bread and butter. But when there is a slowdown, you see some lawyers gravitating towards criminal defence work. To get market share, sometimes promises are made when they should not be made. In addition to this, there are increased price pressures stemming from an increased supply of lawyers.

What do you think can be done to encourage more lawyers to join the criminal bar? Do you take the view that the being a criminal lawyer is a vocational calling or are 118

you of the opinion that it is a mere profession?

Sunil: I honestly feel that many are keen to do crime. But idealism won’t feed you. So you end up doing a smattering of crime if you are lucky enough to be in a firm that is supportive enough.

The fact remains that there is insufficient demand which requires this ramped up supply. So while the government’s efforts to increase quality supply are laudable, the root problem remains a lack of paying demand. If all criminals were rich and could afford time costs without requesting any discounts, all the senior counsel might end up doing criminal law and we may have a shortage of corporate litigators.

Diana: I take the view that being a criminal lawyer requires one to be passionate about it. I suppose letting young lawyers know where to seek guidance from would help encourage them to try out criminal law, which can sometimes appear quite daunting an area of practice. I am certain the senior lawyers in the criminal bar are always ready to help young lawyers if need be.

What would your advice be for law students aspiring to specialise in criminal law?

Sunil: Only those unshaken by my intentionally bleak comments above should pursue criminal law. And when you do, chase it with a vengeance. Be conscientious and remember that integrity is your only currency.

Diana: Do not be afraid to try – it is challenging because what you do affects someone else’s life but it is a rewarding practice. However, given how practice in general has evolved and how competitive it is now, it may be prudent not to pigeonhole yourself to just criminal practice.

Join Us Choosing a law firm to train with is an important milestone as you embark on your legal career.

There are many options available and that makes it all the more challenging in choosing the one that is right for you.

What do you hope to achieve from your training?

It is not all about the prestige and physical size of a firm when deciding on a law firm to train with. Rather and above all, it is the quality of the training provided by the law firm and the kind of culture and values it holds that would help you to grow and excel in your legal career.

Training

At Shook Lin & Bok, we invest in our people – the drivers of the Firm’s success. We believe in nurturing our young legal minds in a conducive environment and developing them to their fullest potential, not just in the professional sense, but also as an individual.

Quality training is crucial in providing you with a good head start in your legal career. We are serious about professional development and our approach towards practice training is this – we take in our trainees with the intention of retaining them as associates upon their admission to the Singapore Bar.

Qualities Apply

So what are the qualities that we are looking for, you may ask?

While it is important to have a good academic record, we are looking for people who have a passion for the law, an inquisitive mind with a desire to learn, and the drive to excel.

We welcome applications for both internship and practice training throughout the year. To apply, please send your applications to the Recruitment Partner at the following e-mail addresses: trainee@shooklin.com (Training) intern@shooklin.com (Internship)

119 Shook Lin & Bok LLP 1 Robinson Road #18-00 AIA Tower Singapore 048542 T +65 6535 1944 F +65 6535 8577 E slb@shooklin.com W www.shooklin.com

SINGAPORE’S LEGAL INDUSTRY AND FUTURE

Source: smartlocalsg

A N E M P LOY E R’ S P E R S P E C T I V E

by Joel Wong

MR SARJIT SINGH GILL Starting out as a lawyer in today’s job climate seems like an increasingly daunting prospect for many young lawyers. The phrase ‘glut of lawyers’, as so frequently advertised in the media recently, is enough to haunt many of us law students as we sleep at night. In this interview, Mr Sarjit Singh Gill draws upon his abundant legal experience and addresses these pressing issues from an employer’s perspective. In sharing his personal motivations, Mr Singh also provides us with some invaluable insights into the nature of his work, and his visions for the future of the industry.

Mr Sarjit Singh Gill, is a Senior Partner at Shook Lin & Bok LLP. He has extensive experience in a broad range of litigation and arbitration matters, with a special focus on corporate and commercial disputes, banking-related disputes, shareholders’ disputes, professional negligence and fraud. He also has an active international arbitration practice, having been involved in a significant number of complex arbitrations in Singapore and abroad.

