Singapore builders seek force majeure advice as coronavirus causes labour crunch

Boustead Singapore

18/02/2020 05:06

* Companies seek advice on force majeure - lawyers
    * Singapore halts new visas for Chinese nationals
    * Also turns away many Chinese workers with existing visas
    * Govt says contractors for public projects can seek
extensions

    By Aradhana Aravindan and Jessica Jaganathan
    SINGAPORE, Feb 18 (Reuters) - Singapore construction firms
are asking for advice about whether they have the option of
invoking force majeure clauses in building contracts as the
government turns away or quarantines Chinese labour to stop the
spread of the coronavirus, lawyers told Reuters.
    Singapore has an estimated $20-$24 billion of public and
private sector building projects in the works this year - and
any large impact on the sector, which is highly dependent on
foreign labour, could help push the economy into recession.
 urn:newsml:reuters.com:*:nL4N2AH01F
    Derek Loh, a partner at Singapore-based TSMP Law
Corporation, said five clients involved in public sector
construction projects have approached him in recent weeks for
advice on force majeure - which refers to unexpected external
circumstances that prevent a party to a contract from meeting
their obligations.
    "These clients that have sought advice are largely those
that employ Chinese labour," said Loh.
    Two other senior lawyers, who declined to be named, said
they had also received queries related to force majeure. 
    The Building and Construction Authority, a government
agency, has said, however that contractors involved in public
sector projects can seek extensions. It has also urged private
sector developers to give extensions to contractors that work
for them.
    Some Chinese companies have already invoked force majeure on
contracts due to the virus, including China's top LNG buyer
China National Offshore Oil Corp and Jiangsu New Times
Shipbuilding Co.  urn:newsml:reuters.com:*:nL4N2AE0NO urn:newsml:reuters.com:*:nL4N2AC29T
    Singapore, which has one of the highest numbers of virus
infections outside China at 77, has halted the issuance of new
visas to Chinese nationals since Jan. 31. Workers from China
with existing work visas must seek approval before re-entry, and
if approved, must spend 14 days in quarantine. 
    Singapore's labour ministry said last week it was rejecting
400 applications daily from returning workers with recent travel
history to China and had also cancelled some work passes. It has
also prevented employers from hiring foreign staff if rules are
breached.
    The Singapore Contractors Association did not respond to a
request for comment.
    Construction labourers without any travel history to China
have also been infected, with five Bangladeshi workers among
confirmed cases. The firm involved, Boustead Projects Ltd
 BOUS.SI , said it halted construction activities to disinfect
areas and is continuing to assess the impact on the project
concerned. 
    The construction sector, which is allowed to hire workers
from only a handful of countries including China, India and
Bangladesh, expanded 2.8% in 2019, one of the strongest
performers in an economy that recorded a growth rate of 0.7%,
its slowest in a decade.
    The last time several construction firms sought to invoke
force majeure in Singapore was in 2007 when Indonesia banned
sand exports to the city-state bringing building activity almost
to a halt.
    
($1 = 1.3893 Singapore dollars)

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EXPLAINER-As coronavirus fails to ease, interest in 'force
majeure'     urn:newsml:reuters.com:*:nL1N2AB02U
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Online site for coronavirus news    https://www.reuters.com/live-events/coronavirus-6-id2921484
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 (Reporting by Aradhana Aravindan and Jessica Jaganathan;
Editing by Edwina Gibbs)
 ((aradhana.aravindan@thomsonreuters.com; +65 6403 5659;))