COVID-19 (Temporary Measures) Act 2020 — PART 8: CONTRACTS AFFECTED BY

Sushant Shukla

Part of a comprehensive analysis of the COVID-19 (Temporary Measures) Act 2020

All Parts in This Series

Application of Part 8 to Contracts Affected by COVID-19 Delays or Breaches

The COVID-19 (Temporary Measures) Act 2020 introduces Part 8 to address the unprecedented disruptions caused by the pandemic on contractual obligations, particularly in the construction and supply sectors. Section 36 explicitly states the scope of this Part:

"This Part applies to a case where parties ... entered into a contract ... affected ... by a delay ... or a breach ... to a material extent caused by a COVID-19 event;" — Section 36, COVID-19 (Temporary Measures) Act 2020

Verify Section 36 in source document →

This provision exists to ensure that contracts materially impacted by COVID-19 events are afforded a legal framework for relief and adjustment. The rationale is to prevent parties from being unfairly penalised for delays or breaches beyond their control, thereby promoting fairness and commercial certainty during the pandemic.

Section 36 further defines an "affected contract" as one that falls within a prescribed description, is in force during a prescribed period, and is materially affected by COVID-19-related delays or breaches:

"parties ... entered into a contract (called in this Part the affected contract) that falls within such description of contracts as may be prescribed;" — Section 36(1)(a)(i), COVID-19 (Temporary Measures) Act 2020

Verify Section 36 in source document →

The prescribed period and contract types are determined by regulations under Section 39, allowing flexibility to adapt to evolving circumstances.

Application Process and Appointment of Assessors

Section 37 provides the procedural mechanism for parties to seek judicial relief under Part 8. It empowers a party to apply to the Registrar for the appointment of an assessor to determine whether the Part applies and whether it is just and equitable to vary contractual terms:

"A party ... may ... apply ... to the Registrar to appoint an assessor to make a determination whether the case is one to which this Part applies; and ... whether it is just and equitable ... for any prescribed obligation or prescribed right ... to be performed or exercised in a manner other than in accordance with the terms of the contract; and ... for any prescribed term ... to be varied, released or discharged." — Section 37(1), COVID-19 (Temporary Measures) Act 2020

Verify Section 37 in source document →

This provision exists to provide an accessible and specialised forum for resolving disputes arising from COVID-19 disruptions without resorting immediately to protracted litigation or arbitration. The assessor's role is to balance contractual certainty with equitable relief.

Section 37 also contemplates the interaction with other dispute resolution mechanisms, including arbitration and adjudication under the Building and Construction Industry Security of Payment Act (SOPA), ensuring that applications under Part 8 do not conflict with ongoing proceedings:

"arbitral proceedings under the Arbitration Act (Cap. 10)" — Section 37(1A)(b), COVID-19 (Temporary Measures) Act 2020 "an adjudication application has been made under section 13(1) of the Building and Construction Industry Security of Payment Act (Cap. 30B) (called in this Part SOPA)" — Section 37(1A)(c), COVID-19 (Temporary Measures) Act 2020

Verify Section 37 in source document →

Moratorium on Enforcement Actions During Determination Process

To protect applicants from enforcement actions while their application is under consideration, Section 37A imposes a moratorium:

"Where A has made and served an application ... another party ... may not take any action ... during the moratorium period." — Section 37A(1), COVID-19 (Temporary Measures) Act 2020

Verify Section 37A in source document →

This moratorium prevents creditors or other parties from initiating or continuing legal or arbitral proceedings, or enforcement actions such as winding-up applications, against the applicant during the moratorium period. The purpose is to provide breathing space for affected parties to seek relief without the immediate threat of enforcement, thereby reducing the risk of insolvency triggered by COVID-19-related contractual difficulties.

Section 37A(2) lists specific actions prohibited during the moratorium, including:

Commencement or continuation of court or arbitral proceedings
Enforcement of security interests
Winding-up or judicial management applications under the Companies Act

This comprehensive moratorium reflects the legislature’s intent to shield affected parties from aggressive creditor actions during the pandemic.

Assessor’s Determination and Powers

Section 38 mandates the assessor to determine two key issues upon application:

"On the application ... the assessor must make a determination whether the case is one to which this Part applies; and ... whether it is just and equitable ... for a prescribed obligation or prescribed right ... to be performed or exercised ... or for a prescribed term ... to be varied, or for a party to be released or discharged." — Section 38(1), COVID-19 (Temporary Measures) Act 2020

Verify Section 38 in source document →

The assessor’s determination is pivotal in balancing contractual obligations with equitable considerations arising from COVID-19 disruptions. The assessor may vary, release, or discharge prescribed terms to achieve a just and equitable outcome.

Section 38A allows for subsequent determinations if material changes occur or further review is necessary, ensuring flexibility and responsiveness to changing circumstances.

