As well as the location of many significant construction and infrastructure projects, Singapore is increasingly the preferred venue for the resolution of regional and international construction disputes. In this update we therefore examine a number of construction related developments in Singapore.

Singapore as a hub for international commercial mediation

In December 2013, the Ministry of Law issued a press release welcoming recommendations to develop Singapore into a centre for international commercial mediation, attempting to emulate the success of the Singapore International Arbitration Centre in becoming a dispute resolution hub for the region. Given the potential for mediation to be a useful tool in a variety of construction disputes, this is a welcome development for the regional construction sector.

The recommendations, which the Ministry of Law is currently considering how to implement, advocate the establishment of a Singapore International Mediation Institute (the "SIMI") and a Singapore International Mediation Centre (the "SIMC"). The role of the SIMI would be to accredit mediators and ensure their professionalism and ethics, whilst the SIMC would provide mediation products and services. The SIMC would sit alongside the existing Singapore Mediation Centre; the former would focus on the development of international mediation whilst the latter would retain its focus on domestic mediation and construction adjudication.

It is also suggested that legislation be enacted to strengthen mediation framework in Singapore, particularly in relation to the enforceability of mediated settlements. As a further comparator to Singapore's regional status as an international arbitration centre, it has been recommended that the tax incentives currently applicable to arbitration be extended to mediation.

If enacted, these changes would provide a further robust alternative to employers and contractors alike for the amicable settlement of construction disputes.

Singapore case updates

In Jurong Primewide Pte Ltd v Moh Seng Cranes Pte Ltd [2014] SGCA 6, a case which concerned the apportionment of liability for the collapse of a crane into a concealed manhole, the Court of Appeal provided some guidance on the scope of the duties owed by contractors and subcontractors in respect of worksite safety at construction sites. Having noted that the operations at the site were within the framework of the Workplace Safety and Health Regime ("WSH Regime"), the Court found that the presence of such statutory duty did not itself give rise to a common law duty of care and therefore a private right of action. Instead it complements the common law on negligence, which is likely to almost always apply when the WSH Regime applies. Reversing the lower court's decision at first instance, the Court of Appeal therefore found that both the main contractor and sub-contractor were liable in negligence and both had breached their obligations under the WSH Regime.

In Qwik Built-Tech International Pte Ltd v Acmes Kings Corp Pte Ltd [2013] SGHC 278, the High Court examined various claims for monies due and payable in relation to a building and construction project in the Maldives. The Court drew out two contractual principles of general application to the construction industry. First, the Court confirmed that, if a contractor fails to provide materials that it is contractually obliged to provide, the contract price should be reduced by reference to the actual cost of such materials. Secondly, if a contractor is entitled to payment but there is no agreement as to the amount of that payment, the contractor should be remunerated at a reasonable rate, the measure of which needs to be supported by evidence adduced by the contractor.

In Choi Peng Kum and another v Tan Poh Eng Construction Pte Ltd [2013] SGHC 272, the High Court dealt with a wide range of issues, including the validity of a payment claim and the interpretation of certain Singapore Institute of Architects, Articles and Conditions of Building Contracts. The main point of interest was, however, the Court's consideration of the status of security deposited into court under the statutory adjudication regime. Under section 27(5) of the Building and Construction Industry Security of Payment Act, a party applying to set aside an adjudication must pay the unpaid adjudicated amount into court pending the "final determination of those proceedings". The High Court held that "final determination" in this context referred to final decision of the first court and not after all avenues of appeal have been exhausted.

In W Y Steel Construction Pte Ltd v Osko Pte Ltd [2013] SGCA 32, the Court of Appeal also considered the Security of Payment Act. In particular, the Court considered the requirement under section 15(3) of the SOP Act that an adjudicator cannot consider any reasons for withholding payment in the adjudication response that were not included in the payment response. Despite an adjudicator's obligation to observe natural justice, this meant that an adjudicator was not empowered to consider a respondent's submissions giving new reasons for withholding payment, even in cases where the respondent had not filed a payment response at all.

Finally, in the recent decision in Tech-System Design & Contract (S) Pte Ltd v WYWY Investments Pte Ltd [2014] SGHC 57, the Singapore High Court re-confirmed that a beneficiary of a Singapore law governed performance bond may be restrained from calling on the bond if there is a strong prima facie case that it would be unconscionable to allow the beneficiary to call on the bond. However, on the facts of the case, the Claimant had not satisfied that test and no injunction was granted. This case confirms, again, that the threshold to restrain a call on a performance bond is very high and the Singapore courts will not easily curtail the rights of beneficiaries of on demand bonds.