Singapore construction companies are seeking advice on the possibility for them to invoke force majeure clauses in building contracts seeing that that government quarantines or turns away Chinese labour to curb the spread of Covid-19, lawyers spoke to Reuters.
The country has ongoing building projects worth estimated US$20 billion to US$24 billion this year. Because the sector is heavily reliant on foreign workers, any big adverse impact could spark a recession for the economy.
According to a partner at Singapore-based TSMP Law Corporation, Derek Loh, he has been approached by five clients from the public sector construction projects in recent weeks. They were seeking advice on force majeure¸ which is the unexpected external circumstances that prevent a party to a contract from meeting obligations.
Mr Loh pointed out that “these clients that have sought advice are largely those that employ Chinese labour.”
In addition to this, two senior senior lawyers, who wish to remain anonymous, said they had also been asked regarding force majeure.
Contractors involved in public sector projects can ask for extensions, as stated by the Building and Construction Authority (BCA). Private sector developers have also been encouraged to provide extensions to contractors that they employ.
Due to Covid-19, force majeure on contracts have already been invoked by several Chinese firms such as Jiangsu New Times Shipbuilding and LNG buyer China National Offshore Oil Corp.
Since 31 Jan, Singapore has stopped issuing new visas to Chinese nationals.
Also, approval must first be sought before re-entry by workers from China who already own work visas. These workers must then spend 14 days in quarantine if approved.
Last week, the Ministry of Manpower stated that 400 applications from returning workers with recent travel history to China have been rejected per day, and some work passes have been cancelled. If these rules are breached, employers will also be prevented from hiring foreign workers.
There are also infected cases among construction workers with no travel history to China, such as the five Bangladeshi workers. The employing firm, Boustead Projects reported that it has stopped construction activities to disinfect the site as well as assess the impact on the project.
The construction sector grew 2.8 per cent in 2019, making it one of the best performing sectors when the economy was barely growing at 0.7 per cent. Workers from a few countries such as Bangladesh, China and India are allowed for employment in the construction sector.
In 2007, the last invocation of force majeure was sought after by a few construction firms in the country when Indonesia banned sand exports, which greatly disrupted construction activities.