Occupying New Territory: How the Tort of Occupier's Liability Fits into the Modern Day of Spandeck

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Occupying New Territory: How the Tort of Occupier's Liability Fits into the Modern Day of Spandeck

Kelvin Ho

The Spandeck test established in Spandeck Engineering (S) Pte Ltd v Defence Science & Technology Agency¹ [Spandeck] laid out a clear framework to determine duty of care in tort of negligence cases, and was further extended to apply to cases previously brought under the separate nominate tort of occupier’s liability in See Toh Siew Kee v Ho Ah Lam Ferrocement (Pte) Ltd² [STSK]. This article will evaluate the effectiveness of the Spandeck test in resolving the two main issues that plagued the tort of occupier’s liability as highlighted by the Court of Appeal in STSK, namely (1) the often illogical and arbitrary static-dynamic dichotomy, and (2) the invitee-licensee-trespasser trichotomy.

A brief outline of the Spandeck test involves the threshold stage of factual foreseeability, followed by the first stage of legal proximity between the plaintiff and the defendant to find a prima facie duty of care imposed on the latter, and then the second stage of whether there are any negating policy reasons to disaffirm this duty of care. Although it is to be applied incrementally by referring to analogous cases at each stage, the court is allowed to establish new categories of duty where appropriate.

The first problem of the static-dynamic dichotomy regarding the tort of occupier’s liability is that it is never always possible to clearly separate the static and the dynamic. The concept of static refers to the condition of the property while dynamic refers to the activities that take place on it. For example, in the seminal case of Australian Safeway Stores Proprietary Limited v Zaluzna³ [Zaluzna], the plaintiff suffered injuries after slipping on the wet floor of the foyer, which was part of the defendant’s supermarket. The Court opined that on one hand, the condition of the floor was due to the rain and was unrelated to any of the supermarket’s activity, but on the other, the supermarket was running a business at the exact premises where the accident occurred and the very movement of shoppers in the supermarket could definitely be seen as dynamic. As such, the factual matrix in Zalunza seemed to be equally susceptible to both classifications. The use of the Spandeck test can effectively eliminate this issue as it can now be transparently examined under the two stages of the test. With the application of the Spandeck framework, it is no longer necessary to distinguish between static or dynamic. This eliminates the arbitrariness and difficulty of the static-dynamic dichotomy that plagued the tort of occupier’s liability previously.

The second problem addressed by the Spandeck test is the invitee-licensee-trespasser trichotomy, which only arises when the case has been established to be one under the static category. The issue with this trichotomy is that “first (from the viewpoint of logic), it is potentially ambiguous whether an entrant is to be classified as an invitee, a licensee or a trespasser; and second (from the viewpoint of practice), the distinctions between the categories could turn on inconsequential details that potentially lead to injustice”, as opined by V K Rajah JA⁴. In eliminating the preliminary issue of the static-dynamic dichotomy as explained in the preceding paragraph, the Spandeck test effectively nips this problem in the bud. However, the Spandeck approach is not without its flaws in resolving cases of occupier’s liability.

When the Court first subsumed the tort of occupier’s liability under the general tort of negligence in STSK⁵, V K Rajah JA emphasized the control of the premises as the key factor in determining a prima facie duty of care in most cases. Admittedly, the concept behind the static-dynamic dichotomy and the invitee-licensee-trespasser trichotomy is intertwined with the idea of control, since there tends to exist a higher degree of control over the static rather than the dynamic, and similarly over an invitee or licensee as opposed to a trespasser. However, the factor of control was not explicitly examined vis-à-vis the Spandeck stages: in particular, whether control should be examined under the proximity stage or the policy stage was left unclear by the Court. Control can be discussed either way: in the proximity stage as the “defendant’s control over the source of the risk of harm to the claimant”, or in the policy stage as the defendant’s control over “a class of individuals of which the claimant is a member”, as noted by Professor David Tan in The Phoenix Rises: Resurrecting Occupier’s Liability Within The Negligence Framework⁶. Thus, there remains a grey area on whether the factor of control should be examined under the proximity or policy limb of the Spandeck test and this will affect future applications of the test in cases of occupier’s liability.

Assuming control is to be studied in the first stage of proximity, control itself is also insufficient to impose a prima facie duty of care, contrary to what was suggested in STSK that “control of the premises concerned is a sufficient foundation per se for imposing on an occupier a prima facie duty of care under the Spandeck approach”⁷. Other factors such as the occupier’s knowledge of potential entrants entering onto its controlled premises and the vulnerability of such entrants must be considered in light with the factor of control. For example, in cases where the occupiers are aware of the high possibility that children, who are usually deemed vulnerable, may trespass onto their controlled premises, there should be a closer relationship between the occupier and the trespasser. Thus, it is insufficient to use control as the only factor when considering proximity.

V K Rajah JA made an exception to this by stating that the control factor is alone sufficient when dealing with cases involving lawful entrants⁸. However, making this reference only seems to bring back remnants of the invitee-licensee-trespasser trichotomy which the Spandeck test initially tried to dismiss, as lawful entrants can be seen as an invitee or a licensee. In fact, the distinction of lawful and residual entrants should no longer be an issue since the enquiry is effectively subsumed under the first stage of proximity in Spandeck; by examining the circumstantial relationship between the occupier and the entrant. Thus, as Sundaresh Menon CJ⁹ opined, it is better to take full advantage of the flexibility of the Spandeck test itself and do away completely with the distinction between lawful and residual entrants.

In conclusion, the concept of classifying the tort on occupier’s liability under the general tort of negligence, and hence the application of the Spandeck test for cases involving occupier’s liability, was only established recently in the case of STSK in 2013. Even though it was a valiant attempt to make uniform the tort of occupier’s liability via the general Spandeck test, there are still certain unresolved areas as highlighted above, owing perhaps due to the problems in force fitting an age-old tort under an already well-established two-staged test. Nonetheless, the drawbacks of the Spandeck test can still be rectified in future cases, such as clearly defining the factor of control as either a stage one or stage two consideration. Indeed, since the origins of the primary issue of occupier’s liability, being the static-dynamic dichotomy, was “not founded on logic or principle” but rather because “it is rooted in convoluted English legal history” ¹⁰, the application of a more recent and established approach such as the Spandeck test in such cases is still very much welcomed.

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[1] Spandeck Engineering (S) Pte Ltd v Defence Science & Technology Agency, [2007] SGCA 37, [2007] 4 SLR (R) 100.

[2] See Toh Siew Kee v Ho Ah Lam Ferrocement, [2013] SGCA 29, [2013] 3 SLR 384.

[3] Australian Safeway Stores Proprietary Limited v Zaluzna, [1987] HCA 7, [1987] 162 CLR 479.

[4] Supra note 2 at [48].

[5] Supra note 2 at [100].

 [6] [2013] 21 TLJ 59 at page 70.

[7] Supra note 2 at [100].

[8] Ibid at [80].

[9] Ibid at [130].

[10] Ibid at [21].

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The Tangle of the Tort of Unlawful Means Conspiracy

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The Tangle of the Tort of Unlawful Means Conspiracy

Laura Lim

In EFT Holdings, Inc v Marinteknik Shipbuilders (S) Pte Ltd¹ [EFT], the Singapore Court of Appeal (SGCA) discussed the tort of unlawful means conspiracy. While the Court addressed several interesting questions, much was ultimately left to be decided in future cases. Although arguably the more prudent approach, this leaves the tort of unlawful means conspiracy in a tangled mess. Of all the unanswered questions about the tort, one strikes me as particularly fundamental, but was scarcely addressed in EFT – precisely what constitutes “unlawful means”? At first blush, the answer may seem simple enough, but the history of the tort and its development in other jurisdictions suggest that there is more than meets the eye. Before we proceed, it may be useful to understand the elements of unlawful means conspiracy as helpfully laid out by the SGCA in EFT²:

1. there was a combination of two or more persons to do certain acts;
2. the alleged conspirators had the intention to cause damage or injury to the plaintiff by those acts;
3. the acts were unlawful;
4. the acts were performed in furtherance of the agreement; and
5. the plaintiff suffered loss as a result of the conspiracy.

The scope of “unlawful means” therefore evidently relates to the substance of the third element. This requirement of unlawfulness is particularly crucial to distinguish unlawful means conspiracy from conspiracy by lawful means, which is a separate tort requiring not only that the alleged conspirators had the intention to injure the plaintiff (as per element (2)), but that they did the acts with the predominant intention of injuring the plaintiff.

In considering the substance of “unlawful means”, perhaps the best starting point is a statement by Lord Walker in the case of Total Network SL v Revenue and Customs Commissioners³, cited with approval by the SGCA in Beckkett Pte Ltd v Deutsche Bank AG⁴, that “unlawful means, both in the intentional harm tort and in the tort of conspiracy, include both crimes and torts (whether or not they include conduct lower on the scale of blameworthiness)”. This statement not only (1) suggests that the content of “unlawful means” includes “crimes and torts”, but also (2) reminds us of similar torts involving “unlawful means” such as the intentional harm tort. These will be examined in turn.

Firstly, specifying the content of “unlawful means” to include “crimes and torts” seems intuitively fair. Given that this is not an exclusive definition, however, it remains unclear if other forms of “unlawful” behaviour can also be considered. Pertinently, it remains to be determined if a breach of contract or a breach of confidence constitutes unlawful means for the purpose of establishing unlawful means conspiracy (as has been held in several High Court cases⁵ in which the breaches were simply assumed to be unlawful). Given the existence of the tort of lawful act conspiracy, which has a higher threshold for establishing intention, it is submitted that as long as the distinction between lawful and unlawful conspiracy is preserved, a breach of contract or confidence would have to be considered “lawful” so as not to render the tort of lawful act conspiracy devoid of substance and, consequently, otiose⁶.

Secondly, the question of what constitutes “unlawful means” may ultimately turn on the larger issue of whether the tort of unlawful means conspiracy can be considered a species tort to the genus of a broader unlawful means tort or the general body of economic torts such as conspiracy, indirect interference with contract, and intimidation. This issue is relevant to the discussion about “unlawful means” because the term is often an element that requires definition in these torts. While the question of whether to consider the torts together was discussed by the SGCA in EFT, the court eventually made no definite pronouncement. The furthest the court went was to note that while economic torts were traditionally understood as being related, this view has since been rejected by the House of Lords in OBG Ltd v Allan⁷ [OBG] on the basis that each tort within the supposed “genus” is in fact supported by a distinct underlying rationale.

It would be helpful for the SGCA to clarify whether or not a unified body of economic torts can be said to exist in Singapore. If the English position in OBG is accepted, the task of clarifying the content of “unlawful means” in the tort of conspiracy becomes much less daunting, since courts would no longer have to consider the many potential knock-on effects on other doctrines. Conversely, if Singapore courts reject the English position and recognise a unified doctrine of economic torts, it becomes all the more critical to develop a robust definition of “unlawful means” to apply uniformly to the whole body of economic torts for the sake of clarity and doctrinal coherence.

Until then, this area remains mired in uncertainty.

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[1] [2013] SGCA 64, [2014] 1 SLR 860.

[2] Ibid at [112].

[3] [2008] UKHL 19, [2008] 1 AC 1174.

[4] [2005] SGCA 34, [2009] 3 SLR (R) 452 at [120].

[5] See The Monarch Beverage Company (Europe) Ltd v Kickapoo (Malaysia) Sdn Bhd [2009] SGHC 55; Nagase Singapore Pte Ltd [2007] SGHC 169, [2008] 1 SLR(R) 80; Clearlab SG Pte Ltd v Ting Chong Chai [2014] SGHC 221, [2015] 1 SLR 163.

