February 3, 2017

Managing Partner Tan Chong Huat and Associate Raymond Ting co-authored a Business Times opinion piece on the key challenges of completing the Kuala Lumpur-Singapore High Speed Rail project by 2026

RHTLaw Taylor Wessing Managing Partner Tan Chong Huat and Associate Raymond Ting co-authored an opinion piece titled "The HSR project - a complex jigsaw puzzle" published in The Business Times. The article was first published in The Business Times on 3 February 2017. The HSR project a complex jigsaw puzzle Getting the high-speed rail up and running entails getting the involved entities to gel, sorting out profitability and land acquisition issues - and politics. Source: The Business Times © Singapore Press Holdings Ltd. Date: 3 February 2017 Author: Tan Chong Huat and Raymond Ting THE signing of the bilateral agreement for the Kuala Lumpur-Singapore High Speed Rail (HSR) last Dec 13 marked a significant milestone in the development of the project, with discussions having begun more than three years ago between the governments of Singapore and Malaysia. While the terms of the project have been cemented in the bilateral agreement, the actual execution of the project has only just begun, and the process would certainly not be without challenges, the key ones among which are highlighted below: Many moving parts In a joint press conference for the signing of the memorandum of understanding on the project, Prime Minister Lee Hsien Loong referred to the undertaking as a "very complicated jigsaw puzzle". Based on a joint factsheet by the Land Transport Authority (LTA) of Singapore and the Land Public Transport Commission (SPAD) of Malaysia, the operating structure of the HSR project would involve no fewer than five main entities: Two entities appointed by the governments of Singapore and Malaysia to oversee the designing, building, financing and maintaining of the civil infrastructures and operation of the HSR stations within their respective territories. These entities will be LTA and MyHSR; A privately-financed assets company (AssetsCo) that will design, build, finance and maintain rolling stock and rail assets; and Two service operators (Operators) that will separately run the inter-country and domestic services. This structure does not include the various contractors to be appointed by the respective governments for the civil engineering and construction works in each country and the sub-contractors thereunder, the various advisors for the project, the Joint Development Partner and the various entities responsible for carrying out feasibility and advanced engineering studies. The complexity of the project is evidenced by the cross-border relationships and payment flows among the different entities, which creates a web of inter-linked legal rights and obligations between the various stakeholders. It is foreseeable that disputes may arise among the various parties, and issues such as the appropriate forum, seat, governing law, as well as joinder of parties to the dispute resolution process must be considered. Any possible complication in the resolution of disputes may cause delays to the project and substantial losses for the parties concerned. It would therefore be prudent to ensure that the dispute resolution process is fair, transparent, objective and efficient. Long-term profitability The HSR project is a massive undertaking. LTA and MyHSR each bears the burden of financing the civil infrastructure in their respective jurisdiction, and AssetsCo bears the burden of financing the rolling stock and rail assets. Such financing will be over an extended period, as it is envisaged that the construction will take at least seven to eight years. The cost of constructing the civil infrastructure will be recouped by LTA and MyHSR via the concession fees to be paid by the Operators, while the cost of constructing and procuring the rolling stock and rail assets will be recouped by the AssetsCo through the train-leasing fees to be paid by the Operators and the availability payments to be made by LTA and MyHSR. The availability payments thus serve as a guarantee by LTA and MyHSR of the amounts to be received by AssetsCo, should an Operator be in financial difficulty and be unable to pay the track-access charges. Given the high development costs, it is likely that the project will turn profitable only in the long term. In fact, some other high-speed rail projects in the past have struggled to turn profitable, quite notably the Eurotunnel linking Britain and France, which became profitable only after 26 years. While the present demand for travel between Singapore and Malaysia exceeds the capacity of the existing infrastructure, and such demand is expected to grow at an average rate of 3 to 5 per cent per year (comparable to the growth in gross domestic product of Singapore and Malaysia), the long-term fare and non-fare revenue from the HSR project might be affected by a myriad of factors such as changing economic conditions or the presence of competition from other modes of transport. Global economic slowdowns might also affect revenue growth, or even cause revenue to shrink for all market players concerned. It is envisaged that the bulk of the revenue would be from travel fares. The pricing structure of these fares will thus play an important role in ensuring that the revenue is sufficient to turn a profit and yet garner strong demand from customers plying the Singapore-Kuala Lumpur route. This issue is compounded by the volatility of the Malaysian ringgit vis-à-vis the Singapore dollar, which last year sank to a one-year low of RM3.1206 to S$1, and the differences in the purchasing power between the residents of both jurisdictions. It is also likely that travel fares will be subject to regulatory controls. It is unclear in what proportions the inter-country service and domestic service would each contribute to the total revenue of the HSR project. To ensure its economic viability, it is crucial to address at the outset the potential legal issues surrounding the availability payments to be made by LTA and MyHSR. Firstly, given that 335km (or 95.7 per cent) of the 350 km-long HSR line will be in Malaysia, the apportionment for the liability for the availability payments to be shared between LTA and MyHSR should be worked out. Secondly, it should be specified whether such liability will be joint, several or joint and several. Thirdly, any limits on the exposure to LTA and/or MyHSR with regard to the availability payments should be clarified. Land acquisition The Singapore Land Authority (SLA) has announced the acquisition of the sites of the Jurong Country Club (JCC) and the Raffles Country Club to make way for the HSR project. It has been reported that the JCC is appealing against the SLA's compensation of S$89.8 million, which was just over half of JCC's claim of S$168.1 million. The more challenging land acquisition issues are, however, likely to arise in Malaysia, as seven of the stations in the HSR line will be situated in Malaysia. Under the Federal Constitution of Malaysia, land management is the responsibility of the state government. As the HSR line will pass through the states of Johor, Malacca, Negri Sembilan and Selangor, four state governments will be involved. The timelines for land acquisition by each state government, as well as any appeals against the compensation awarded by each state, will therefore need to be taken into account. While the ruling Najib administration supports the HSR project, the parliamentary opposition does not and this could mean that the opposition-controlled state government of Selangor are unlikely to expedite land acquisition in and around Kuala Lumpur. The need to manage the interests of both the federal and state governments of Malaysia might complicate the process of land acquisition and lead to delays or even an impasse. Political issues The governments of Singapore and Malaysia might have slightly different aims in relation to the HSR project. As most of the HSR line is in Malaysia, the Malaysian government might place greater emphasis on the domestic service within Malaysia and promote the HSR project as one that connects the various Malaysian cities and thus primarily benefits Malaysia. On the other hand, the emphasis of the Singapore government would be on the direct route between Singapore and Kuala Lumpur, and the convenience afforded to both domestic and international travellers. It is unclear how the infrastructure and train-related assets will compete for such use of the infrastructure and assets. There might also be political costs linked to the public discontent arising out of a failure of any of these objectives. In Singapore, two former transport ministers have both stepped down from the Cabinet amid public discontent over Singapore's public transport system, including the repeated failures and technical lapses on the Mass Rapid Transit system. As the HSR project is for the long term, the continued support of both the Singapore and Malaysian government is instrumental in ensuring its success. While the current ruling government of Malaysia supports the HSR, the parliamentary opposition does not. In fact, the opposition has stated that it would prefer to invest the money in connecting Sabah and Sarawak by rail, arguing that these two states are in greater need of transport links. While the next Malaysian general election is required to be held only by mid-2018, Prime Minister Najib Razak has signalled that the polls might be brought forward. Following the 1MDB scandal that has plagued his administration and against the backdrop of the current economic climate, it is unclear how the elections will play out. The HSR project heralds the deepening of bilateral ties between Singapore and Malaysia, and a closer level of economic integration within the Asean community. The process of fitting the pieces of the complicated jigsaw puzzle has just begun and and the amount of resources and effort required for the undertaking will certainly be immense. It is imperative for the governments of both countries to work out a fair and transparent process to address and resolve the legal issues that will likely arise as they work towards completing the project by 2026. The writers are respectively managing partner and an associate of RHTLaw Taylor Wessing LLP
February 2, 2017