With more than 30 years of experience, Mr Singh is also involved in many domestic and cross-border restructuring and insolvency matters, some of which are significant and high profile in nature. His clients include insolvency 120

practitioners (liquidators, judicial managers, administrators, etc), accounting firms, financial institutions and non-bank creditors.

Mr Singh is a member of the International Insolvency Institute. He is also on the Board of the Central Provident Fund and a member of its Risk Management and Public Engagement Committees.

He is widely recognised as a leading lawyer for dispute resolution, international arbitration and restructuring and insolvency by a number of legal directories including Chambers Global/Asia-Pacific, The Legal 500 Asia Pacific, IFLR1000, Best Lawyers in Singapore, The International Who’s Who of Insolvency & Restructuring Lawyers, PLC Which Lawyer and Asialaw Leading Lawyers.

Mr Singh also has been listed as an India foreign expert for Dispute Resolution: Arbitration (Singapore) and an expert based abroad in Singapore for Dispute Resolution (India) in Chambers Global 2012 to 2016 We can start with your personal life, incentives and motivations.

Why did you choose law?

With an interdependent world more than ever involved in international trade and commerce one sees many more disputes arising from cross border transactions; these usually involve foreign parties or at least one foreign party.

Businessmen are often suspicious of courts they are not familiar with and here is where arbitration proves attractive.

Singapore has become a choice destination for arbitration in recent years. The Singapore International Arbitration Centre, has seen tremendous growth. It was therefore crucial to be proficient in this area, so as to be able to offer clients this option of alternative dispute resolution. It is most instructive and appealing dealing with disputants of different nationalities and cultures.

You also took up a case relating to the Mental Capacity Act where you argued that the third respondent did not have capacity. This is a pertinent and developing area of law. Do you agree with the recent changes to the Mental Capacity Act? The Mental Capacity Act (“MCA”) is a relatively new piece of legislation. Therefore, it is likely that this area of the law will continue to develop and evolve in the coming years.

Law is the most practical option as it equips you with various useful skills, such as critical thinking, research and writing, opening up a host of career opportunities. But to practice law, you must have a passion for it.

Personally, apart from the practicality, law provided me with an opportunity to contribute to society. The law affects everyone’s daily lives, in one way or another, and as a lawyer, I am in a position to help.

You have been particularly successful in the areas of arbitration and insolvency. Could you expand on why these fields of work were attractive to you, and what were your keys to success in these areas of law?

Finding commercial solutions for your clients is particularly important in the context of a commercial law practice.

These two fields of work are crucial in this regard.

In insolvency you are trying to make the best of what may seem like a hopeless situation at the start. It is both challenging and satisfying to work towards maximizing recovery for clients in such a situation. Even more challenging is that in insolvency you will encounter companies in different lines of business. To work with the management of an insolvent outfit or an insolvency practitioner of the insolvent outfit you have to acquaint yourself with the insolvent company’s line of business whether it is shipping, metal or commodities trading or even prawn farming. I also find it interesting to study the antecedent transactions entered into by the insolvent company and where appropriate, apply to court to have these set aside if they offend relevant insolvency legislation.

There are 2 key amendments which have been introduced to the MCA. First, the Act now provides for professional deputies registered with the Office of Public Guardian (“OPG”).

While the Court had the power to appoint such professional persons previously, the structure of the Act only envisaged the Court appointing persons who had been proposed by parties to the application. With the changes to the MCA, the Court will now have a pool of registered deputies to select from in making its appointment. This is likely to be of assistance to persons with mental incapacity where the Court finds it inappropriate to appoint family or friends as deputies, such as where there is familial discord or infighting.

Second, the changes to the MCA provide greater protection for persons with mental capacity by expanding the grounds on which a lasting power of attorney (“LPA”) or the appointment of a deputy may be suspended or revoked by the Court. The amended sections 17 and 20 of the MCA provide that the Court may revoke or suspend a LPA or deputyship where the donee/ deputy is convicted of an offence involving fraud or dishonesty. The need for such added protections was highlighted in a recent case where it had been alleged that a foreigner had manipulated a wealthy widow to gain control of her assets. The provision of greater powers to the Court to intervene in such cases will aid in the protection of vulnerable individuals of our society, in line with the spirit of the MCA. Singapore’s legal industry and education What is the current state of the industry?