[6] See Lee Pey Woan, "A Rare Case of Conspiracy by Lawful Means", Singapore Law Blog (25 December 2014) (http://www.singaporelawblog.sg/blog/article/72), in which Lee notes that in SH Cogent Logistics Pte Ltd v Singapore Agro Agricultural Pte Ltd [2014] SGHC 203, “possibly the first and only instance of lawful means conspiracy in Singapore”, the means employed by the defendants were “not, on closer examination, entirely lawful in nature”.

[7] [2007] UKHL 21, [2008] 1 AC 1.

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Cooperation and Concession: Whaling in the Antarctic (Australia v Japan: New Zealand Intervening)

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Cooperation and Concession: Whaling in the Antarctic (Australia v Japan: New Zealand Intervening)

Reuben Ong

PART I: INTRODUCTION

In its most recent judgment, the International Court of Justice (ICJ) ruled against Japan on the issue of whether its whaling program, JARPA II, complied with Art VIII of the International Convention for the Regulation of Whaling (ICRW). Interestingly, instead of subjecting JARPA II to an objective review based on the relevant international framework, the Court seemed content to focus on a standard of review based on Japan’s own self-conceived and conceded standards. Based on JARPA II’s own objectives, the Court then found inconsistencies between those objectives and key elements of JARPA II’s methodology; particularly, the usage of lethal sampling. This short commentary will briefly examine the merits of the Court’s focus on cooperation and concession, and will discuss whether this cautious approach is the best way forward.

PART II: CASE SUMMARY

Although commercial whaling has been banned ever since a 1982 moratorium adopted by the International Whaling Commission (IWC), Art VIII of the ICRW permits whaling for “purposes of scientific research”.¹ Under this veneer of compliance, Japan continued the harvest and distribution of whale meat for consumption under the auspices of its allegedly scientific whaling programs—JARPA and JARPA II. The controversial program continued into the 21st century, until 2010 where Australia formally instituted proceedings against Japan.

In argument, Australia submitted that JARPA II should be subjected to an objectively ascertained standard of scientific rigour. Japan countered that each nation reserved the right to issue whaling permits at its own discretion, and that any resolutions proposing an objective standard were at best recommendatory. Although the court agreed that the standard of “scientific purpose” cannot depend simply on each state’s perception,² it ultimately declined to define an objective standard, noting that “scientific research” is not defined in the ICRW.³ Instead, the Court based its review on JARPA II’s own stated research objectives. Ultimately, inconsistencies between its objectives, methodology and implementation led to the finding that the lethal sampling of whales under JARPA II was not reasonable in relation to achieving its objectives.⁴

PART III: DISCUSSION

The overall tenor of academic response to the decision has been rather subdued. Most were disappointed by what they perceived as the Court’s failure to enunciate a clear standard of scientific review. However, due consideration must be given to motives behind the Court’s rather cautious approach. By declining to give a definitive meaning to “scientific research”, the Court probably had an eye on acting de lege ferenda; amidst a sea of obligations both binding and non-binding, the Court was rightly wary of transforming mere recommendations into binding orders.⁵ In so doing, the Court deftly sidestepped the need to give a definition of a controversial and multifaceted term. Instead of imposing its own interpretation of an international framework on Japan, the Court based its decision on relatively uncontroversial benchmarks—JARPA II’s own stated research objectives, as well as legal obligations which Japan conceded it owed. Doling out equal parts justice and diplomacy, the Court astutely framed Japan’s obligation in terms of a duty to cooperate within a self-conceived and conceded standard of review.⁶

A growing willingness to defer to each state’s interpretation of what constitutes a scientifically rigorous research plan seems evident in the Court’s approach of ‘reasonableness’. Telesetsky, Anton and Koivurovac argue that the Court’s focus on ‘reasonableness’ shifted the burden of proof from Australia having to prove bad faith, to Japan needing to demonstrate that its methodology, design and implementation of JARPA II was reasonable.⁷

It has been further argued that the ‘reasonableness’ test formulated might be exported to other issues that are not necessarily scientific in nature.⁸ If this approach were adopted in a general manner, it would underscore the greater emphasis on cooperation and concession in the enforcement of international law.

PART IV: THE WAY FORWARD

The cautious approach undertaken by the Court has left questions as to its efficacy. A few months after JARPA II was shut down by the ICJ, Japan announced that its whaling program would be resurrected under a scaled-down program called NEWREP-A.⁹ A similar but smaller whaling program which Japan conducts in the North Pacific, JARPN, was not even the subject of argument during the proceedings, and will carry on unhindered.¹⁰ Conservationists may be forgiven for thinking that the decision confers no lasting legal protection on whales.

Be that as it may, the Court’s approach represents a win from a compliance perspective. Although NEWREP-A is a whaling program similar in many respects to JARPA II, Japan acknowledged the decision and stated that it would abide by it. NEWREP-A is only at the proposal stage, and Japan has made clear that it would consider the advice of the IWC’s Scientific Committee in ensuring that the program design complies with the spirit of the Australia v Japan decision.¹¹

In sum, the Court’s cautious approach based on cooperation and concession deserves credit where it is due. Although it does not go far enough to please hardline conservationists, it has nudged Japan in the direction of greater accountability. By confining its comments strictly to JARPA II, the Court succeeded in stopping JARPA II and programs of its scale, without foreclosing the possibility of smaller programs by Japan. The Court has thus once again showed its penchant for eschewing a winner-takes-all solution in favour of one which gives both parties something to take home.

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[1]  International Convention for the Regulation of Whaling, 2 December 1946, 161 UNTS 74, [1948] ATS 18.

[2] Case concerning Whaling in the Antarctic (Australia v Japan: New Zealand intervening), Judgment of 31 March 2014, online: International Court of Justice < http://www.icj-cij.org/docket/files/148/18136.pdf> [Whaling] at para 61.

[3] Ibid, at para 86.

[4] Ibid, at para 127.

[5] Erik Franckx, “The Legal Nature of Resolutions of Intergovernmental Organizations: The Contribution of the Whaling in the Antarctic Case” (Lecture delivered at the Japanese Society of International Law), at 9.

[6] Ibid, at 13.

[7] Anastasia Telesetsky, Donald K Anton & Timo Koivurova, “ICJ’s Decision in Australia v Japan: Giving up the Spear or Refining the Scientific Design?” (2014) 45:4 Ocean Development & International Law 328 at 336.

[8] Ibid.

[9] Japan, Ministry of Agriculture, Forestry and Fisheries, Proposed Research Plan for New Scientific Whale Research Program in the Antarctic Ocean (NEWREP-A) (Nov 2014).

[10] Jeffrey J Smith, “Evolving to Conservation?: The International Court’s Decision in the Australia/Japan Whaling Case” (2014) 45:4 Ocean Development & International Law, 301 at 303.

[11] Japan, Chief Cabinet Secretary, Statement by Chief Cabinet Secretary, the Government of Japan, on International Court of Justice “Whaling in the Antarctic (Australia v. Japan: New Zealand intervening)“, 31 March 2014, <http://www.mofa.go.jp/press/danwa/press2e_000002.html>.

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Successor Liability: Acquirers of Indian Businesses beware!

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Successor Liability: Acquirers of Indian Businesses Beware!

Harsh Kumar*

In India, the principle of successor liability typically applies in mergers of companies, transactions for the fraudulent purpose of escaping liability for the seller’s obligations, or situations where it is imposed by statute (for example, cases involving the breach of environmental law or certain labour laws.¹) However, the Indian Supreme Court has, in McLeod Russel India Limited v Regional Provident Fund Commissioner, Jalpaiguri and others², recognised the principle of successor liability in the case of a business transfer, for historical non-compliances by a seller in payment of provident fund (social security) dues.

BACKGROUND

McLeod Russel India Limited (“Acquirer”) acquired M/s Mathura Tea Estate (“Business”) from Saroda Tea Company Limited (“Seller”) pursuant to a Memorandum of Understanding (“MOU”). At the time of the acquisition of the Business, the Seller had an outstanding claim for provident fund payment to its employees under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952³ (“EPF Act”). The Acquirer discharged the provident fund dues of employees who were transferred to the Acquirer as part of the Business. However, the Acquirer sought to ring-fence its liability for damages on account of non-payment of the provident fund contributions. Accordingly, the MOU recorded the Seller as exclusively liable for the damages resulting from its failure to pay provident fund contributions to the employees of the Business, prior to the date of transfer of the Business.

In respect of proceedings before the Regional Provident Fund Commissioner (“RPFC”), the Acquirer sought to absolve itself from any liability for damages on the basis that historical non-compliances with the EPF Act were to the Seller’s account, as such non-compliances occurred prior to the date of transfer of the Business. Under section 17B of the EPF Act, an acquirer is jointly and severally liable with the seller for non-payment of provident fund dues prior to the date of transfer of an establishment or business. However, there prevailed divergent views amongst the various High Courts in India regarding an acquirer’s liability to pay for damages for past non-compliances with the EPF Act. Nonetheless, on a conjoint reading of the relevant sections of the EPF Act, the RPFC held that the Acquirer and the Seller were jointly and severally liable for damages for non-payment of provident fund dues prior to the date of transfer of the Business. Accordingly, the RPFC imposed a penalty on the Acquirer for its delay in depositing damages within the period stipulated by law.

The Acquirer challenged the decision of RPFC before a single-judge bench of the Kolkata High Court. The single-judge bench upheld the Acquirer’s appeal on the basis that no punitive liability could arise on the Acquirer, for historical non-compliances by the Seller, prior to the date of transfer of the Business. On a further appeal, the division bench of the Kolkata High Court reversed the order of the single-judge bench by relying on a previous judgment rendered by the division bench of the Kolkata High Court. Aggrieved by the judgment of the division bench, the Acquirer filed an appeal before the Supreme Court challenging that judgment.

SUPREME COURT'S VERDICT

The issue before the Supreme Court was whether the Acquirer was liable for the Seller’s non-compliance in paying provident fund dues. Based on a review of sections 14B and 17B of the EPF Act, the Supreme Court held as follows: (a) damages, on account of non-payment of the provident fund dues was a joint and several liability of the Acquirer and the Seller (regardless of the date of transfer of the Business), (b) transfer of the Business did not preclude an employee of the Business from initiating a case against the Acquirer and/or the Seller for recovery of his statutory dues; until an employee’s provident fund dues were paid, such dues would have the first charge over the assets of the Business in priority to all other debts of the Business, and (c) liability of the Acquirer for previous non-compliance by the Seller with the EPF Act could not be assigned or mitigated through any contractual arrangement. Per section 17B of the EPF Act, the Acquirer’s liability extended up to the value of the assets acquired by it.

IMPLICATIONS OF THE JUDGMENT

The Supreme Court has clarified that, in the case of a transfer of a business or establishment, in respect of which provident fund dues are pending, the seller and the acquirer will be jointly and severally liable to pay not only the pending provident fund amount but also damages, if any, imposed by the government authorities. It is now imperative for an acquirer to undertake a detailed diligence on the status of provident fund payments by a company or establishment, otherwise it may have to shoulder all pre-closing provident fund liabilities.

From a transactional perspective, acquirers of a business should consider an escrow to appropriately ring-fence their liability for provident fund dues of a company or establishment. If an escrow is not commercially feasible, then acquirers may consider adjusting the valuation for the business, or seeking a specific indemnity from the seller for liabilities not expressly assumed by the acquirers. An insurance cover may also be obtained to appropriately safeguard against pre-closing liabilities. These safeguards and the manner in which parties will bear associated costs for implementing these safeguards should be negotiated with the seller while finalising the business purchase agreement.

