An extract from The Securities Litigation Review, 7th Edition

Private enforcement

i Forms of actionNature of proceedings

Private actions can be commenced by writ of summons or originating summons. The latter is generally limited to proceedings that only concern questions of law and do not involve substantial disputes of fact.

Availability of class action suits

Singapore law does not recognise class action lawsuits in the sense that is traditionally understood in the United States. However, it does allow a single person to commence a proceeding on behalf of various persons who have the same interest. This process is referred to as 'representative proceedings'. Separately, multiple suits that pertain to the same transaction or involve common questions of fact or law can also be consolidated into a single suit.

Shareholder derivative action

A shareholder derivative action can be commenced either as a statutory derivative action under the Companies Act or as a common law derivative action. It is generally easier to commence a statutory derivative action, as the threshold requirements are less onerous. However, statutory derivative actions may only be commenced by companies incorporated in Singapore – there is no such restriction for common law derivative actions.

ii ProcedureCourt system

The general rules relating to the jurisdiction of the Singapore courts apply to securities claims. Where the quantum of a claim exceeds S$250,000, it will be heard in the first instance in the General Division of the High Court. Where it does not, it can be heard in the State Courts.

If the case is transnational in nature, it may be heard in the Singapore International Commercial Court (SICC) if certain requirements are met. The SICC is part of the General Division of the High Court.

There is a specialist list of judges who will generally hear securities and financial matters.

Civil appeals from the State Courts are heard by the General Division of the High Court. Civil appeals from the General Division of the High Court will generally be heard by the Appellate Division, save for specified categories of cases (including cases relating to the law of arbitration, insolvency and restructuring cases, and SICC decisions) that will be heard by the Court of Appeal, which is the apex court in Singapore. Parties are generally only allowed one tier of appeal as of right. Any further appeal against the decision of the Appellate Division may be brought to the Court of Appeal only with leave of the Court of Appeal.

Civil procedure rules

The civil procedure rules relating to service, pleadings, discovery, pre-trial procedures, conduct of trials, and appeals are the same as in any other private law action. These can be found in the Supreme Court of Judicature Act, the State Courts Act, the Rules of Court and the Practice Directions of the respective courts.

A public consultation exercise on major reforms to Singapore's civil procedure regime was completed in 2019. It remains to be seen what legislative amendments will be introduced and how they will impact securities litigation in Singapore.

Financial Industry Disputes Resolution Centre

Apart from securities litigation in the courts, it is common for financial services disputes to be resolved by alternative dispute resolution (ADR) in the Financial Industry Disputes Resolution Centre (FIDReC).

FIDReC is an independent institution set up to provide ADR services for financial disputes in Singapore. Access to FIDReC is available to retail investors with a claim against financial institutions, limited to S$100,000 per claim (unless agreed otherwise).

When a dispute is referred to FIDReC, it will first direct parties to resolve their dispute by mediation. If mediation fails, the case will be heard by way of adjudication. The decision of the adjudicator is binding on the financial institution, but not on the retail investor, who may seek further recourse through the courts.

iii SettlementsEntering into settlement

The general principles relating to the settlement of a securities claim are no different from those relating to settlement of other types of claims. Settlement agreements generally take the form of a contract or a deed.

The parties are generally free to agree on the terms of the settlement and the courts would not intervene save in exceptional circumstances. There is no need for the court to endorse the settlement agreement, though it is possible for parties to record the terms of the settlement agreement by entering it as a consent order.

Costs

In the event of a settlement, there is no requirement for attorneys' fees to be fixed by the court – parties are free to agree on their costs.

However, if a settlement offer is made by one party and the other party does not accept it, there may be costs implications for the latter party depending on the outcome of the trial. Under Singapore's civil procedure rules, where a plaintiff's offer to settle is rejected and the plaintiff subsequently obtains a court judgment equal to or more favourable than the terms of the offer, the plaintiff is entitled to its legal costs on an indemnity basis from the date of the offer to the date of the judgment.

Conversely, where a defendant's offer to settle is rejected and the plaintiff subsequently obtains a judgment that is equal to or worse than the terms of the offer, the court may award the defendant its costs on an indemnity basis.

Breach of settlement agreement

Where one party acts in breach of the settlement agreement, the possibility of the other party bringing a claim based on the facts existing prior to settlement (as opposed to a claim based on the settlement agreement alone) depends on the terms of the settlement agreement.

iv Damages and remedies

The primary remedy awarded in securities claims, as in other claims, is damages. The calculation of damages depends on the exact nature of the claim, though the general principle behind an award of damages is to compensate the plaintiff for its losses.

If the claim is contractual in nature, the standard measure of damages will be the amount needed to place the plaintiff in a position as if the contract had been performed. If the claim is tortious in nature, the standard measure of damages will be the amount needed to place the plaintiff in a position as if the tort had not been committed.

Where there has been a contravention of the SFA, investors who have suffered losses as a result of the contravention are entitled to make claims against the contravening person. The amount of compensation that a claimant is generally entitled to is its loss suffered by reason of the difference between the price at which the securities were dealt in contemporaneously and the price at which the securities would likely have been so dealt in at the time of the contemporaneous dealing if there had been no contravention (or where insider trading is concerned, if the inside information had been generally available). However, the maximum recoverable amount is the amount of profit gained or the amount of loss avoided by the contravening person. The court will pro-rate this amount if there are multiple claimants.

Non-monetary remedies, such as orders for specific performance and injunctions, may be awarded where damages are inadequate to compensate the plaintiff for its loss. The court will consider all the circumstances to decide whether to award such remedies, including whether the plaintiff itself is guilty of any blameworthy conduct.