Integration with the Building and Construction Industry Security of Payment Act (SOPA)

Recognising the importance of SOPA in the construction industry, Part 8 integrates closely with SOPA adjudication processes. Section 38B clarifies the effect of Part 8 determinations on SOPA proceedings:

"'adjudication application' means an adjudication application made under section 13 of SOPA; 'adjudicator' means an adjudicator appointed under section 14(3) of SOPA; 'authorised nominating body', 'claimant', 'payment claim', 'respondent' and 'supply contract' have the meanings given by section 2 of SOPA;" — Section 38B(9), COVID-19 (Temporary Measures) Act 2020

Verify Section 38B in source document →

Section 38C further empowers adjudicators under SOPA to exercise the powers of assessors under Section 38, enabling streamlined adjudication of COVID-19-related contract variations:

"An adjudicator may ... exercise the powers mentioned in section 38(1)(a) and (b) as if he or she were an assessor determining an application under section 37" — Section 38C(2), COVID-19 (Temporary Measures) Act 2020

Verify Section 38C in source document →

This integration ensures that COVID-19 relief mechanisms are consistent across related statutory frameworks, avoiding conflicting decisions and promoting efficient dispute resolution.

Effect of Determinations on Court or Tribunal Proceedings

Section 38D addresses the impact of Part 8 determinations on ongoing court or tribunal proceedings:

"The effect of a determination under this Part on any court or tribunal proceedings is to be as prescribed." — Section 38D, COVID-19 (Temporary Measures) Act 2020

Verify Section 38D in source document →

While the exact effect is subject to regulations, this provision underscores the primacy of Part 8 determinations in managing COVID-19-related contractual disputes, potentially suspending or influencing other proceedings to prevent inconsistent outcomes.

Regulatory Powers and Definitions

Section 39 empowers the Minister to make regulations for the effective implementation of Part 8:

"The Minister may make regulations ... for carrying out or giving effect to this Part." — Section 39(1), COVID-19 (Temporary Measures) Act 2020

Verify Section 39 in source document →

This regulatory power allows for the prescription of contract types, periods, procedural details, and other necessary matters to adapt the Part’s application to evolving pandemic conditions.

Key definitions underpinning Part 8 include:

Affected contract: A contract prescribed under regulations, in force during the prescribed period, and materially affected by COVID-19 delays or breaches (Section 36(1)(a)(i)).
Prescribed period: The period prescribed under Section 39 for the purposes of Part 8 (Section 36(3)).
Assessor and Registrar: Officials responsible for determination processes (Sections 37 and 38).
Prescribed obligation, right, and term: Contractual elements subject to variation or relief under Part 8.
COVID-19 event: Defined events causing delays or breaches.
SOPA terms: Including adjudicator, claimant, payment claim, respondent, and supply contract as defined in SOPA Section 2 (Section 38B(9)).

Absence of Explicit Penalties for Non-Compliance

Notably, Part 8 does not specify penalties for non-compliance with its provisions. Its focus is procedural and remedial, providing mechanisms for relief and moratorium rather than punitive measures:

"No explicit penalties for non-compliance are stated in the provided text of Part 8." — COVID-19 (Temporary Measures) Act 2020

Verify source in source document →

This approach reflects the legislature’s intent to facilitate cooperation and equitable adjustment rather than enforcement through sanctions during the pandemic.

Cross-References to Other Legislation

Part 8 cross-references several key statutes to ensure coherence and integration:

Arbitration Act (Cap. 10): Recognised in relation to arbitral proceedings affected by COVID-19 (Section 37(1A)(b)).
Building and Construction Industry Security of Payment Act (Cap. 30B) (SOPA): Central to adjudication processes and definitions (Sections 37(1A)(c), 38B, 38C).
Companies Act (Cap. 50): Referenced concerning winding-up and judicial management applications during moratorium (Section 37A(2)(f)).
Court and tribunal proceedings: The effect of Part 8 determinations on such proceedings is regulated (Section 38D).

These cross-references ensure that Part 8 operates harmoniously within Singapore’s broader legal framework, avoiding conflicts and promoting legal certainty.

Conclusion

Part 8 of the COVID-19 (Temporary Measures) Act 2020 establishes a comprehensive and flexible framework to address contractual disruptions caused by the pandemic. By enabling applications for equitable contract variations, imposing moratoriums on enforcement actions, and integrating with SOPA adjudication, it balances the interests of affected parties and creditors. The absence of penalties and the provision for regulatory adaptation reflect a pragmatic approach to managing the ongoing challenges posed by COVID-19.

Sections Covered in This Analysis

Section 36: Application of Part 8 to affected contracts
Section 37: Application for determination and appointment of assessor
Section 37A: Moratorium on enforcement actions
Section 38: Assessor’s determination and powers
Section 38A: Subsequent determinations and reviews
Section 38B: Effect on SOPA adjudication
Section 38C: Powers exercisable by SOPA adjudicators
Section 38D: Effect on court or tribunal proceedings
Section 39: Regulatory powers

Source Documents

For the authoritative text, consult SSO.

Written by Sushant Shukla

Topics

Singapore SSOStatutes Legislation