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*Mr Harsh Kumar is Associate Partner in the Corporate (M&A and Private Equity Team) at Khaitan & Co, New Delhi. The Singapore Law Review would like to thank Mr Kumar for his contribution to Juris Illuminae.

[1] Please see Central Inland Water Transport Corporation. Ltd. v Workmen (1975) SCC 348, (1975) Supp. SCR 4434, and Anakapalla Cooperative Agricultural and Industrial Society Ltd. v Workmen (1963) Supp.1 SCR 730, where the Supreme Court set out the factors that ought to be taken into consideration before determining whether a transferee was a successor-in-interest of the transferor in respect of a business carried on in an establishment transferred to the transferee. 

[2] 2014 (8) SCALE 272.

[3] (19 of 1952).

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Downstream Investments in India

Downstream Investments in India

Akshata Srinath

Foreign investment coming into India comprises of both direct and indirect investments. These investments are from non-residents and resident Indian entities. A Downstream Investment¹ means such investment which is indirect foreign investment by one Indian company into another Indian Company by acquisition of shares and way of subscription. The framework until 2009 depended upon the press release by the DIPP wherein prior permission was required to be taken from Foreign Investment Promotion Board (“FIPB”) or any other concerned authority. The complication further arose when there were investments made by foreign owned Indian holding companies where not only the prior permission was required, but pre-requisite conditions were to be fulfilled, which included to keep checks on the foreign equity levels and the time period to keep track of the transfer.² To understand such investment structure, it is important to analyse the key issues involved wherein before due diligence initiates all the parties to the transaction need to understand the investment structure along with the other approvals required from the relevant authorities.

A Core Investment Companies (“CICs”) also known as a ‘shell company’ is the company which only exists in India for the purposes of investment in other Indian companies.³ A foreign owned Indian company which is a CIC requires to fulfillment of the conditions of the regulations framed by the Reserve Bank of India (“RBI”). CICs, as per the law, needs to be registered with the RBI and they need to obtain a Certificate of Registration. It is to be noted that neither the amount being invested nor the ownership or the control of the CICs is significant for acquiring the approvals. Furthermore, when such downstream investments are made through such companies, it will need to comply with other subsequent and relevant conditions on entry route, other caps and conditions. Also while allowing such foreign investments to come in India. FIPB approval along with the RBI approval is required.⁴ Furthermore, the guidelines also bring out the procedure for the calculation of foreign investment in Indian Companies, transfer of ownership and control of Indian Companies along with the downstream investment of the Indian Companies.

Consequently, after seeing into the foreign investment rules and regulation, it can be indicated that even if a company tries to bring in investment in India without any approval by the relevant authorities, the foreign owned Indian company needs to make a report/disclosure to the RBI at the end of the financial year, declaring the utilization of the said investment made. Moreover, for the purpose of downstream investment, the Indian companies making the downstream investments would have to bring in requisite funds from abroad. As the new policy steps in, funds from the domestic market cannot be used. However this does not preclude downstream operating companies, from raising debt in the domestic market. Downstream investments through internal accruals are permissible by an Indian company, subject to the provisions of clause 6⁵ which proposes a suitable regulatory framework for the CICs to comply with the registration process with the RBI. The RBI has also made further clarification on when a downstream investment is made by an Indian company which is not owned and controlled by residents into another Indian company, this investment will be subjected to the sectoral norms on entry route, conditions and caps applicable to the sector in which latter company operates.⁶

When downstream investments are made by a CIC which is owned and controlled by a non resident entity, further notification needs to be made to the Department of Industrial Policy & Promotion (“DIPP”) and Secretariat for Industrial Assistance (“SIA”) along with FIPB and RBI.⁷ Also issue, transfer pricing and valuation of shares should be in accordance with the Securities and Exchange Board of India (“SEBI”).⁸ The Indian company needs to comply with the provisions of the Companies Act 1956 like investments by the way of induction of foreign equity needs to be backed up by a resolution of the Board of Directors and a shareholders’ agreement.⁹

Therefore, the parties before the commencement of the process of due diligence, should clarify any concerns with respect to the above mentioned laws, the suitability of the investment structure to bring in foreign investments in the company, clarity on whether certain approvals are applicable to them or not.

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[1] The term ‘Downstream Investment’, is widely used in practice but it is not specifically defined. It only came into definition by the Press Note 4 [2009 Series] issued by the Department of Industrial Policy & Promotion, Government of India (DIPP) as indirect foreign investment by one Indian company into another Indian company by way of subscription or acquisition in terms of Press Note 2 of 2009.

[2] “Press Note No. 9 (1999 Series)” Government of India, online: <http://dipp.gov.in/English/acts_rules/Press_Notes/press9_99.htm>.

[3] “Master Circular– Regulatory Framework for Core Investment Companies (CICs)” Reserve Bank of India, online: <http://www.rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx?id=7391>. It has to be understood that any such method in which investments enter in India, need approval from the RBI which includes declaration of the amount of investment coming into the company.

[4] “Foreign Investment in India – Guidelines for calculation of total foreign investment in Indian companies, transfer of ownership and control of Indian companies and downstream investment by Indian companies” Reserve Bank of India, online: <http://rbidocs.rbi.org.in/rdocs/Notification/PDFs/01APDIR040713.pdf>.

[5] “Regulatory Framework for Core Investment Companies (CICs)” Reserve Bank of India, online: <http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=5944&Mode=0>.

[6] Supra note 4.

[7] “Consolidated FDI Policy” Government of India (5 April 2013) online: <http://dipp.nic.in/English/Policies/FDI_Circular_01_2013.pdf>, “Press Note No. 6 (2013 Series)” Government of India online: <http://dipp.nic.in/English/acts_rules/Press_Notes/pn6_2013.pdf>.

[8] “Foreign Investments in India” Reserve Bank of India, online: <http://www.rbi.org.in/commonman/English/scripts/faqs.aspx?id=15>.

[9] Indian Companies Act, 1956, Act No. 1, s 31, s 40, and s 94 (1)

Consent in the context of rape: a discussion

Consent in the Context of Rape: A Discussion

Ng Teng Wei

INTRODUCTION

In R. (F) v Director of Public Prosecutions,¹ the English High Court examined the issue of consent in a case of rape. The case was an application for judicial review by the claimant against the Director of Public Prosecutions’ refusal to prosecute the intervener for rape and/or sexual assault.

THE UK DECISION

In R. (F) v Director of Public Prosecutions,² the claimant had suffered from an abusive relationship with her former partner, with whom she had been in an Islamic marriage with, though they had never lived together. The proceedings came about after the claimant had agreed to sexual intercourse with the intervener with the condition that the intervener would not ejaculate into the claimant’s vagina. The intervener, however, ejaculated inside the claimant. The claimant subsequently made a police report, but the Director of Public Prosecutions decided not to prosecute. Hence, the claimant claimed judicial review of the refusal to prosecute.

The Lord Chief Justice, delivering the judgment, first considered the case of Assange v Swedish Prosecution Authority ³ [Assange], where the accused, while knowing that the victim’s prerequisite to consent to sexual intercourse was for the accused to wear a condom, consummated unprotected sexual intercourse with the victim. In Assange, the English High Court held that:

“if [the victim] had made clear that she would only consent to sexual intercourse if Mr Assange used a condom, then there would be no consent if, without her consent, he did not use a condom, or removed or tore the condom without her consent. His conduct in having sexual intercourse without a condom in circumstances where she had made clear she would only have sexual intercourse if he used a condom would therefore amount to an offence under the Sexual Offences Act 2003, whatever the position may have been prior to that Act.”⁴

The Lord Chief Justice then noted that ejaculation is irrelevant to the definition of rape under Section 1(1) of the Sexual Offences Act 2003,⁵ but that ejaculation may be an aggravating factor in sentencing.⁶ The Lord Chief Justice then noted the ‘choice’ is crucial to the definition of consent in Section 74 of the Sexual Offences Act 2003, ⁷ and concluded that:

“[i]f before penetration began the intervener had made up his mind that he would penetrate and ejaculate within the claimant’s vagina, or even, because “penetration is a continuing act from entry to withdrawal” (see s.79(2) of the 2003 Act) he decided that he would not withdraw at all, just because he deemed the claimant subservient to his control, she was deprived of choice relating to the crucial feature on which her original consent to sexual intercourse was based. Accordingly her consent was negated. Contrary to her wishes, and knowing that she would not have consented, and did not consent to penetration or the continuation of penetration if she had any inkling of his intention, he deliberately ejaculated within her vagina. In law, this combination of circumstances falls within the statutory definition of rape.” ⁸

THE LAW

The English High Court had basically laid down 3 rules for the law of consent in sexual offences:

1. If there are preconditions to sexual intercourse, default of a precondition before or at the point of penetration would amount to a withdrawal of consent to sexual intercourse. (The principle as laid out in Assange.)
2. Accidental default of a precondition to sexual intercourse would not negate consent.
3. Penetration with the intention of defaulting a precondition to sexual intercourse, with the defaulting of that precondition occurring during or after penetration, would negate consent. (Note that it is unclear whether the consent is withdrawn at the point of such formation of intention, or whether consent is withdrawn at the point of the default of the precondition, or whether consent is retrospectively negated ab initio after the occurrence of the default of the precondition. Whether or not this matters is unclear.)

These three rules reflect this idea of “conditional consent”. The underlying principle behind these three rules is that the freedom of choice of both parties has to be respected. ⁹ When a party is robbed of free choice, then sexual penetration would be regarded as rape.

THE LAW IN SINGAPORE

In Singapore, there is no statutory definition of consent, though Section 90 of the Penal Code ¹⁰ does indicate situations where consent is vitiated. However, in Public Prosecutor v Iryan bin Abdul Karim ¹¹ [Iryan], the Singapore High Court adopted the definition in Ratanlal & Dhirajlal’s Law of Crimes: A Commentary on the Indian Penal Code 1860, Vol 2 ¹² that:

“[c]onsent on the part of a woman, as a defence to an allegation of rape, requires voluntary participation, not only after the exercise of intelligence, based on the knowledge of the significance and the moral quality of the act, but after having freely exercised a choice between resistance and assent… Consent implies the exercise of free and untrammelled right to forbid or withhold what is being consented to (emphasis mine); it is always a voluntary and conscious acceptance of what is proposed to be done by another and concurred in by the former.” ¹³

This definition places emphasis on free choice, similar to s74 of the UK Sexual Offences Act 2003.¹⁴ Hence, it is likely that Singapore would adopt a similar stance to that of the UK High Court if a similar case were to be pleaded before the Singapore Courts.

However, there are some points that require clarification with regards to the law of consent in this regard.