RHTLaw Taylor Wessing featured as 2017 Emerging Markets Expert by Asian Legal Business

RHTLaw Taylor Wessing has been featured in an article published in Asian Legal Business titled “2017 Emerging Markets Experts”. In this article, Asian Legal Business highlights a list of firms who are armed with the right network, client list and expertise to lead emerging markets as Asia’s frontier economies. The article was first published on Asian Legal Business January 2017 Asia edition. 2017 Emerging Markets Experts Source: Asian Legal Business © 2017 Thomson Reuters Date: January 2017 Author: Raj Gunashekar With the amount of legal work in developing economies, particularly in Southeast Asia, increasing, law firms need to have the right network, client list and knowhow to succeed. ALB compiles a list of firms that are making a name for themselves in Asia’s frontier economies. RHTLaw Taylor Wessing Established in 2011, RHTLaw Taylor Wessing boasts of 30 partners with Tan Chong Huat as the managing partner of the firm. The firm has demonstrated expertise in Indonesia, the Philippines and Vietnam. Some of its clients include Alpha JWC, Nippon Paint, PT Berau Coal Energy, PT Uangteman, Standard Chartered Bank Indonesia and UOB Indonesia. RHTLaw Taylor Wessing has advised Nippon Paint on its investments in Indonesia, and Alpha JWC, an Indonesian-based venture capital firm, on its investments in both Indonesia and Singapore. It is also working with Otoritas Jasa Keuangan (OJK) and FinTech Association of Indonesia to provide inputs on the development of fintech regulations in Indonesia. View the full article published in Asian Legal Business January 2017 Asia Edition here.
January 26, 2017