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Singapore’s legal industry is very dynamic and it continues to evolve. In just the past 12 months there have been a number of developments, most significantly the launch of the Singapore International Commercial Court (SICC).

In November last year, the Ministry of Law also set up the Legal Services Regulatory Authority (LSRA) which oversees the regulation of all law practice entities and the registration of foreign lawyers in Singapore.

Local firms are expanding overseas, some through mergers and alliances. The launch of the ASEAN Economic Community offers great opportunities for law firms to expand into the region. And as Singapore is well positioned to play a key role in this initiative, there will be abundant opportunities for lawyers based in Singapore.

Will the industry be able to accommodate the present glut of lawyers?

It is correct that there have been large numbers of new lawyers getting called to the bar. However, this does not necessarily equal to an oversupply. Singapore’s legal industry has been expanding in recent years. With more foreign law firms, and other businesses, setting up offices in Singapore, new opportunities are created for newly qualified lawyers.

From an employer’s perspective, is NUS’s policy change which doubles the number of First Class honours degrees to 10% and raise the number of Second Class Honours from 50% to 65% an indication that: firstly lawyers graduating from overseas universities are seen as posing a competitive threat to local students, and secondly that the industry itself is about to get more competitive than it already is?

I do not for a moment think that NUS’s policy change can be attributed to the reason which you have articulated, namely that lawyers graduating from overseas universities are seen as posing a competitive threat to local students.

In fact, bright local and foreign graduates have been, and continue to be, equally regarded by the top law firms and other employers.

My view is that NUS’s policy change in this regard is to bring it broadly in line with the practice in England and Australia. Clearly, foreign universities have been more generous in awarding First Class and Second Upper degrees.

The legal industry has always been very competitive. With increasing numbers entering the market, especially in the short-term, NUS’s policy change will level the playing field to some extent for local graduates at the top end.

in Singapore’s legal history that have shaped law in Singapore today?

There are certain critical moments in Singapore’s short history that have no doubt shaped our law. Our independence from the British, and later Malaysia, no doubt the most important of them.

Since then, steps have been taken to develop an autochthonous legal system in Singapore. The abolition of the right to appeal to the Privy Council and the enactment of the Application of English Law Act crystallised this position. Local case law has also developed, in line with Singapore’s unique needs, and with our historical and economic position in mind.

More recently, the setting up of the Singapore International Commercial Court has been a watershed moment in our country’s legal history. This will no doubt be a boon to the standing of Singapore’s legal system internationally.

Given that the practice of law is demanding and time consuming, how much time do you set aside for keeping abreast with non-legal developments? (i.e. Politics, Arts etc.)

Law cannot be practiced in a vacuum. It is a reflection of the society we live in, and the society that we want to be a part of.

As demanding and time consuming the practice of law is, in order to be a good lawyer, one has to be engaged with the world at large and its non-legal developments.

Do you think that there is a tendency for lawyers in Singapore to be singularly concerned with their line of work?

The pace of life including in our city-state is so fast and there are so many external pressures to compete and succeed in one’s line of work that it is getting more and more difficult not to be singularly focused on one’s specific line of work. There is always something that can be done better; something new to learn; or something that is about to change that will inevitably have some impact on one’s line of work.

I don’t think this tendency is confined to just lawyers in Singapore. Besides internal pressures mentioned above, external market pressures and pace of change (in the world) makes it difficult to excel in one’s chosen field if one is not singularly concerned with one’s line of work.

Critical moments in Singapore’s legal history

How active a role should lawyers play in both engaging with our legal history and constructing a legal future?

In your opinion what are certain critical moments

The legal profession itself is one that is built on the

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foundation of learning from history. The very cornerstone of our law, the common law, is concerned with evolution through case law. Past legal precedents play an integral part of the common law process and one has to understand and engage with our legal history in order to be proficient in the law.

In respect of constructing our legal future, Singaporeâ&#x20AC;&#x2122;s autochthonous legal system is still in the early stages of its development. In the coming years, there will no doubt be many more important decisions of the Singapore Courts, as the law is shaped to meet Singaporeâ&#x20AC;&#x2122;s unique composite landscape and ever changing needs. Young lawyers will, no doubt, play an important role in this development.