A. Consent to What?

Firstly, what is the focus of the law of consent in a case of rape? Where consent has been given for penetration, though there is forbiddance of internal ejaculation, does the law of consent consider merely whether there was consent to sexual penetration, or is it much more than that? Section 375(1) of the Penal Code ¹⁵ states:

“Rape

375 —(1) Any man who penetrates the vagina of a woman with his penis —

(a) without her consent; or

(b) with or without her consent, when she is under 14 years of age,

shall be guilty of an offence.” ¹⁶

This statute alone suggests that consent here refers to consent to sexual penetration alone. However, when read with the definition of consent in Iryan,¹⁷ it becomes clear that the express forbiddance to internal ejaculation must not be regarded separately from the consent to penetration, as the express forbiddance is part of the “freely exercised choice” to the assent to penetration and disregard for the forbiddance would amount to robbing the party of the freedom “to forbid or withhold what is being consented to”. Thus, the ruling in R. (F) v Director of Public Prosecutions ¹⁸ would appear to agree with that in Iryan.¹⁹ Nevertheless, it is to be noted that the Court of Appeal of Singapore has yet to endorse the Iryan ²⁰ definition of consent, and it may yet reduce uncertainty if we were to include this definition in the Penal Code.²¹

B. Limits to Conditional Consent

Secondly, should there be a limit to the types of conditions which when in default would negate consent? Whilst the preconditions of using protection before penetration or requiring withdrawal pre-ejaculation should be awarded protection, what about other preconditions?

Consider the situation where a woman insists that the man must make a certain amount of cash before she would agree to intercourse. If the man lies, and sexual intercourse occurs, would consent have been negated such that the man has committed rape?²² Despite the immorality of such a lie, should the man be branded a rapist and be incarcerated?

Former Barrister Laura Perrins believes that “the criminal justice system – the greatest weapon in the State’s hand when condemning a citizen’s behaviour – should be slow to fill the vacuum left by a collapse in moral standards. Dr Jonathan Rogers, senior lecturer of laws at University College London, says: “I wouldn’t go so far as to say that there is no possible place for conditional consent, but we could certainly get by without using it.”²³ Clearly there must be a line drawn when it comes to the type of pre-specified conditions which, in default, would negate consent. The English High Court did not test the boundaries of conditional consent, and this doctrine is yet untested in Singapore, though this could further muddy the waters in the difficult doctrine of consent. Yet, it may be that conditional consent, in light of R. (F) v Director of Public Prosecutions,²⁴ would be a necessary tool in delineating whether consent had been given.

CONCLUSION

The doctrine of consent has always been difficult to grasp and delineate. However, this writer would agree that the ruling in R. (F) v Director of Public Prosecutions ²⁵ is correct, though the court could afford to further explore the limits and boundaries of conditional consent.

It is interesting to note that this case has been hyped up by the media, proclaiming that there can be rape even when there is consent.²⁶ This is not really true, as the consent is negated when the preconditions are not met, and thus there is no longer any valid consent to begin with. In reality though, behind all the fuss, let us all not forget that it is actually very simple. As Ally Fog puts it, “[i]f you do something to someone’s intimate bits (or with your intimate bits) which you know s/he has not consented to or is unable to consent to at that moment, you are committing an act of sexual assault or rape.” ²⁷ There, it is as simple as that.

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[1] [2013] 2 Cr. App. R. 21.

[2] Ibid.

[3] [2011] EWHC 2849.

[4] Ibid at [86].

[5] 2003 c 42 (UK).

[6] Supra note 1 at [21].

[7] Supra note 4.

[8] Supra note 1 at [26].

[9] Ibid.

[10] Penal Code (Cap 224, 2008 Rev Ed Sing).

[11] [2010] 2 SLR 15.

[12] Ratanlal and Dhirajlal, Ratanlal & Dhirajlal’s Law of Crimes: A Commentary on the Indian Penal Code 1860, Vol 2 (Bharat Law House, 26th Ed, 2007).

[13] Ibid at p 2061.

[14] Supra note 4.

[15] Supra note 8.

[16] Supra note 8, s 375(1).

[17] Supra note 9.

[18] Supra note 1.

[19] Supra note 9.

[20] Supra note 9.

[21] Supra note 8.

[22] Consider also the scenario of the alleged karate champion as mentioned by Nicholas J. McBride, Fellow, Pembroke College, Cambridge, on the first page of his article. Nicholas J. McBride, “Rape and Consent” <http://mcbridesguides.files.wordpress.com/2012/08/mcbride-rape-and-consent.pdf>, p 1.

[23] Laura Perrins, ” Did you know the legal definition of rape and ‘consent’ is changing? Here’s how” The Telegraph (19 September 2013), online: The Telegraph <http://www.telegraph.co.uk/women/womens-life/10319902/Did-you-know-the-legal-definition-of-rape-and-consent-is-changing-Heres-how.html>.

[24] Supra note 1.

[25] Supra note 1.

[26] “Sex consent could lead to rape charge, judges say” BBC News UK (24 April 2013), online: BBC <http://www.bbc.co.uk/news/uk-22281457>; “Sex with consent ‘can still be rape'” Metro News (24 April 2013), online: Metro <http://metro.co.uk/2013/04/24/sex-with-consent-can-still-be-rape-3665975>.

[27] Ally Fog, “Consensual sex and rape – it’s really very simple” The Independent Voices (25 April 2013), online: The Independent <http://www.independent.co.uk/voices/comment/consensual-sex-and-rape–its-really-very-simple-8588287.html>.

Powerful to build, powerless to defend

Powerful to Build, Powerless to Defend

Lim Wei Zheng

The silent builders of our home and economy have begun to vocalize their thoughts. The landmark SMRT Bus workers strike¹ raised a few eyebrows, but raised more questions – as does the increase in migrant workers falling to their deaths². What have they fallen into? What systemic pit have we built for these workers?

Their hands have painstakingly built the hardware and software of our country. Yet, these who are powerful to build and man the social frameworks of our society, are powerless to defend themselves against the socio-legal labyrinth they find themselves trapped in. The recent spate of workmen accidents and exploitation suggests that the element of control may undermine the freedom of contract in terms of the formation and enforcement of contract. The control imbalance between the employers and migrant workers severely skews the bargaining power workers have in negotiating and enforcing the terms of their contract.

This warrants first an examination of the control disparity between employers and migrant workers, and how this disparity is more pronounced for migrant as opposed to local workers. This will be followed by a discussion of the non-contractual remedies available in tort and statute. The impact of this control imbalance on the formation and enforcement of the contract, as well as the remedies available to the workers will then be examined. It is submitted that the private law system, in theory, does have legal recourse available to these workers, but the realities of control and evidentiary burdens render these unavailable. Instead, policy should work to equalize the disparity through imposition of legislative frameworks.

Indeed, locals and migrant workers may be subject to the same employers, but what is it exactly about these migrant workers that make them exceptionally vulnerable, as opposed to local employees? Beyond their unfamiliarity with our language and legal system, the answer lies in what these workers left behind – their homes. A nagging threat preventing transient workers from raising or enforcing legal claims they have would be the threat of repatriation – a threat that lacks the same force for local employees. Workers stand to lose too much in the face of repatriation – they have invested too much in the journey here that they would stand to lose much financially and emotionally were they to return empty handed. Too many shackles chain transient workers to their jobs in Singapore – even before they touch down at our sunny shores. Placement and agent fees leave them with debts³ that must be repaid before they may return home. Delays in payment of wages force them to remain in Singapore to pursue their claim. Arbitrary deductions for sick leave, informal saving schemes and rent compel them to work overtime to earn back what was lost⁴. The threat of repatriation is a very real one, as it prevents workers from pursuing any claims they have against their agents and employers⁵. Besides threatening their financial position, repatriation threatens their social status back home, due to the shame of returning as “failed migrants”, particularly for male migrant workers⁶. The threat is accentuated by the ease with which repatriation can be done legally or illegally. Legal means allow employers to unilaterally cancel or refuse to renew work permits⁷, rendering what was legal today, an illegal overstaying tomorrow. Alternatively, employers may enlist the services of repatriation officers, to forcefully repatriate⁸ workers who are unwanted, or to cause workers to disappear before their case may be heard before the courts⁹. This control imbalance, where workers have a compelling reason to stay in Singapore, but employers have the power to make them leave before their time is up, causes employers to have a stronghold over more than the workers’ pay – but also the workers’ safety.

This control imbalance has the power to exacerbate the workers’ physical, mental and economical safety. Repatriation in itself involves the tortious offences of battery; assault and false imprisonment, which threaten both the worker’s physical and mental safety. The motive behind forceful repatriation seeks to deny the worker his rightful claim to his due wages, threatening the worker’s financial safety. While in theory, workers may try seeking legal recourse by calling the police before filing criminal or civil claims¹⁰, in practice, repatriation companies are viewed as a legal means of safeguarding the employers’ security bond¹¹, and thus enforcement agencies may be reluctant to intervene.

Beyond actual forceful repatriation, which may be a reality for a number of workers, the control imbalance caused by the threat of forceful repatriation further threatens the safety of many, when safety regulations imposed by statute¹² go unenforced due to the threat. While in practice employers have an onerous, direct and non-delegable duty to ensure workers safety by imposing a safe system of work¹³ in statute and under common law, the control imbalance lends them license to not enforce such precautions, especially if it would save costs and time. Unfortunately, it does not save lives¹⁴. Definitely, not every employer is guilty of flouting such safety rules, but enough are, to pose a threat to the lives of the workers who pass through their hands¹⁵. In certain instances, threats of repatriation may even suffice to cease protests¹⁶ against commands to flout safety regulations¹⁷.

This problem is heightened when the flouting of safety regulations actually results in accidents. Under the Work Injury Compensation Act¹⁸, compensation seems to be a simple matter in that the claimant simply has to suffer from the respective afflictions. However, it is a complex issue in reality, where a heavy evidentiary burden lies upon the worker to prove the injury, as there are no formalized systems of documenting proof. There is no standardized procedure across the medical profession as a whole as to collecting testimonial evidence concerning the worker’s injury. For instance, there are no guidelines stipulating that both the workers and employers’ account of the accident should be noted down. It is understandable that in a large percentage of cases, doctors would prefer to hear an account of the accident from primarily the employers, as there is a smaller language barrier to surmount. Further, where concrete evidence such as closed-circuit television footage of the accident is available, they usually lie in the hands of employers, who can choose not to hand it over. The lack of formalized systems to help workers formally document proof, lend workers no avail when employers counter-claim that the employee’s injury was not work-related¹⁹.

Beyond legal recourse in criminal, statutory and tort law, workers theoretically have recourse in contract law. Firstly, regarding arbitrary deductions from the sum the worker is entitled to; employers are not allowed to unilaterally change the terms of the contract unless the other contracting party agrees. However, due to the control imbalance, most are afraid to persist in challenging such deductions, when they are unfamiliar with the Singapore’s legal system, and the threat of being sent home without receiving any pay looms overhead.

Secondly, contract law does not satisfactorily provide a resolution to the problem of salary delays. While salary delays are a breach of the terms of a contract, these salary delays are not conditions, as the time of payment will not be deemed as a condition in common law²⁰. As these delays are not deemed as a breach of a contractual condition, this does not entitle the worker to the common law right to termination of the contract – which might be the next best remedy available to the worker after a long period of salary delay. The right to terminate would allow the worker to cut his losses when the employer clearly has no money to pay or will not pay the worker his salary, which would render the common law right to damages or sue for contract price a hollow one.

Thirdly, while salary delays are not breaches of contractual conditions, the Employment Act²¹ does stipulate that salaries must be paid within seven days of the agreed date of payment²², and that over time pay must be paid within fourteen days of the last salary period²³. Thus, the law allows a form of settlement for wage disputes via the Ministry of Manpower (“MOM”) caseworkers and the Labour Court. However, in practice, while MOM has succeeded in helping workers receive their unpaid salaries, in most cases, where the employers themselves are penniless, the workers are still unable to recoup their losses²⁴.

