April 28, 2017

RHTLaw Taylor Wessing Managing Partner Tan Chong Huat and General Counsel Alvin Chen shared with The Straits Times how airlines should be obligated to inform passengers of their rights if a flight is overbooked

RHTLaw Taylor Wessing Managing Partner Tan Chong Huat and General Counsel Alvin Chen shared with The Straits Times how airlines should be obligated to inform passengers of their rights if a flight is overbooked The article was first published in The Straits Times on 28 April 2017.   Regulate airlines' discretion in bumping passengers off overbooked flights Source: Straits Times © Singapore Press Holdings Ltd. Date: 28 Apr 2017 Author: Tan Chong Huat and Alvin Chen The recent dramatic eviction of a passenger from a United Airlines flight in the United States has prompted debate in Singapore on the common industry practice of overbooking, and raised concerns whether consumer rights are adequately protected. While the economic benefits of flight overbooking to airlines are obvious - to ensure that the number of vacant seats is kept to a minimum and, thereby, maximise the revenue for each flight - the heart of the matter is how airlines exercise their discretion to "bump off" passengers. Currently, there is no legislative framework in Singapore which governs the exercise of such discretion. In contrast, European Union Regulation 261/2004, enacted in 2004 to protect passenger rights, requires airlines "to reduce the number of passengers denied boarding against their will" by calling for volunteers to surrender their reservations, in exchange for compensation that is prescribed in these regulations. If there are insufficient volunteers, the airline may then proceed to deny boarding to passengers against their will. A similar regime is found in the US Code of Federal Regulations, which requires an airline to request volunteers before denying boarding. A volunteer is defined as someone who "willingly accepts the carrier's offer of compensation, in any amount", in exchange for giving up the seat. If there are insufficient volunteers, the airline can deny boarding to other passengers "in accordance with its particular boarding priority", subject to compensation. An airline's boarding priority rules are, however, no guarantee that a bumped-off passenger has been treated fairly. For example, in a lawsuit brought by the well-known American consumer advocate Ralph Nader against Allegheny Airlines in the early 1970s, the defendant airline had bumped off Mr Nader, who was due to give a speech to a public advocacy group, from one of its flights which had been overbooked. Mr Nader alleged that the defendant had contravened a provision in the US Federal Aviation Act, which prohibited an air carrier from subjecting passengers to unjust discrimination, or undue or unreasonable prejudice or disadvantage. Under the defendant's boarding priority rules, passengers with an "OK" marking on their tickets, or whose names were on a computerised list, had confirmed reservations and were to be boarded. After the flight had been boarded to capacity, Mr Nader, who had a confirmed reservation, arrived late at the boarding gate. He was not permitted to board as he was considered an "oversold" passenger under the boarding priority rules. The US court, however, found that the defendant had failed to comply with its own boarding priority rules, as it had denied Mr Nader's boarding priority by allowing at least one other oversold but lower-priority passenger, to board the flight. Admittedly, notwithstanding the absence of a legislative framework in Singapore, it may well be industry practice for air carriers departing from Singapore to adopt the approach in Europe and the US - ask for volunteers first, then deny boarding. However, such a practice is likely to result in inefficient negotiations, as the passenger cannot be certain about the amount of compensation the airline is willing to offer in exchange for denial of boarding, which would not be the case if clear compensation laws were in place, as in Europe and the US. Moreover, if this practice is applied inconsistently, both the airline and the passenger would be effectively negotiating in the dark about each other's positions. Coupled with the relatively tight timeframe that such negotiations must be completed before take-off and the potential permutations of each airline's boarding priority rules, one would expect that complaints against overbooking would be regularly lodged with the Consumers Association of Singapore (Case). However, following the United Airlines debacle, Case was cited in a media report as stating that no complaints against overbooking had been lodged since January last year. One plausible reason that may explain the apparent gap between theory and reality in Singapore is that because overbooking is a long-established practice, airlines have become adept at resolving the impasse if no volunteers step forward initially. As mentioned in The Sunday Times report on April 16 (No Room On The Plane), airlines may simply increase the incentives for denial of boarding. Also, given the large pool of potential "volunteers" available, it should not be too difficult to find a few passengers who are willing to be bumped off in exchange for adequate compensation. Compensated passengers are unlikely to be motivated to make a complaint to Case even though their negotiations with the airline may have taken more time and effort than necessary. Unless one is forced off the plane involuntarily, as in the United Airlines incident, there would not be clear cause for complaint. Nevertheless, the absence of consumer complaints may not be conclusive evidence that the market is working efficiently and no legislative intervention is required. Where there is poor management of oversold seats, the authorities must step in to achieve a better balance between the interests of passengers and those of airlines, and promote better customer-handling procedures. One area of concern is whether airlines should be permitted to deny boarding to vulnerable passengers, such as the elderly or the illiterate, on the basis that they had agreed to compensation. Such consumers may, however, not have understood the full ramifications of being denied boarding or appreciated the adequacy of the compensation offered. Under the US Code of Federal Regulations, it may be arguable whether they would be considered volunteers if their "willingness" to accept compensation was procured by improper influence. The lack of statutory guidance in Singapore on how airlines should exercise their discretion to bump off passengers may result in arbitrary or, worse, unlawful decisions, which should not be shielded by the "defence" of industry practice. In the interest of consumer protection in Singapore, clear provisions on the procedure for denying boarding and compensation amounts should be set out in statute, so as to address the information gap faced by passengers. Airlines should also be obligated to inform passengers of their rights to compensation and assistance, similar to those set out in Article 14 of EU Regulation 261/2004. Treating passengers fairly would not only be consistent with the position in Europe and the US, but would also reinforce Singapore's reputation as one of the world's top air hubs. Mr Tan Chong Huat is managing partner and Mr Alvin Chen is general counsel, legal and compliance, at RHTLaw Taylor Wessing.
April 27, 2017