From a global platform of more than 2,200 lawyers in more than 30 offices across the world, we help clients overcome legal challenges and meet their business goals every day.

We recruit only the highest calibre candidates, both in terms of academics and interpersonal skills. We value diversity, originality and creative thinking, and put a strong emphasis on client service, entrepreneurship, leadership and teamwork.

In Singapore, we offer a two-week summer vacation scheme; students who attend the vacation scheme are eligible to apply for an English law training contract in Singapore towards the end of the scheme.

In London, we offer two summer vacation schemes, each lasting two weeks. Students who attend the vacation schemes are eligible to apply for a training contract in the London office. We also consider applications for a training contract from those who do not attend a vacation scheme. Our annual intake of trainees is approximately 20 in London and 2 in Singapore.

For more information or to apply for one of our vacation schemes, please visit www.lw.com. Š Copyright 2016 Latham & Watkins. All Rights Reserved.

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NOT JUST AN THER LAW FIRM We Stand Out Baker & McKenzie.Wong & Leow is a joint law venture between Baker & McKenzie and Wong & Leow LLC. This unique partnership allows us to advise clients on both domestic and cross-border issues.

Baker & McKenzie has 77 in 47 countries, serving our clients with over 4,200 lawyers. Through Wong & Leow LLC, we have full rights of audience before the Singapore courts. This combination of our unparalleled global coverage and extensive local knowledge – gained from over 30 years of operating in Singapore – enables us to advise our clients on both domestic and international law.

Growing future talent is key to Baker & McKenzie.Wong & Leow. We are passionate about offering opportunities for growth and development.

Work and Think Globally Being global is in our DNA. Working at Baker & McKenzie.Wong & Leow you will begin to build your professional network straight away by working with our international clients and colleagues. We pride ourselves on our global integration and offer several opportunities for you to experience legal cultures different to your own during your career with us: we hold regular regional training programmes and run an Associate Secondment Programme where you may apply to work elsewhere in the Baker & McKenzie network for up to three months.

Want to learn more?

To apply for a training contract or internship, please visit our website and complete the application form.

If you have any questions or would like any further information please contact Kate Doyle, Training and Graduate Recruitment Manager, kate.doyle@bakermckenzie.com.

Facebook Baker & McKenzie.Wong & Leow Graduates

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Internship Your Internship. Your Opportunity.

You enjoy a challenge and want new opportunities?

You are strong academically and practical in your approach?

You like taking responsibility and getting things done?

You express yourself confidently while staying open to new things?

You seek a friendly and inclusive culture where making a difference to local and global communities matters?

Yes to all of the above?

Our aim is to make your internship experience a genuine one. You will sit within a practice group, be assigned an individual mentor and every effort will be made to involve you in real work for real clients.

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Experience first-hand our extensive training programmes

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Gain a commercial perspective to complement your legal education

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Learn practical skills to help you further your career

Internship Dates: 5th December – 23rd December 2016: Application deadline 31st August 2016 5th June – 30th June 2017: Application deadline 31st March 2017 3rd July – 28th July 2017: Application deadline 31st March 2017 31st July – 25th August 2017: Application deadline 31st March 2017

Multiply your potential Training Contracts Our Trainees get the best of both worlds: a thorough grounding in Singapore Law and practice together with exposure to multi-national clients and the opportunity to exchange knowledge with the best legal minds from all over the world.

Baker & McKenzie.Wong & Leow offers a number of Training Contracts each year to law graduates with the requisite academic qualifications and attitude. For overseas graduates who secure a place on our Trainee programme we also provide the additional 6 months of relevant legal training required to enable you to qualify for admission to the Singapore Bar. Applications for 2019 Training Contracts open on 1st September 2016.

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Source: HK Court of Final Appeal

WOMEN IN INTERNATIONAL LAW

by Ammani Mathivanan A narrow definition of International Law is difficult to advance as it stretches across a spectrum of issues. From the regulation of trade relations between nations to International Criminal and Humanitarian Law, this area of international legal order is fairly extensive and cannot be viewed independently from international relations, is extensive. In simplicity International Law could be regarded as a mechanism governing interactions between states and also regulating the overarching relationship between the state and its citizens. Singaporeâ&#x20AC;&#x2122;s engagement and application of International Law includes its dispute with Malaysia concerning land reclamation works in Pulau Tekong and Tuas View Extension before the International Tribunal for the Law of the Sea; as well as the dispute with 126

Malaysia over the sovereignty of Pedra Branca before the International Court of Justice.

