Available COVID-19 Related Legislations Allowing Companies to Seek Recourse for Payments being Withheld
Ministry of LawSpeakers
Summary
This question concerns whether COVID-19 legislation provides recourse for companies whose payments are withheld due to contract interpretation disagreements. Minister for Law Mr K Shanmugam clarified that such disputes should be resolved through standard legal proceedings or alternative dispute resolution, as the COVID-19 (Temporary Measures) Act 2020 does not cover contract interpretation. He noted the Act instead offers a moratorium on legal proceedings for pandemic-related contractual breaches and established a rental relief framework for SMEs and Non-Profit Organisations. Furthermore, the Act was amended to include Part 8, providing targeted relief for sectors affected by construction or supply contract delays. These provisions aim to support businesses impacted by the pandemic's extraordinary circumstances rather than mediating specific contractual disagreements.
Transcript
9 Miss Cheng Li Hui asked the Minister for Law in light of the current tough business environment, whether the COVID-19 related legislation provides for companies, especially SMEs, whose payments are withheld because of disagreement in interpretation of contract terms to seek recourse and, if so, what are these.
Mr K Shanmugam: Where there is a disagreement in the interpretation of contract terms, regardless of whether it leads to a withholding of payments or otherwise, it should be resolved in the usual way – through legal proceedings in the courts, or via any alternative dispute resolution mechanism agreed by the parties (such as arbitration or mediation).
The COVID-19 (Temporary Measures) Act 2020 (the Act) does not deal with disputes over the interpretation of contracts. Instead, the Act provides a suite of legal reliefs to help businesses and individuals whose contracts have been affected in unanticipated ways due to the extraordinary impact of the COVID-19 pandemic on all aspects of our daily life.
First, in April 2020, we introduced the Act to provide temporary relief to businesses and individuals who are unable to fulfil their contractual obligations under certain scheduled contracts due to COVID-19. It imposed a moratorium on the commencement or continuation of legal and enforcement proceedings where the breach of contract was materially caused by COVID-19.
Second, in June 2020, the Act was amended to create the rental relief framework for Small and Medium Enterprises, and specified Non-Profit Organisations, to support them in their recovery from the impact of the COVID-19 pandemic.
Third, also in June 2020, we amended the Act to include a new Part 8, which provide further targeted relief for specific sectors that have been affected by a delay or breach in a construction or supply contract.