Fourthly, these salary disputes may arise out of duplicate contracts and documents, where different terms are incorporated into legal documents, which purport to be the same. For instance, in their home countries, workers sign documents which may be in their own native tongue, but when they reach their destination country of Singapore, they sign the same document in English. While the terms profess to be the same, in reality, due to the language barrier, the workers are unable to do their due diligence to ensure the contractual terms are the same. Further, the control imbalance raises questions of the equality of bargaining power between the employers and migrant workers. Having already paid their agent fees and airfares, any legal recourse available in the doctrines of mistake, misrepresentation or duress, upon discovery of the differences in terms of contract in Singapore, would be too little, too late. The differences in equality of bargaining power further undermine the true nature of the freedom of the migrant worker to contract on his terms. While local workers may lack freedom to negotiate the terms of our contracts, the ability of locals to wait out legal claims and easily switch employers without being encumbered by work permits provides local workers with a very real means of enforcing the terms of their contracts in the event of breach.

In sum, these salary delays, non-payment of medical compensation for work accidents and deductions do plague a good number of the low-skilled and semi-skilled migrant workers in Singapore. The question then is what form of legal recourse does statute or the private law system afford them and to what extent are these effective in light of the control imbalance? The answer, while dismal, offers some hope. Practically speaking, the control imbalance and the very real threat of repatriation pose a high barrier to successfully enforcing and proving any legal claims that workers have. However, the sound theoretical legal doctrines bring hope in that there are legal avenues to tackle each problem, and bring optimism that slight systemic changes may be able to address problems posed by the control imbalance.

Policy should be two-pronged: aimed at both reducing the threat of repatriation, and easing the evidentiary burden on migrant workers. Regarding the former, the Singapore Court of Appeal has been open to employers footing the travel expenses of their workers when their workers return to Singapore to pursue their claim²⁵. This brings hope that the threat of repatriation will be eased in time, where workers need not fear being repatriated because they can return to Singapore for their case to be heard even after their Special Passes or Work Permits expire, as their employers will be responsible for their expenses. Systemic changes in the form of allowing workers to pursue their claims from their home countries, rather than Singapore, would be helpful in reducing the legal sting of the threat of repatriation. Regarding the latter, compulsory issuance of pay slips²⁶, and streamlining the statement-recording procedures for doctors, will help reduce the level of evidentiary burden placed on workers in trying to prove the validity of their claims.

Clearly, a balance between fairness and certainty must be struck both in theory and in practice. The day where sound theoretical checks against the abuse of control imbalances can be enforced in reality is one where perhaps, these silent builders will truly be legally empowered to defend themselves fully.

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[1] Fann Sim, “Singapore bus driver strike makes world news”, Yahoo! News (30 November 2012), online: <http://sg.news.yahoo.com/singapore-bus-driver-strike-makes-world-news-104247497.html>.

[2] Teckwah Tan, “Singapore’s Maids: No Respite?”, The Diplomat (05 August 2013), online: <http://thediplomat.com/2013/08/singapores-maids-no-respite/>.

[3] Kirstan Han, “Singapore’s Exploited Immigrant Workers”, The Daily Beast (11 August 2013), online: <http://www.thedailybeast.com/articles/2013/11/08/singapore-s-exploited-immigrant-workers.html>.

[4]“Debts, Delays, Deductions: Wage Issues Faced by Foreign Domestic Workers in Singapore”, Transient Workers Count Too (24 May 2009), online: <http://twc2.org.sg/2009/05/24/debt-delays-deductions-wage-issues-faced-by-foreign-domestic-workers-in-singapore/>.

[5] Fann Sim, “Chinese Worker Rescued from Being Repatriated by Employer” YahooNews – Singapore Scene (21 December 2012), online: <http://news.yahoo.com/blogs/singaporescene/chinese-worker-rescued-being-repatriated-employer-024508057.html>.

[6] Sallie Yea, “Troubled Waters: Trafficking of Filipino Men into the Long Haul Fishing Industry through Singapore” (2012) at 56. Online: Transient Workers Count Too <http://twc2.org.sg/wp-content/uploads/2013/01/Troubled_waters_sallie_yea.pdf>.

[7] Ministry of Manpower, Work Permit (Foreign Worker) Cancellation and Renewal, online: MOM

<http://www.mom.gov.sg/foreign-manpower/passes-visas/work-permit-fw/cancelation-renewal/Pages/pass-cancellation.aspx>.

[8] Philip Lim, “Missing Migrant Workers Hunted Down in Singapore”, The Jakarta Globe (3 August 2011), online: <http://www.thejakartaglobe.com/archive/missing-migrant-workers-hunted-down-in-singapore/>.

[9]Repatriation Companies – Manpower Minister’s Response Belittles the Efforts of Migrant Workers, Jolovan Wham, (30 November 2011), online: <http://www.theonlinecitizen.com/2011/11/repartriation-companies-manpower-ministers-response-belittles-the-efforts-of-migrant-workers/>.

[10] Ibid.

[11] Ibid.

[12] Workplace Safety and Health Act (Cap 354A, 2009 Rev Ed Sing).

[13] Chandran a/l Subbiah v Dockers Marine Pte Ltd [2010] 1 SLR 786; [2009] SGCA 58.

[14] Fiona Low, “More Workers in Singapore Falling to Their Deaths”, The Straits Times (4 November 2011), online: The Jakarta Post <http://www.thejakartapost.com/news/2011/11/04/more-workers-singapore-falling-their-deaths.html>.

[15] “Workplace Injuries, ill health ‘cost billions’”, TodayOnline (31 July 2013), online: <http://www.todayonline.com/singapore/workplace-injuries-ill-health-cost-billions>.

[16] Lim Wei Zhen, “Workers Told to Ignore Max Carrying Load Per Man Suffer Injury”, Transient Workers Count Too (19 August 2013), online: <http://twc2.org.sg/2013/08/19/workers-told-to-ignore-max-carrying-load-per-man-suffer-injury/>.

[17] Arjun Naidu, “Worker May Need Operation for Back Injury, Employer Wants to Send him Home”, Transient Workers Count Too (5 August 2012), online: <http://twc2.org.sg/2012/08/05/worker-may-need-operation-for-back-injury-employer-wants-to-send-him-home/>.

[18] (Cap 354, 2009 Rev Ed Sing).

[19] “Who Said What to the Doctor”, Transient Workers Count Too (6 December 2013), online: <http://twc2.org.sg/2013/12/06/who-said-what-to-the-doctor/>.

[20] Man Financial (S) Pte Ltd (formerly known as E D & F Man International (S) Pte Ltd) v Wong Bark Chuan David [2008] 1 SLR 663; [2007] SGCA 53.

[21] Employment Act (Cap 91, 2009 Rev Ed Sing).

[22] Ibid, s 21(1).

[23] Ibid, s 21(2).

[24] Andrew Loh, “Construction Workers in Yishun Demand Pay, Refuse to Work”, Yahoo (18 December 2012) online: <http://news.yahoo.com/blogs/singaporescene/construction-workers-yishun-demand-pay-refuse-063411977.html>.

[25] Selina Lum, “Insurer Rebuked for Wasting the Court’s Time”, Asiaone (30 November 2013), online: <http://news.asiaone.com/news/singapore/insurer-rebuked-wasting-courts-time>.

[26] Rachel Chang, Joanna Seow and Robin Chan, “Move for Compulsory Payslips Deferred”, Asiaone (15 November 2013), online: <http://business.asiaone.com/news/move-compulsory-payslips-deferred>.

Protection of personal data in Singapore and Brazil—A general comparison

Protection of Personal Data in Singapore and Brazil — A General Comparison

Renato Leite Monteiro*

Data protection is current a trend topic on world politics, in both the media and society in general. The issue is far from new, but since Edward Snowden² released information about a secret worldwide surveillance program performed by the United States of America National Security Agency on electronic communications over the Internet, news pops up almost every day revealing that not only common US and foreign citizens³, but also head-of-states⁴, have had their communications monitored.

These revelations by Mr Snowden exposed a surveillance program that included tapping the Brazilian President. Such an act led the head-of-state to address the situation in her opening speech at the United Nations General Assembly of 2013⁵, highlighting that “tampering in such a manner in the affairs of other countries is a breach of international law and an affront to the principles that must guide relations among them”. It also led to cancelling an official visit to the United States, under the reasoning that “interception practices of communication and citizens’ data, companies and members of the Brazilian government are a grave fact, a threat to national sovereignty and individual rights, and incompatible with the democratic cooperation between friendly nations"⁶.

In a time when the amount of electronic data produced everyday surpasses the amount of regular data produced by the entire human civilization since its dawn⁷, several countries have yet to regulate how data which flows through its infrastructure should be processed and treated. Europe has been legislating about it for more than thirty years⁸. The United States has only sectorial laws⁹, regarding, e.g., health records or tax data. Although Brazil has statutory provisions in its constitution guaranteeing the right to privacy¹⁰, it still does not have a comprehensive protection to personal data. Rather, it only has a brief overview of the issue in its consumer code and also in specific regulations, such as medical records.¹¹ Singapore has recently introduced the Personal Data Protection Act [PDPA] ¹², which encompasses certain particularities when compared to similar provisions from other regions of the world.

As opposed to Brazil and the European signatory countries, Singapore does not provide to its citizens a statutory right to privacy, instead relying more on the tort remedy of breach of confidence to enforce such a claim.¹³ Confirming the theory that “privacy” and “data protection” are two different concepts¹⁴, the word “privacy” is absent from Singapore’s Data Protection Act.¹⁵ The Act focuses on information management; and the economic, commercial and competitive advantages of having clear rules on how the industry based in Singapore ought to process personal data.¹⁶ A culmination of years of discussion and comments¹⁷, Singapore’s act comprises a concept of personal data¹⁸, but does not differentiate it from sensitive data.¹⁹ Its main advantages are the rules on collection, use and disclosure of personal data, setting forth the need of actual or deemed consent from the individual to perform those acts.²⁰ Consent can be withdraw at any moment²¹ and deemed consent is limited to situations when the individual voluntarily provides the personal data or there are reasons to believe that such data would be provided.²² Also, the individual must be informed as to the purpose his information is being collected²³, and its use must be limited to such purpose.²⁴ But there are exceptions to the need of consent, such as emergencies, legal services and newsworthiness.²⁵ It created a Data Protection Authority (“DPA”)²⁶, responsible for the enforcement of the act. In case of a violation, the authority can fix said offenders with penalties up to $1 million, amongst other measures.²⁷

It is important to note that the PDPA left out major provisions present not only on the Brazilian Bill on the Protection of Personal Data, but in several other legislations. The PDPA does not provide, when dealing with trans-border transfers, the need for the foreign country to apply the same level of protection to personal data as Singapore. Rather, it only requires the same standard of protection.²⁸ Also, it has not implemented a data breach notification system, setting pace on the opposite direction of countries with a very liberal approach to data protection.²⁹ Another interesting provision that confirms that the approach of the act is to enhance Singapore’s economy, and not primarily protect the privacy of its citizens, is that data processed by government institutions do not need to follow the PDPA’s requirements³⁰. Data breach obligations have been one of the most effective measures mandated by data protection legislations³¹, since data processors, data controllers and intermediaries are required to notify not only the DPAs, but also the individuals whose personal data have been breached. Up to this date publicizing data breaches has not been a regular practice of private organizations and governments, that fear liability and – more important – bad publicity that can lead to direct repercussions on businesses.³²