Women in International Law Singapore (WILâ&#x20AC;˘S) was launched in 15 October 2015 to bring together Singaporeans and Singapore-based women professionals in International law. This platform provides a wide range of resources to students and early professionals aiming to pursue a career in this field. Its website and its Facebook group publishes news updates on international law and matters concerning gender diversity. Together with its Mentoring programme and Q & A sessions on their Slack network, an interactive platform where one can find out about the challenges, rewards and opportunities available, it has es-

tablished itself as the go-to source for any individual interested in this sector.

We speak to Davinia Aziz, a member of the WIL•S founding team, to find out more about this field of law and organisation. She is currently Deputy Senior State Counsel in the International Affairs Division of the Attorney-General’s Chambers, Singapore. This Division deals with public international law issues for Ministry and statutory board clients across the Singapore Government. In a book chapter on the work of her Division written for The Practice of Law (LexisNexis), Davinia has explained that all States, including Singapore, must concern themselves with public international law so as to “ensure that the world functions on the basis of a set of equitable, determinable and predictable rules.”

What were the challenges you faced in trying to establish yourself in this field and in seeking out opportunities?

When I was still doing my LLB and when I then graduated in 2002, there were not many opportunities to practise public international law in Singapore. You could become an academic, or you could join the International Affairs Division (IAD) at the Attorney-General’s Chambers. I met Deena Bajrai, who is now my IAD colleague, when she came to help judge a practice round for my teammates and myself in preparation for the Philip C. Jessup International Law Moot Court Competition sometime in 2001.

Deena and Associate Professor Robert C. Beckman (now Director of the Centre for International Law, NUS) told me about the opportunities at IAD. In 2002, I graduated from NUS and did well enough to be invited to interview for the Singapore Legal Service. It is the Singapore Legal Service that provides lawyers to the IAD and other Government agencies. I joined the Service as a Justices’ Law Clerk and eventually was posted to IAD. These days there are more opportunities to practise public international law in Singapore, but it is also more competitive. This is part of the reason why we thought it would be useful to establish something like WIL•S. Could you tell us more about your work in the International Affairs Division? What is the most rewarding aspect of your work?

I practice across the range of public international law issues that come to IAD, except for mutual legal assistance and extradition.

The aspect of my work that I enjoy the most is working with my policy clients across the Singapore Government.

Since my practice is broad, I could be working on anything from aviation to human rights, as well as with people with different kinds of expertise other than law, such as economics or hydrography. So I learn lots of different

things from them, and I enjoy working with them to help them address legal issues and advance policy.

Who are the members of this organisation and how did you get together to form this organisation? Do you think women are well-represented in this field?

Gérardine Goh Escolar [Legal Adviser to the President, Iran-United States Claims Tribunal], Koh Swee Yen [Partner in the Commercial & Corporate Disputes Practice, Wong Partnership], Cheah Wui Ling [Assistant Professor, Faculty of Law, National University of Singapore]; Charis Tan [Senior Associate, Eversheds LLP]; Diane Tan [Acting Director (International Legal), Ministry of Law] and Sarala Subramaniam [Deputy Director (International Legal), Ministry of Law] are the other members of the WIL•S founding team. Geri, Swee Yen, Wui Ling, Charis, Diane and Sarala are all my personal friends. Some of them have also been my colleagues at one time or another. We have also been really fortunate to have eminent women international lawyers such as Loretta Malintoppi of Eversheds LLP, as well as Daphne Hong and Danielle Yeow, two top-ranking women international lawyers at IAD, come in to help and support us. Loretta and Daphne are both mentors in our inaugural mentoring programme. Danielle will be part of an important panel discussion on gender diversity in international law that WongPartnership LLP will host on Thursday 15 September, 6:30 PM. You can find more information about that event here: tinyurl. com/159event.