Head of Intellectual Property & Technology Practice Jonathan Kok quoted in The Straits Times on the potential legal liabilities application companies could face

RHTLaw Taylor Wessing Head of Intellectual Property & Technology Practice Jonathan Kok was quoted in The Straits Times on the topic of measures to keep live streaming applications’ content in check. The article was first published in The Sunday Times on 26 April 2017. Measures in place to keep content in check Source: Straits Times © Singapore Press Holdings Ltd. Date: 27 Apr 2017 Author: Lester Hio When Bigo Live launched last year, the app quickly gained notoriety from streamers dressing provocatively and toeing the fine line between performing and explicit content. Now, both Bigo Live and BeLive, aware that people will abuse the adage that sex sells for the prospect of easy money by strutting their stuff in front of a camera, have measures in place to keep content clean. Both apps have age restrictions in place. Streamers who show explicit content are banned, as are users who use profanity or make abusive and derogatory remarks. "Censorship moderators and artificial-intelligence censors are available 24/7 to monitor content, and live streamers who fail to abide by the rules risk a permanent ban," said a Bigo Live spokesman. BeLive takes it one step further by banning the mobile phones of repeat offenders, using the phone's Unique Device Identifier so that banned users can't access the app. BeLive moderators are also alerted each time a new stream is started, and will monitor it for unsavoury content. "It can be quite obvious from the first five minutes of the streamer's opening act what he or she is up to," said BeLive co-founder Lim Kim Hui. Such concerns are potential legal pitfalls that both companies want to avoid in order to sustain the business. "If an app company comes to know about an obscene video but does nothing about it, then the app company could be liable," said lawyer Jonathan Kok, head of intellectual property and technology at RHTLaw Taylor Wessing. "An app company that wants to be a credible social media site would impose rules and regulations to ensure that the user-generated content is kept clean."
April 26, 2017

RHT Subhas Anandan Bursary Award Supports Children of Employees in Meeting Education Expenses