As for Brazil, the country has been openly discussing Internet regulation³³. Recently, a law was approved (“cybercrime bill”) amending its criminal code to include certain acts performed through electronic means and over the Internet³⁴. Concurrently, a civil legislative framework is under debate.³⁵ This bill will encompass questions such as Internet Service Providers’ (“ISP”) liability for third-party content, network neutrality and set time limits to ISPs’ storage of Internet users’ connection data. But this framework does not directly addresses the issue of protection of personal data. For this a different bill has been introduced.³⁶ Due to the recent set of events involving privacy and data breaches of Brazilian citizens, both provisions that were on hold have been urgently brought into force.³⁷

The Brazilian Bill³⁸ on the Protection of Personal Data is based on the European Directives on Data Protection³⁹ and on the Canadian Data Protection Act [PIPEDA].⁴⁰ It guarantees a list of citizens’ basic rights regarding their personal data: the right to (i) access one’s data; (ii) correct inaccurate or wrong data; (iii) delete them; (iv) object to their processing; (v) not be subject to purely automated decisions; and (iv) be compensated for the misuse of one’s personal data.⁴¹

Similar to the European provisions, and different from the Singapore’s PDPA⁴², the bill sets forth that personal data can only be transferred to countries that guarantee the same level of protection.⁴³ The DPA, the institution created to overview the enforcement of the act, will pronounce the acknowledgement of the same level of protection.⁴⁴ It mandates a data breach notification regime;⁴⁵ differentiates between personal data and sensitive data;⁴⁶ and furthermore, it expands its application not only to private organizations, but also to governmental institutions of all levels.⁴⁷ The bill even determines strict liability to data processors in case of data breaches.⁴⁸

Therefore, both legislative provisions, Singaporean and Brazilian, aim on setting clear rules to the processing of personal data over electronic infrastructures in their territory. This is a clear reaction to digital era in which the world is currently inserted. But the laws are founded on different perspectives. Singapore’s PDPA is based on economic goals. Brazil’s bill is based on the country’s long lasting history of statutory recognition of the right to privacy.⁴⁹ Which is more important depends on the different approaches given by interpreters. But it is important to bear in mind the current state of international politics due to the recent data breaches scandals.⁵⁰ Nonetheless, both countries may end up achieving the same objective, which is to protect the personal data of its citizens.

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[1] New York University LL.M. Candidate in Global Business Law, National University of Singapore LL.M. Candidate in Intellectual Property and Technology Law, Singapore Law Review Editor.

[2] The Guardian, The NSA Files, Edward Snowden, online: The Guardian Online <http://www.theguardian.com/world/edward-snowden>.

[3] Paul Owen, The NSA Files, 60m Spanish phone calls monitored’ as Merkel row continues – live coverage, online: The Guardian Online <http://www.theguardian.com/world/2013/oct/28/nsa-files-60m-spanish-phone-calls-monitored-as-merkel-row-continues-live-coverage> (last accessed on 29 Oct 2013).

[4] James Ball, NSA monitored calls of 35 world leaders after US official handed over contacts, online: The Guardian Online <http://www.theguardian.com/world/2013/oct/24/nsa-surveillance-world-leaders-calls>.

[5] H. E. Dilma Rousseff, Statement by President of the Federal Republic of Brazil, online: General Assembly of the United Nations
 <http://gadebate.un.org/sites/default/files/gastatements/68/BR_en.pdf>.

[6] Literal translation of the oficial announcement: “as práticas ilegais de interceptação das comunicações e dados de cidadãos, empresas e membros do governo brasileiro constituem fato grave, atentatório à soberania nacional e aos direitos individuais, e incompatível com a convivência democrática entre países amigos.”

[7] A report from IBM informs that “every day we create 2.5 quintillion (1018) bytes of data – so much that 90 percent of the world’s data today has been created in the last two years alone. The increasing volume, variety and velocity of data available from new digital sources like social networks, in addition to traditional sources such as sales data and market research, tops the list of CMO challenges.” EdTech, How “Big” is Big Data?, online: EdTech Online <http://www.usinnovation.org/sites/default/files/ASTRA-EdTech-big-data.pdf>.

[8] Convention for the Protection of Individuals with regard to Automatic Processing of Personal Data online: <http://conventions.coe.int/Treaty/en/Treaties/Html/108.htm>; The European Directive 95/46/EC on the protection of individuals with regard to the processing of personal data and on the free movement of such data, online: <http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31995L0046:en:HTML>.

[9] For a list of federal regulation involving data protection in the US, see: Bureau of Consumer Protection, Privacy and Security, online: BCP Business Centre <http://business.ftc.gov/privacy-and-security>.

[10] Brazil Federal Constitution, 1988, Art 5, X.

[11] For more information about protection of personal data in Brazil, see <http://culturadigital.br/dadospessoais>.

[12] Personal Data Protection Act 2012 (No. 26 of 2012).

[13] X Pte Ltd and another v CDE [1992] 2 SLR 996. For more, see Mohammed Reza, Azri Tan, “Old Fashioned” Breach of Confidence: The Singapore Approach to Privacy Law, [2013] LSS 26.

[14] Cf Karen McCullagh, Protecting ‘privacy’ through control of ‘personal’ data processing: A flawed approach, (2009) International Review of Law, Computers & Technology, 23:1-2, 13-24, DOI: 10.1080/13600860902742562.

[15] Simon Chesterman, After privacy: the rise of Facebook, the fall of Wikileaks, and Singapore’s Personal Data Protection Act 2012, [2012] SJLS at 403.

[16] Ibid at 402.

[17] Ibid at 403.

[18] PDPA, supra note 12, s 2(1).

[19] Supra note 15 at 405.

[20] PDPA, supra note 12, s 13.

[21] Ibid, s 16.

[22] Ibid, s 15(1).

[23] Ibid, s 14(1).

[24] Ibid, s 25(b).

[25] Ibid, s 17.

[26] Ibid, s 5.

[27] Ibid, s 29.

[28] Ibid, s 26(1).

[29] 46 US states, the District of Columbia, Guam, Puerto Rico and the Virgin Islands have implemented data breach notification requirements, even though there is no federal statute with such provision. For more information, see: NCSL, State Security Breach Notification Laws, online: National Conference of State Legislatures <http://www.ncsl.org/research/telecommunications-and-information-technology/security-breach-notification-laws.aspx>.

[30] Supra note 15 at 408.

[31] European Network and Information Security Agency, Trust services: A key to increase citizens confidence in the online world, online: ENISA Online <http://www.enisa.europa.eu/act/it/eid>.

[32] Ibid at 21.

[33] To have access to the public discussions, access http://culturadigital.br/marcocivil/ (in Portuguese).

[34] Law 12.737/12, from November 2012 (available, in Portuguese, at http://www.planalto.gov.br/ccivil_03/_ato2011-2014/2012/lei/l12737.htm).

[35] Supra note 33.

[36] To have access to the open discussions about the Brazilian Data Protection Bill, access: http://culturadigital.br/dadospessoais/tag/legislacao/ (last accessed in 28 Oct 2013).

[37] T. A. Ridout, Marco Civil: Brazil’s Push to Govern the Internet, online: Huffington Post <http://www.huffingtonpost.com/t-a-ridout/brazils-push-to-govern-the-internet_b_4133811.html>.

[38] To have access to the full text of the bill, http://www.acessoainformacao.gov.br/acessoainformacaogov/publicacoes/anteprojeto-lei-protecao-dados-pessoais.pdf (in Portuguese).

[39] Supra note 8.

[40] Personal Information Protection and Electronic Documents Act, online: <http://laws-lois.justice.gc.ca/eng/acts/P-8.6/>.

[41] Supra note 38, art. 15.

[42] Supra note 29.

[43] Supra note 38, art. 35.

[44] Ibid, art. 38.

[45] Renato Monteiro; Cedric Laurant, New Brazilian data protection bill adopts data breach notification regime, online: Information Security Breaches & The Law <http://blog.security-breaches.com/2011/05/09/new_brazilian_data_protection_bill_adopts_data_breach_notification_regime/>.

[46] Spra note 38, art. 21.

[47] Ibid, art. 32.

[48] Ibid, art. 6.

[49] Luis Roberto Barroso, Ana Paula Barcellos. O começo da história. A nova interpretação constitucional e o papel dos princípios no direito brasileiro, Revista de Direito Processual, Rio de Janeiro (57), 2003.

[50] Supra note 2.

Legal Points of Interest in Hong Kong: Past, Present, Future

Legal Points of Interest in Hong Kong:
Past, Present, Future

Meaghan Lim

Hong Kong has unique legal characteristics as both an ex-colony of Britain and a Special Administrative Region (SAR) in China. To provide background, first, a timeline.

TIMELINE¹

1842 – China cedes Hong Kong island to Britain. 1984 – Britain and China sign a Joint Declaration²on the conditions under which Hong Kong will revert to Chinese rule in 1997. 1990 – Beijing formally ratifies Hong Kong’s Basic Law³

1992 October – Proposals for the democratic reform of Hong Kong’s institutions aimed at broadening the voting base in elections are announced. China is outraged at not being consulted, threatens to tear up business contracts and overturn the reforms after it has taken control.

1997 July – Hong Kong is handed back to the Chinese authorities.

2004 April – China rules that its approval must be sought for any changes to Hong Kong’s election laws, giving Beijing the right to veto any moves towards more democracy, such as direct elections for the territory’s chief executive.

2004 July – Britain accuses China of interfering in Hong Kong’s constitutional reform process in a manner inconsistent with self-governance guarantees agreed before the handover.

2007 July – Hong Kong plans for full democracy unveiled.

2007 December – Beijing says it will allow the people of Hong Kong to directly elect their own leader in 2017 and their legislators by 2020.

2008 September – Hong Kong’s pro-democracy camp wins more than a third of seats in legislative elections, retaining a key veto over future bills.

2012 September – Pro-democracy parties retain their power of veto over new laws in Legislative Council elections.

PAST

There were two points at which China and Britain had disagreements regarding the administration of Hong Kong. In October 1992, China was angry about not being consulted regarding democratic reform in Hong Kong. In 2004, Britain accused China of interfering in Hong Kong’s constitutional reform process in a manner inconsistent with self-governance guarantees. As a principle in law, “the King cannot be sued in his own court”. Likewise in international law, a foreign sovereign cannot be sued in court⁴. This was extended to governments of States⁵.

The exception is where the foreign State voluntarily submits to the court, as said in Matsuyama & Sano v The Republic of China (1928)⁶:

“It is beyond doubt under international law that, in as much as no State acknowledges the authorities of another State except as an act of voluntary submission, a foreign State, in principle, is not amenable to our jurisdiction under some peculiar ground, such as the fact of the proceedings being in rem exists. There may be an exception only when such a State deliberately accepts our jurisdiction; and this may comprise occasions provided for by a treaty or those in which it has expressed its willingness to abide by the decision of our courts in the particular instance, or in contemplation of certain specific cases. Concession of that nature, however, must always and necessarily be made between the States concerned… It is true that the view that upon the institution of any litigation against a foreign State, it is still the duty of the Court… to issue a writ of summons and cite the parties to appear at an appointed date, so that an opportunity may be afforded to ascertaining the intention of the defendant (in this Case, the Republic of China), is a plausible one. It must nevertheless be pointed out that such issue of the note of citation ex officio … is in itself an exercise of our authority and cannot be effected against a State which does not submit to our jurisdiction.”

These principles of respect for sovereignty and non-interference with another’s domestic affairs are also reflected in C 1, art 2 of the UN Charter⁷, s 1⁸ and s 7⁹ respectively. China and Britain, as ratified members of the UN since 1945¹⁰, agreed with these principles before their issues with management of Hong Kong.