“Failure to pay compensation awarded by the Labour Court under the Work Injury Compensation Act is a criminal offence”, Employment Partner Vernon Voon shares more with The Straits Times

RHTLaw Taylor Wessing Partner Vernon Voon was featured in The Straits Times article titled “Give Labour Court more power to protect workers”. The article was first published in The Straits Times dated 26 January 2017. Give Labour Court more power to protect workers With the Labour Court expanding to become the Employment Claims Tribunals covering more workers, it's time to equip it with more power to enforce its own orders Source: The Straits Times © Singapore Press Holdings Ltd. Date: 26 January 2017 Author: Toh Yong Chuan Two separate labour cases against employers. Both involving Bangladeshi construction workers. Both workers won, yet they cannot get the payment orders enforced. In the first Catch-22, Mr Islam Rafiqul was owed $7,363 in unpaid salary and the Labour Court last month ordered his employer, Geosray Engineering and Services, to pay up. The employer ignored the order. The Ministry of Manpower (MOM), which runs the Labour Court, told Mr Islam to go to the State Courts to take action to seize the employer's assets to get the money back. This would involve him having to pay, out of his own pocket, legal fees as well as those for a bailiff and auctioneer, which he cannot afford. In the other case, the Labour Court last September ordered local company Ridgeway Marine and Construction to compensate Mr Sujan Ahmed $11,625. The company, which did not cover the worker with compulsory workplace insurance, made a small partial payment and stopped. To get the remainder, he has to take the employer to the State Courts. These two cases highlight a gap in the law meant to protect foreign workers. And while these cases involve foreign low-wage construction workers, the limitations of the system affect all workers, since the Labour Court covers local ones as well. The cases raise the question: Why can't the Labour Court enforce its own orders? LABOUR COURT'S ROLE AND GOOD INTENTIONS The Labour Court, despite its name, functions less like a court of law and more like an administrative tribunal. Its "courthouse" is within MOM's premises and its powers are mostly drawn from the Employment Act, Singapore's main labour law that sets out the basic terms and conditions for workers. It hears employment-related complaints on issues such as disputes over salary, dismissal and leave. The hearings are held behind closed doors and lawyers are not allowed to represent workers or employers. By cutting down on the legal paperwork and not involving lawyers, the fees for taking complaints to the Labour Court are very low: Employers pay $20 and workers pay $3. This makes the system accessible to all. The mediation process also makes the dispute less combative, which is in line with the longstanding desire by the Government, unions and employers to keep industrial relations harmonious. Other countries use a tribunal system to resolve labour disputes too. Hong Kong has its Labour Tribunal, offering "a quick, informal and inexpensive way of settling monetary disputes between employees and employers", says its website. Here, Labour Court sessions are run by the Commissioner for Labour and his deputies, who are senior officials in MOM. Its primary goal is to settle disputes through mediation, not make rulings and enforce the decisions. Mr Martin Gabriel, founder of human resources consultancy firm HRMatters21, says: "Employers see those chairing Labour Court sessions more as referees settling disputes rather than judges presiding over cases." Mr Gabriel, a former MOM officer, has advised about 10 employers and represented five in Labour Court sessions over the past 15 years. The court does not publish its decisions or an annual report, so little is known about the types of cases it handles. Still, the MOM received about 6,000 complaints of salary disputes each year in 2015 and 2016. Half were resolved without the cases going to the Labour Court. And of the 3,000 cases that went before the latter, 1,000 were resolved through mediation. Manpower Minister Lim Swee Say said in a written reply to Parliament this month that in about 1,400 cases each year, the Labour Court had ordered employers to pay their workers. However, the employers in about 350 cases ignored the Labour Court's orders. Workers in such situations have one recourse, laid out in 2013 by then Manpower Minister Tan Chuan-Jin in a reply to a parliamentary question: "(They) may enforce the orders by way of writ of seizure and sale through the Subordinate Courts." This applies to payment orders across the different courts. Indeed, besides the Labour Court, the Small Claims Tribunals - which handle commercial and civil disputes of up to $10,000, or up to $20,000 if the parties consent to the higher limit - also follow the same process. The limitations of the Labour Court in enforcing its orders has not escaped labour lawyers. Having workers take their disputes to the Labour Court instead of civil courts only solves "half the problem", says Mr Vernon Voon, employment and labour relations partner at law firm RHTLaw Taylor Wessing. This is because the worker still has to go to the civil