Into its 2nd year, the RHT Subhas Anandan Bursary Award was presented to four of our colleagues’ children today. All of them are students pursuing either their secondary or post-secondary education. The quantum awarded to each student ranges from $400 to $500, with a total of $2400 being awarded in all. Established in 2015, the Bursary Award helps children of the staff of RHTLaw Taylor Wessing and RHT Group of Companies to meet education expenses. Named in honour of the late Subhas Anandan, a Senior Partner at RHTLaw Taylor Wessing, the Bursary Award is a tribute to his legacy of helping others in need.  A man for others, Subhas cared not only for the unprivileged and unrepresented, but for fellow colleagues as well. A bursary scheme was an initiative he had wanted to start. Last year, the RHT Subhas Anandan Bursary Award supported six students with a total awarded amount of $2000.   RHT Subhas Anandan Bursary Award ceremony was featured in The Straits Times Online. The article was first published in The Straits Times Online on 26 April 2017. Five students receive RHT Subhas Anandan Bursary Award in honour of late criminal lawyer Source: Straits Times Online © Singapore Press Holdings Ltd. Date: 26 Apr 2017 Author: Camillia Deborah Dass It was supposed to be one of the biggest days of any mother's life - her daughter's wedding day. However, that morning, Huzaimah Haji Tanon, 53, suffered a stroke and died two weeks later. Since then her family has struggled to manage on a single income, but on Wednesday (April 26), her son Muhammad Irman Abdul Aziz, 18, got help with his educational expenses through the RHT Subhas Anandan Bursary Award. He was one of the five students who received the bursary, which was established in 2015 and launched in 2016. It was named in honour of the late Subhas Anandan, who was a notable criminal lawyer and a senior partner at RHTLaw Taylor Wessing. The award, which is sponsored by RHTLaw Taylor Wessing and RHT Group of Companies, aims to help children of staff meet their educational expenses by awarding deserving recipients with amounts between $200 and $600, depending on their educational level. Students are selected based on both academic as well as extra-curricular performances. Deputy managing partner at RHTLaw TaylorWessing, Mr Azman Jaafar, 52, said at the ceremony: "Subhas was a man for others. He had a heart of gold not just for the underprivileged and underrepresented, but also for the people in our midst - our staff who have worked tirelessly through these years." Irman is currently in his final year at the Institute of Technical Education (ITE) where he is pursuing a career in opticianry. He intends to apply to a polytechnic, after graduating from ITE, and eventually go to a university. "I'm going to use the money for food and transport and things like that so I don't have to keep asking my dad for money," he said. His father, Abdul Aziz Latiff, 49, who is a dispatch clerk at the firm, said: "I want him to be a successful person and I want him to make the family proud."
April 6, 2017

RHTLaw Taylor Wessing Managing Partner Tan Chong Huat discusses how the recent amendments to the Securities and Futures Act will require Reit managers to put unitholder interests first in The Business Times