Ratification¹¹ of the Joint Declaration legally binds Britain and China to the terms set out in the Joint Declaration. However, as the declaration is without provisions subjecting China or Britain to the other’s jurisdiction, there is no enforceable method for Britain or China to enforce their legal declaration¹² except goodwill¹³.

There was the possibility of bringing the dispute to the International Court of Justice¹⁴. However, only contentious cases can be applied for unilaterally¹⁵. These mostly concern possible infringement of territorial or jurisdictional rights¹⁶, which would not be the case in either of the disagreements mentioned.

For disputes regarding interpretation of agreements, it is more likely that the States would submit an application for Advisory proceedings¹⁷. However, this type of application would require the consent and agreement of both States¹⁸. They are rare in comparison to Contentious cases¹⁹, indicating that China and Britain would not likely agree to such a method of dispute settlement.

CURRENTLY

General Principles²⁰ of the Basic Law

The HKSAR has a high degree of autonomy in executive, legislative and independent judicial power, including that of final adjudication²¹. The socialist system and policies shall not be practised in the HKSAR, and the previous system shall remain unchanged for 50 years²². The laws previously in force in Hong Kong (common law, rules of equity, ordinances, subordinate legislation and customary law) shall be maintained, except for any that contravene the Basic Law and subject to any amendment by the legislature of the HKSAR²³.

Relationship Between the Central Authority & the HKSAR²⁴

The Central People’s Government (“CPG”) is responsible for the defence and foreign affairs relating to the HKSAR. The CPG authorises the HKSAR to conduct relevant external affairs and maintain public order in the Region on its own²⁵. National laws are not applied in the HKSAR except for those listed in Annex III²⁶, which are applied locally by way of promulgation or legislation by the HKSAR²⁷. No body directly under the Central Government may interfere in the affairs which the HKSAR administers on its own in accordance with the Basic Law²⁸.

Possible Point of Tension

There appears to be tension between the Basic Law principle of non-interference²⁹ and its Annex I provision³⁰ that requires amendments to election laws to be approved by Beijing. They are not technically contradictory as Art 22 on non-interference has the qualifier “in accordance with this Law”, and Annex I amends the Basic Law. Art 45³¹ on elections also had a qualifier of “in accordance with the principle of gradual and orderly progress”. The tension has been tentatively resolved as Beijing has stated that it will allow the people of Hong Kong to directly elect their own leader in 2017 and their legislators by 2020, showing that the approval is merely for speed, placing it under the qualifier of “gradual progress”. However, until the election laws of Hong Kong reach a state that no longer requires change, Beijing repeals the requirement of approval or the Basic Law expires, this tension in spirit will still exist.

LEGAL FUTURE

In 2047, the 50 year hold-off of mainland policies under the Basic Law will end. It is possible that Hong Kong’s common law system would be replaced altogether by mainland China socialist-civil law. This would have the benefit of consistency. However, it also means that Hong Kong would lose part of its legal heritage and identity. Precedents under Hong Kong’s common law structure would no longer be binding. On the other hand, the legal arrangement could be allowed to continue, effectively extending the legal system arrangement that existed under Basic Law. This means that there will not be any major overhaul of the system currently in place, though without the Basic Law, China would be able to impose laws to be effected through the common law system.

Effects

Whatever the direction decided for Hong Kong, it is likely to affect Macau. Macau is under a similar agreement under the 1999 Sino-Portuguese joint declaration³². Their Basic Law³³ arrangement ends in 2049³⁴. Macau is somewhat different from Hong Kong as Portugal operates under civil law, which is more similar to China’s current legal system. There would be less change with the legal system itself. However, the general direction of completely replacing or extending their current legal system would be impacted from Hong Kong’s arrangement, as Macau is the only other SAR.

CONCLUSION

The disagreements concerning Hong Kong in the past illustrate principles in international law. The current “one country, two systems” shows slight tension in the spirit of the terms of the Basic Law, which can be resolved given enough time. When Hong Kong’s Basic Law agreement ends in 2047, the direction taken by China would be illuminating as well as important as the decision regarding Hong Kong may also affect Macau.

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[1] BBC, Hong Kong Profile, online: BBC news Asia-Pacific <http://www.bbc.co.uk/news/world-asia-pacific-16526765 on 13 Dec 2013>.

[2] The Joint Declaration sets out, among other things, the basic policies of the People’s Republic of China (PRC) regarding Hong Kong. Under the principle of “One Country, Two Systems”, the socialist system and policies shall not be practised in the Hong Kong Special Administrative Region (HKSAR) and Hong Kong’s previous capitalist system and life-style shall remain unchanged for 50 years. The Joint Declaration provides that these basic policies shall be stipulated in a Basic Law of the HKSAR.

Basic Law Promotion Steering Committee, Some Facts about the Basic Law, online: The Basic Law

<http://www.basiclaw.gov.hk/en/facts/index.html>.

[3] The Basic Law of the Hong Kong Special Administrative Region of the People’s Republic of China [Basic Law].

The Basic Law ensures that the legal system in the HKSAR will continue to give effect to the rule of law, by providing that the laws previously in force in Hong Kong (that is, the common law, rules of equity, ordinances, subordinate legislation and customary law) shall be maintained, save for any that contravene the Basic Law, and subject to subsequent amendment by the HKSAR legislature.

Government of Hong Kong, Legal System in Hong Kong, online: Department of Justice <http://www.doj.gov.hk/eng/legal/>.

[4] Sompong Sucharitkul, “Jurisdictional Immunities in Contemporary International Law from Asian Perspectives” in Zou Keyuan & Jianfu Chen, eds, International Law in East Asia (England: Ashgate Publishing Limited, 2011) at 10.

[5] Ibid at 11.

[6] Judgement of December 1928, Great Court of Judicature, 7 Daihan Minchu, 1128 at 1135-1136; 4 Annual Digest of Public International Cases, 168 at 168-169.

[7] Charter of the United Nations, 26 June 1945, Can TS 1945 No 7.

[8] Ibid, art II, s 1. The Organization is based on the principle of the sovereign equality of all its Members.

[9] Ibid, art II, s 7. Nothing contained in the present Charter shall authorize the United Nations to intervene in matters which are essentially within the domestic jurisdiction of any state or shall require the Members to submit such matters to settlement under the present Charter; but this principle shall not prejudice the application of enforcement measures under Chapter Vll.

[10] United Nations, Member States of the United Nations, online: United Nations Member States <http://www.un.org/en/members/>.

[11]Ratification legally binds a State to implement the Convention and/or Optional Protocol, subject to valid reservations, understandings and declarations.

United Nations, Chapter Four: Becoming a party to the Convention and the Optional Protocol, online: United Nations Enable <http://www.un.org/disabilities/default.asp?id=231>.

[12] Berkeley Journal of International Law , Joint Declaration of the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the People’s Republic of China on the Question of Hong Kong with Annexes, 5 Int’l Tax & Bus Law, 424 (1987), online: Berkeley Journal of International Law <http://scholarship.law.berkeley.edu/cgi/viewcontent.cgi?article=1073&context=bjil>.

[13] Charter of the United Nations, supra note 7, Art II, s 2.

All Members, in order to ensure to all of them the rights and benefits resulting from membership, shall fulfill in good faith the obligations assumed by them in accordance with the present Charter.

United Nations, Chapter 1: Purposes and Principles, online: Charter of the United Nations <http://www.un.org/en/documents/charter/chapter1.shtml>.

[14] The Court’s role is to settle, in accordance with international law, legal disputes submitted to it by States and to give advisory opinions on legal questions referred to it by authorized United Nations organs and specialized agencies.

International Court of Justice, The Court, online: International Court of Justice <http://www.icj-cij.org/court/index.php?p1=1>.

[15] International Court of Justice, Cases, online: International Court of Justice <http://www.icj-cij.org/docket/index.php?p1=3>.

[16]International Court of Justice, List of Cases referred to the Court since 1946 by date of introduction, online: International Court of Justice <http://www.icj-cij.org/docket/index.php?p1=3&p2=2>.

[17] Ibid.

[18] International Court of Justice, Cases, online: International Court of Justice <http://www.icj-cij.org/docket/index.php?p1=3>.

[19] International Court of Justice, List of Cases referred to the Court since 1946 by date of introduction, online: International Court of Justice <http://www.icj-cij.org/docket/index.php?p1=3&p2=2>.

[20] Basic Law Promotions Steering Committee, Chapter I: General Principles, online: Basic Law Full Text<http://www.basiclaw.gov.hk/en/basiclawtext/chapter_1.html>.

[21]Basic Law, supra note 3, art 2.

[22] Ibid, art 5.

[23] Ibid, art 8.

[24] Basic Law Promotions Steering Committee, Chapter II: Relationship between the Central Authorities and the Hong Kong Special Administrative Region, online: Basic Law Full Text<http://www.basiclaw.gov.hk/en/basiclawtext/chapter_2.html>.

[25] Basic Law, supra note 3, art 13-14.

[26] Basic Law Full Text—Annex III: National Laws to be Applied in the Hong Kong Special Administrative Region (Personally compiled. All effective from 1 July 1997 unless indicated otherwise with brackets.)

1. Resolution on the Capital, Calendar, National Anthem and National Flag of the People’s Republic of China

2. Resolution on the National Day of the People’s Republic of China

3. Declaration of the Government of the People’s Republic of China on the Territorial Sea

4. Nationality Law of the People’s Republic of China

5. Regulations of the People’s Republic of China Concerning Diplomatic Privileges and Immunities

vi.            Law of the People’s Republic of China on the National Flag;

vii.           Regulations of the People’s Republic of China concerning Consular Privileges and Immunities;

viii.          Law of the People’s Republic of China on the National Emblem;

ix.            Law of the People’s Republic of China on the Territorial Sea and the Contiguous Zone;

x.             Law of the People’s Republic of China on the Garrisoning of the Hong Kong Special Administrative Region. Law of the People’s Republic of China on the Exclusive Economic Zone and the Continental Shelf [4 November 1998]

xi.            Law of the People’s Republic of China on Judicial Immunity from Compulsory Measures Concerning the Property of Foreign Central Banks [27 October 2005]

Note: The English translation is prepared by the Department of Justice, Government of the Hong Kong Special Administrative Region. It is for reference purposes and has no legislative effect.

Basic Law Promotions Steering Committee, Annex III: National Laws to be Applied in the Hong Kong Special Administrative Region, online: Basic Law Full Text<http://www.basiclaw.gov.hk/en/basiclawtext/annex_3.html>.

[27] Basic Law, supra note 3, art 18.

[28] Basic Law, supra note 3, art 22.

No department of the Central People’s Government and no province, autonomous region, or municipality directly under the Central Government may interfere in the affairs which the Hong Kong Special Administrative Region administers on its own in accordance with this Law. If there is a need for departments of the Central Government, or for provinces, autonomous regions, or municipalities directly under the Central Government to set up offices in the Hong Kong Special Administrative Region, they must obtain the consent of the government of the Region and the approval of the Central People’s Government. All offices set up in the Hong Kong Special Administrative Region by departments of the Central Government, or by provinces, autonomous regions, or municipalities directly under the Central Government, and the personnel of these offices shall abide by the laws of the Region.

*For entry into the Hong Kong Special Administrative Region, people from other parts of China must apply for approval. Among them, the number of persons who enter the Region for the purpose of settlement shall be determined by the competent authorities of the Central People’s Government after consulting the government of the Region. The Hong Kong Special Administrative Region may establish an office in Beijing.

Basic Law Promotions Steering Committee, Chapter II: Relationship between the Central Authorities and the Hong Kong Special Administrative Region, online: Basic Law Full Text<http://www.basiclaw.gov.hk/en/basiclawtext/chapter_2.html>.