The idea of a women’s network such as WIL•S is not really an original one. Many Singaporeans recognise great international law names such as Ambassador Tommy Koh, former Senior Minister and Minister for Foreign Affairs S. Jayakumar, but there are actually many great women professionals in the field who are perhaps not as well-known.

I have already mentioned Daphne, Danielle and Deena.

In fact, there are many other wonderful examples, and today, about half of the lawyers at IAD are female. But there wasn’t any platform for professionals from private practice, academia, the international civil service and the Singapore Government to connect and interact with each other. We also wanted to create a place for female law students and early career lawyers interested in public international law to meet and interact with women professionals already in practice. So the group of us got together, and started WIL•S. Do you think there are particular difficulties women professionals face in this field of work?

I think that most people, when asked this question, will cite things such as work/life balance, and so on. “Women” is a very large group, and not all of them will have the same personal difficulties. One specific challenge we were trying to address when we started WIL•S, and in particular the mentoring programme, was simply to allow law stu127

[“Careers in Public International Law” held at the Nationa University of Singapore on 15 October 2015. Credit: WIL•S]

dents and early career lawyers to find women who could be mentors. We also just wanted to create connections among Singaporean and Singapore-based women professionals in this field. The larger the platform, the more likely it is that you will find somebody who perhaps faced similar challenges and can make constructive suggestions on how to address them. I think that it is important for us to get to know each other, and to meet each other from time to time, to see that certain kinds of achievements are possible.

Do you see WIL•S is a platform to network and share experiences? What advice could you offer a student aspiring to work in this field?

That’s what WIL•S is for now. So far we have organised one careers panel (at NUS in October; details can be found at wil-s.org), two Practitioner Q&A events and our inaugural mentoring programme is up and running. I have also mentioned our upcoming September event (tinyurl. com/159event). We plan to grow the network organically depending on community interest, so anyone with ideas or who would like to volunteer their time (always welcome!) can visit www.wil-s.org/get-involved.

As for advice, there isn’t a one-size-fits-all solution; especially since the opportunities to practise public international law these days are so diverse. For example, if you go to the #chat channel on the WIL•S Slack platform, you can see a Practitioner Q&A chat with Sanja Popovic (formerly of the OSCE Mission in Kosovo). Her advice is practical and valuable, but quite specific to opportunities 128

in the transitional justice field. So I would just say: learn as much as you can, make as many contacts and connections as you can, and come along to one of our events to meet us and other international lawyers.

SINGAPORE LEGAL SERVICE

A Career with a Difference

A UNIQUE CAREER The breadth and scope of experience that is available to a Legal Service Officer (“LSO”) is unsurpassed. LSOs are provided numerous opportunities and wide exposure to a broad spectrum of challenging and interesting work that is not available elsewhere.

LSOs may serve as a Deputy Public Prosecutor or State Counsel in the Attorney-General’s Chambers. LSOs may also be appointed a District Judge, Magistrate, Coroner or Registrar at the State Courts, the Supreme Court or the Family Justice Courts; or Directors/Heads of Legal Service departments or Legal Counsel in Ministry HQs, departments and the Registries. LSOs may, in addition, be seconded to specific statutory boards/statutory bodies to undertake legal work.

PUBLIC SERVICE You will, as an LSO, have a noble and fulfilling legal career that will make a difference to and have a positive impact on our society. You will serve and protect the interests of the public and the nation.

You will directly participate in the administration of justice and be in a position to advance the rule of law in Singapore.

INTERNSHIPS A unique suite of internships in the various Legal Service departments is available for law students.

Internships are offered twice annually and coincide with the vacation periods in each academic year.

REQUIREMENTS & APPLICATIONS Undergraduates who have successfully completed at least their second year may apply for possible appointment as an LSO. The candidates who are interviewed may be required to undergo an internship (of at least two weeks) at the Attorney-General’s Chambers/Legal Service department.

Those who perform well at both the interview and the internship may be offered “conditional” appointment to the Legal Service as an LSO. The possible confirmation of the offer of “conditional” appointment as an LSO will be reviewed on the candidate’s successful completion of the undergraduate law degree programme and being awarded the requisite qualification.

Please visit us at www.lsc.gov.sg for more information on the available career and internship opportunities.

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