courts to enforce the order if the employer does not pay up. "This requires time and financial cost, which an employee who is deprived of his salary can ill afford," says Mr Voon. BEEFING UP THE LABOUR COURT The Labour Court needs to do more to protect foreign low-wage workers as they are the most vulnerable to exploitation, says Mr Alex Au, an advocate for foreign workers' rights at Transient Workers Count Too (TWC2). Indeed, the Government already recognises that some workers need more protection than others. For example, the Employment Act covers all workers earning $2,500 and below a month, and manual workers on $4,500 and below. And when the Employment of Foreign Manpower Act was amended in 2012, it gave more powers to the MOM to protect foreign workers. For example, the MOM can appoint Commissioners for Foreign Manpower who can impose fines on companies that breach rules in hiring foreign workers. Boosting the powers of the Labour Court is a logical next step in protecting these vulnerable low-wage workers. The Labour Court is due to be expanded in April when it becomes the Employment Claims Tribunals (ECT). The ECT will cover workers at all salary levels. It will benefit professionals, managers and executives earning over $4,500 a month in particular, as they would otherwise have to file claims with the civil courts. The current Labour Court does not cover them. But one can imagine their disappointment if they were to obtain a court order and, in the event the employers refuse to pay, they are told they have to enforce the orders themselves. Given the expansion of the Labour Court in April, it is timely to review whether it can give workers more help. THREE WAYS TO GIVE IT TEETH First, make it easier for the worker to seek legal recourse against employers which do not pay. They should not have to take the step of seizing the employers' assets, with all the jumping through legal hoops that it involves. In Britain, a worker awarded payment by its Employment Tribunal can get help with enforcement. He can ask the court to force the respondent to pay by filling in a "penalty enforcement form". Respondents will be fined if they do not pay up within 28 days. There is no need for the British worker to seize the employer's assets and sell them. Second, punish employers which ignore the Labour Court orders. Mr Voon notes: "Failure to pay compensation awarded by the Labour Court under the Work Injury Compensation Act is a criminal offence, and there is no strong policy reason why non-compliance with an order of the Labour Court issued under the Employment Act shouldn't be on the same footing." The MOM already has the powers to charge employers in court for not paying salaries or injury compensation. The next logical step is to also punish the employers which ignore the court payment orders. This will reduce the non-compliance rate. Third, for workers whose employers cannot pay up, the Labour Court can direct the workers to get financial aid. In Hong Kong, there is a government-run Protection of Wages on Insolvency Fund that can pay workers if employers are bankrupt. Mr Au suggests another variation: a backstop fund which pays out the Labour Court orders first and claims from the employers later. For foreign workers, there is already a little-known relief fund here. The Migrant Workers' Centre - which is backed by MOM, the National Trades Union Congress and the Singapore National Employers Federation - runs the Migrant Workers' Assistance Fund that has $457,706 as at March last year. It gave out $64,782 in assistance to workers in 2015. Whatever the source and mandate of the relief funds, the idea is that it need not be solely a government effort. Non-governmental organisations can chip in too. In the longer run, the scope and powers of the Labour Court, and the ECT from April, cannot remain static. Any move to review how the Labour Court can be enhanced to protect workers from the apparent injustice of not receiving their ordered payment or compensation cannot come too soon.
January 25, 2017

“The US withdrawal from the Trans-Pacific Partnership will see Singapore putting in more resources to develop FTAs” Deputy Managing Partner Azman Jaafar said in an interview with Channel NewsAsia

“The US withdrawal from the Trans-Pacific Partnership will see Singapore putting in more resources to develop FTAs.” RHTLaw Taylor Wessing Deputy Managing Partner Azman Jaafar said this when interviewed by Channel NewsAsia on the United States formal withdrawal from the Trans-Pacific Partnership (TPP). The interview was featured in Channel NewsAsia and Channel 5 News. “This may not spell an end for trade agreements for export-oriented Singapore. Singapore might put in more resources to develop bilateral free-trade agreements with other countries in the region.” Other regional integration initiatives are still ongoing, including the Regional Comprehensive Economic Partnership that is seen as a multi-lateral trade pact that will replace the TPP and deepen trade links amongst Asian countries and China.  The emerging global economic leadership of China will be the new normal. Azman’s full feature can be found in the following news reports: Singapore Tonight – Channel NewsAsia, 23 January 2017 5 News – Channel 5, 23 January 2017