[29]Ibid.

[30] Basic Law, supra note 3, annex I.7.

If there is a need to amend the method for selecting the Chief Executives for the terms subsequent to the year 2007, such amendments must be made with the endorsement of a two-thirds majority of all the members of the Legislative Council and the consent of the Chief Executive, and they shall be reported to the Standing Committee of the National People’s Congress for approval.

Basic Law Promotions Steering Committee, Annex I: Method for the Selection of the Chief Executive of the Hong Kong Special Administrative Region, online: Basic Law Full Text <http://www.basiclaw.gov.hk/en/basiclawtext/annex_1.html>.

[31] Basic Law, supra note 3, art 45.

The Chief Executive of the Hong Kong Special Administrative Region shall be selected by election or through consultations held locally and be appointed by the Central People’s Government.

The method for selecting the Chief Executive shall be specified in the light of the actual situation in the Hong Kong Special Administrative Region and in accordance with the principle of gradual and orderly progress. The ultimate aim is the selection of the Chief Executive by universal suffrage upon nomination by a broadly representative nominating committee in accordance with democratic procedures.

The specific method for selecting the Chief Executive is prescribed in Annex I: “Method for the Selection of the Chief Executive of the Hong Kong Special Administrative Region”.

Basic Law Promotions Steering Committee, Chapter IV: Political Structure, online: Basic Law Full Text <http://www.basiclaw.gov.hk/en/basiclawtext/chapter_4.html>.

[32] “Decree of the President of the People’s Republic of China”, online: Basic Law Macau <http://www.umac.mo/basiclaw/english/main.html>.

[33] Basic Law of the Macao Special Administrative Region of the People’ s Republic of China.

[34]Ibid, Art 5.

Unclear stance on de minimis patent infringement and related legal conundrums in Organic Seed Growers & Trade Association et al. v Monsanto Company

Unclear stance on de minimis patent infringement and related legal conundrums in Organic Seed Growers & Trade Association et al. v Monsanto Company

Li Linzhe

Intellectual property rights including copyright, trademark usage and patent are actively enforced by large corporations; some may have enforced it too actively. Monsanto Co., the world’s leading multinational chemical and agricultural biotechnology corporation, has brought 144 infringement suits for unauthorized use of its seeds between 1997 and 2010. Approximately 700 other cases were settled without litigation, as noted in the case of Organic Seed Growers & Trade Association v Monsanto Co¹.

The case essentially involves a declaratory judgment action against 23 Monsanto patents covering transgenic seed products like corn, cotton, canola, sugar beets, soybeans and alfalfa. The plaintiff is a coalition of several dozen farmers, seed sellers and agricultural organizations². They seek a court order to estop Monsanto from initiating legal actions to enforce its patent rights against those caught by inadvertent infringements which allegedly occur inevitably whenever wind drifts carry pollens of recombinant plants to non-genetically modified fields.

In the United States, the rights conferred by the patent grant is, in the language of Title 35 of the United States Code³, “the right to exclude others from making, using, offering for sale, or selling” the patented invention in the United States or “importing” the patented invention into the United States. The right is a positive right of exclusion against infringers regardless of whether the infringer is intentional or inadvertent which, as it turns out, opens a host of problems when it comes to patent enforcement.

It is beneficial at this stage to set out the background of the law and the case. The power of the Congress to grant patents is derived from Article I, Section 8, Clause 8 of the U.S. Constitution, which allows the Congress to “promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries”. Patentable inventions are defined in sections 100-105 of Title 35 of the United States Code, which include inventions and discoveries of “any new and useful process, machines, manufacture, or composition of matter, or any new and useful improvement”⁴. Monsanto’s Roundup Ready® glyphosate-resistant seeds (which are designed to be used together with glyphosate herbicide, Roundup®) contain recombinant herbicide-resistant genes isolated from Agrobacterium strain CP4 (CP4 EPSPS), making it a “new and useful improvement” within the definition of patentable inventions.

Plaintiffs in this case, who refused to use Monsanto’s genetically-modified seeds, alleged that they had suffered substantial injuries because they were put at risk for inadvertent infringements of Monsanto’s patents. For fear of being sued, they were forced to forego planting even conventional (non-genetically modified) “corn, cotton, canola, sugar beets, soybeans and Alfalfa” due to the extent to which these crops were transgenic (the judge accepted the evidence that “over 85-90% of all soybeans, corn, cotton, sugar beets, and canola grown in the U.S. contains Monsanto’s patented genes”). They also suffered from increasing financial burdens by having to take costly precautions to avoid contamination, such as testing seeds for transgenic traits and creating “buffer” zones between their farms and those of neighbours growing modified crops. It is their counsel’s argument that only by eliminating any risk of being sued for inadvertent as well as uncontrollable infringements would they dare resume to grow conventional crops which are under threat of severe transgenic contamination.

Plaintiffs assisted by Benjamin N. Cardozo School of Law’s Public Patent Foundation (PubPat) lost their case. The judgment delivered on 10th June 2013 held that “taken together, Monsanto’s representations⁵ unequivocally disclaim any intent to sue appellant growers, seed sellers, or organizations for inadvertently using or selling ‘trace amounts’ of genetically modified seeds”. The court also dismissed the action on the ground that Monsanto (through its representation) has disclaimed any intent to sue inadvertent users or sellers of seeds that are inadvertently contaminated with up to 1% of seeds carrying Monsanto’s patented traits. An express covenant not to sue as sought by the plaintiffs was also refused.

Federal Circuit considered the plaintiff’s argument that even though Monsanto has never threatened suit against them, in light of Monsanto’s evident history of aggressive assertion of its transgenic seed patents against other growers and sellers (144 suits and 700 settlements), they are entitled to assume that if they infringe those patents, they will also be sued—even if the infringement is inadvertent. However, the court held that this evidentiary history of aggressive patent enforcement alone did not suffice for declaratory judgment jurisdiction. “Allegations of a subjective ‘chill’ are not an adequate substitute for a claim of specific present objective harm or a threat of specific future harm”.

Further to the dismay of the coalition of farmers, the rule of de minimis non curat lex does not seem to offer any semblance of protection to fend off what many deem as harassing threats of litigation. Federal Circuit is reluctant to budge from its position in earlier precedents that “one who, within the meaning of the Patent Act, uses (replants) or sells even very small quantities of patented transgenic seeds without authorization may infringe any patents covering those seeds”, citing SmithKline Beecham Corp. v Apotex Corp. ⁶ and Abbott Labs. v Sandoz, Inc.⁷ In both cases, the court rejected the proposition that patent claims should be construed to avoid reading on “trace amounts” of a patented compound, even though that compound’s self-replicating properties might “place potential infringers in the untenable position of never knowing whether their product infringes because even a single undetectable [molecule would infringe (noting that de minimis infringement can still be infringement).

Hence, the practical effect of the decision is that intention does not constitute an element in patent infringement. Both intentional and inadvertent infringements are caught by the Act even though only “trace amounts” of patented materials were found in the fields of the farmers who refuse to use genetically-modified seeds. There is still a substantial risk that those farmers could be liable for infringement if they harvested and replanted or sold contaminated seed once the contaminated rate is beyond the threshold 1%. Taking the law to the extreme, merely permitting transgenic seeds inadvertently introduced into one’s land (by wind) to grow would constitute an infringing use if the threshold 1% is exceeded. Even though I tend to agree with Federal Circuit’s dismissal of plaintiff’s declaratory action on the ground that mere possibility of being sued does not suffice to allow them to claim damages caused by their own decisions to forebear from growing conventional crops with high transgenic content, I found the current legislation’s stance on “de minimis infringement” ambivalent and unsatisfactory. The 1% threshold is never expressly stated as a matter of law. As the court itself pointed out, United States Department of Agriculture has never established an upper limit on the amount of trace contamination that is permissible. It was the plaintiffs’ argument (which Monsanto did not contest and the Court refused to decide on the threshold) that “trace amounts” must mean approximately one percent (the level permitted under various seed and product certification standards).

Given that now intention no longer matters in a patent suit―inadvertent infringement is still an infringement―the law governing de minimis infringement should be all the more clearer. Farmers can no longer exert any control over possible contaminations caused by inevitable natural force. Moreover, given that no compensation is made to their increased expenditures on building “buffer zones” and testing for transgenic traits, it is only fair if the farmers can rely on a judicially fixed threshold below which they would be shielded from any threat of litigation, not as a private assurance between the parties, but as a policy across the board regarding patent issues involving transgenic crops.

It must not be overlooked that in reality, large corporations have a far stronger leverage against individual farmers and non-profit agricultural organisations not by threatening to sue but by threatening the mere prospect of litigation. As revealed in documentaries like Food Inc., it is an unannounced fact that Monsanto regularly sends private investigators to force inspections of farmers’ crops at ungodly hours and threatens them with the prospect of being sued, indirectly forcing many to switch to cultivate Monsanto’s genetically-modified seeds or to forego growing conventional crops altogether, even though they have been growing those crops on their acres for decades. Even in those settled cases, farmers are usually gravely prejudiced by corporations’ bargaining power. Not surprisingly, massive compensations for infringement apart, as a condition of the settlement, the farmers are banned from talking to the media about any of their encounters with the corporation including, invariably, the details regarding private investigations and threats.

As long as the law on “de minimis infringement” is foggy, Monsanto can and would continue its aggressive enforcement of its patents and its investigations which have put many on severe distress and others out of business. Emotional turmoil aside, those farmers’ livelihoods are at stake; either legislative or judicial protection must step up to give them redress.

Currently, the only silver lining of Organic Seed Growers & Trade Association v Monsanto Co. is that applicants can rely on a de facto judicial estoppel to fend off potential patent suits with contaminant level below 1%. As Federal Circuit points out in the obiter, while Monsanto’s representations are not an express covenant not to sue, they have a similar effect. Since the Court has relied on Monsanto’s representations to defeat the plaintiffs’ declaratory judgment claims, those representations are binding as a matter of judicial estoppel⁸.

Unfortunately, this protection is not available against de minimis infringements of other patents by other corporations if there is no prior action or similar representation by the corporation giving rise to judicial estoppel⁹. As a result, the chilling effect caused by the uncertainty of the law as well as its enforcement is likely to ensue.

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[1] 718 F.3d 1350, 107 U.S.P.Q.2d 1067

[2] Plaintiff organisations include, inter alia, Organic Crop Improvement Association International Inc., Beyond Pesticides, Navdanya International, Maine Organic Farmers and Gardeners Association, Northeast Organic Farming Association of New York, Northeast Organic Farming Association/Massachusetts Chapter, Inc.

[3] 35 U.S.C. s 154 (a)(1)

[4] 35 U.S.C. s 101

[5] A statement posted on Monsanto’s website reads: it has never been, nor will it be Monsanto policy to exercise its patent rights where trace amounts of our patented seeds or traits are present in farmer’s fields as a result of inadvertent means.

[6] 403 F.3d 1331, 1336, 1339–40 (Fed. Cir. 2005)

[7] 566 F.3d 1282, 1299 (Fed. Cir. 2009)

[8] It is well established that a party who successfully argues one position is estopped from later adopting a contrary position in a case involving the same patent, see New Hampshire v Maine, 532 U.S.

[9] The main factors warranting judicial estoppel are [1] a party’s later position is “clearly inconsistent” with its prior position, [2] the party successfully persuaded a court to accept its prior position, and [3] the party “would derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped.” (see New Hampshire v Maine, 532 U.S. at [750]–[751])