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The Evolution of the Practice of Construction Law in Singapore from the late 80s to Present Day

The construction legal practice in Singapore has grown substantially in the last 20 to 30 years, both in terms of volume and sophistication.

In late 80s and the 90s, dispute resolution mechanisms in the construction industry were heavily skewed in favour of owners and main contractors. Standard form contracts in the industry provided for "pay when paid" provisions and provisions that stipulated that legal proceedings cannot be commenced until a project was certified to be complete. These provisions were abused time and again. It was very common for main contractors who were sued by subcontractors and suppliers to commence litigation or arbitration proceedings against owners, and for them to take a long time to resolve the disputes – if they even commenced proceedings. Scores of subcontractors and suppliers became insolvent as a result and the main beneficiaries were the less scrupulous main contractors and owners.

This trend was viewed with great concern by the authorities who decided to introduce statutory adjudication in Singapore to deal with such abuse. A panel of industry experts studied adjudication schemes primarily in England and certain states in Australia and recommended a scheme which incorporated the best practices of the various schemes studied. Essentially, the scheme in Singapore made unenforceable "pay when paid" provisions and any other provision which attempts to side step the rights of a party who has carried out works or performed services in the construction industry to make a claim for payment under the statutory adjudication scheme. It also provided for a quick and inexpensive way to recover payment for work done – even if the award given in an adjudication is only "temporarily final", i.e. it can be opened up and reviewed in subsequent litigation or arbitration proceedings.

The statutory adjudication scheme was introduced in Singapore in 2004. It came into operation on 1 April 2005. Although it was meant to benefit the contractors, subcontractors and suppliers that had suffered under the previous dispute resolution regime, initial take up was quite slow. In the first few years after its introduction, there were barely a handful of statutory adjudications. Whilst this could be partially explained by the industry's initial lack of knowledge about the statutory adjudication scheme, anecdotal evidence also indicated a general reluctance on the part of the industry players to bite the hands that fed them. Most would prefer negotiations and only legal proceedings as a last resort. As statutory adjudication follows a very strict time regime, it means that parties that have submitted payment claims have to initiate action within very tight timelines or miss the chance of initiating the action altogether. Most chose not to initiate legal action and preferred to negotiate. Over time, due to increasing exposure and education, the construction industry became a lot more comfortable with the statutory adjudication scheme and the number of adjudications registered every year have grown exponentially since the early years. From a handful in the initial years, the number of adjudication applications filed almost tripled from 164 to 481 between 2010 and 2015.

As the number of adjudications grew, so did the body of law governing them. As of late 2016, there were at least 34 written decisions of the Singapore High Court and Court of Appeal dealing with issues arising in statutory adjudications. And at least 30 of the 34 decisions were rendered in the last 4 years alone. As the law governing statutory adjudication gained clarity and sophistication, so did the practice of law in this area. From initial debates over whether repeat claims, i.e. claims which are repeated for the next claim period without any additional claims added, are permitted under the statutory regime, the discourse has now moved on to issues such as the recoverability of prolongation costs and whether such claims constitute claims for work done or claims for damages – and whether claims for damages are recoverable under the statutory adjudication scheme. The Courts are also now having to contend with a growing number of what has been labelled as "satellite litigation", i.e. applications to Court to set aside adjudication awards on jurisdictional and other technical grounds – which have little to do with the merits of the case. Such forms of litigation are said to be antithetical to the main objectives of statutory adjudication – which are to provide a quick and inexpensive means of resolving construction related disputes.

The concerns above have led to calls for reforms to be made to the statutory adjudication regime. To this end, the Law Reform Committee of the Singapore Academy of Law has released a report that proposes a number of refinements to the regime. Consultations have been taking place with industry players and the amendments to the relevant legislation are now with the Attorney-General's drafting division. It is anticipated that a draft Bill will be ready for public consultation soon.

Increased number of adjudications has also led to an increased demand for accredited adjudicators. As the number of construction lawyers who also serve as adjudicators are limited, not just in terms of number or but also in terms of the time they can dedicate to serving as adjudicators, the authorised body in charge of adjudication has had to cast its net a little wider to get professionals in the industry to serve as adjudicators. The pool of adjudicators now includes construction professionals such as architects, engineers and quantity surveyors. However, the inclusion of professionals who are not legally trained has also led to its own issues. This is being addressed by better training and also a soon to be introduced formalised disciplinary framework for adjudicators.

The development of construction legal practice in Singapore will now take a bigger leap forward with a soon to be introduced specialist accreditation scheme for practitioners of construction law. The scheme strives to encourage legal practitioners of construction law in a drive towards excellence and to provide the general public with a reliable means of identifying and accessing legal practitioners with particular skill and knowledge in this area of practice. The subcommittee charged with looking into this has drawn from the experience of legal practitioners of construction law in other jurisdictions such as Australia, Canada, United Kingdom and USA. Essentially, there will be a two-tier system with a lower tier (Accredited Specialist) and an upper tier (Senior Accredited Specialist). Candidates will need to apply to be accredited and will be assessed based on their involvement in the practice of construction law, accumulation of CPD points, examination results (for the lower tier), a selection panel interview, references from fellow legal practitioners and disciplinary record.

It is interesting and exciting times ahead for legal practitioners of construction law in Singapore. In this regard, the practice of construction law in Singapore has come a long way from being just a sideline practice of the general commercial litigator.