RHTLaw Taylor Wessing Managing Partner Tan Chong Huat was featured in The Business Times article titled “New hope for Reit unitholders with SFA Amendment?”. The article was first published in The Business Times on 6 April 2017. New hope for Reit unitholders with SFA Amendment? Source: The Business Times © Singapore Press Holdings Ltd. Date: 6 April 2017 Author: Tan Chong Huat, Joseph Lau, Gerald Tham IN the first of this two-part article, we explored some options available to unitholders of a Real Estate Investment Trust (Reit) to hold a Reit manager accountable for its actions. In this second part, we discuss the impact of the Securities and Futures (Amendment) Act 2017, and consider whether recent events in the Reits industry will impact and shape discourse on future development of the Reits regime. Putting unitholder interests first When the 2017 SFA Amendment Act becomes effective, a Reit manager will have a statutory duty to act in the best interests of the unitholders and to give priority to the interests of unitholders over its own interests, or the interests of its shareholders, should there be a conflict of interest. Breach of this duty renders the manager liable to all unitholders for any profit, directly or indirectly made by it or any of its related companies, or for any damage suffered by the unitholders as a whole. This is also a criminal offence, where the Reit manager may be liable to a fine not exceeding S$100,000. The 2017 SFA Amendment Act also imposes duties on the directors of the manager to take all reasonable steps to ensure that the Reit manager discharges its duties and to give priority to the interests of unitholders over the manager's own interests, or the interests of the manager's shareholders, should there be a conflict of interest. Directors who contravene these duties will be liable to all unitholders for any profit, directly or indirectly made by them or the manager or any of the Reit manager's related companies, or for any damage suffered by the unitholders as a whole. This is also a criminal offence, where the directors may be liable to a fine not exceeding S$100,000 or up to two years imprisonment. There are three important qualifiers to these statutory duties. First, the 2017 SFA Amendment Act has not yet taken effect, and thus these provisions are still outside the range of options available to unitholders. Second, proceedings against a director of a Reit manager would only be allowed where the Reit manager has conducted the affairs of the Reit or exercised its powers in a manner that is oppressive or disregards unitholders' interests, or where an act of the Reit manager has been done or is threatened which unfairly discriminates or is prejudicial to unitholders. As examined in the previous article, it is not presently clear how the Singapore courts will interpret or apply these requirements. Finally, the 2017 SFA Amendment Act is not likely to have retrospective effect, which means that it is not clear whether the actions taken by a Reit manager or its directors before the date when the 2017 SFA Amendment Act becomes effective, can be used to support a claim for breach of these new statutory duties. It remains to be seen whether a Reit manager who had placed itself into a position of conflict before the effective date of the 2017 SFA Amendment Act, and continues to be in such a position of conflict thereafter, would be liable for a breach of any statutory duties. What's next for the Reits regime? In light of the above challenges, would further changes need to be implemented in the Reits regulatory regime in the foreseeable future? Here we would point out that the revised Code on Collective Investment Schemes (CIS), which was issued on Jan 1, 2016, and the 2017 SFA Amendment Act, resulted from a wide-ranging consultation on enhancements to the regulatory regime governing Reits and Reit managers, initiated by the Monetary Authority of Singapore (MAS) as recently as 2014. The revised CIS incorporated changes to, among others, align the performance fee structure with the long-term interests of a Reit's unitholders, and enhance disclosures relating to income support payments. In the consultation, MAS requested feedback on whether the current approach of relying on unitholders to initiate a review of the Reit manager's appointment is effective, and if not, the additional possible measures that could be considered. MAS noted that "respondents were of the view that it is currently not difficult for unitholders to convene an extraordinary general meeting to obtain a simple majority that is needed to remove a Reit manager". MAS also noted that there was a general consensus that the current approach is broadly effective, and that no regulatory intervention was needed at that time. However, as examined in the previous article, such recourse may not be feasible for unitholders of a Reit whose units are still substantially held by the Reit's sponsor and related parties. At this juncture, it is not clear what further regulatory change in the Reits regime could be implemented. One possible avenue is to explore targeted requirements to prevent the "clever financial engineering" that a Reit manager may undertake "to disguise inherent blemishes", such as an acquisition by the Reit manager of assets at inflated prices and the leaseback of these assets to the vendor at inflated rents, which Ho Ching cautioned against in her speech marking the listing of MapleTree Logistics Trust on July 28, 2005. Aligning interests Another possible way forward would be for stakeholders to revisit the measures to ensure the interests of all unitholders are aligned with those of the Reit manager, and consider whether the existing suite of measures to promote financial transparency and improve corporate governance are sufficient. These could include examining the compensation structures adopted in the industry and subject the same to tighter parameters including independent approval by unitholders at annual general meetings such that the Reit manager's fee structure is more closely aligned with the long-term interest of the Reit and its unitholders, and adopting best practices with respect to the charging of acquisition and divestment fees by a Reit manager by subjecting the same to a mandatory review and approval process by the audit and/or risk committee(s). These measures were not implemented in the last review of the Reits regime, in light of the varying business models of Reits and practical difficulties in implementation, respectively. In addition to strengthening investor confidence in Reits, these proposed changes would need to be balanced against attracting more Reit listings to Singapore and possibly stymieing the development of S-Reits as an asset class. Mr Tan is managing partner of RHTLaw Taylor Wessing LLP; Mr Lau and Mr Tham are associates of the firm.