Singapore Comparative Law Review (UKSLSS Law Journal) 2023

SINGAPORE COMPARATIVE LAW REVIEW 2023

The United Kingdom Singapore Law Students’ Society (UKSLSS)

Law Journal

SINGAPORE COMPARATIVE LAW REVIEW

Patron’s Foreword

Over the years, I have been writing a foreword to this review annually to give my personal reflections on the articles published by Singapore students studying law in UK law schools. It was more than a privilege to have been asked to do so, as I regard it as a learning experience for me in many ways. Governments need to change the law by legislation to keep up with social and, currently, technological advancements that impact the lives of the people. Even the common law of England has to receive a cleaning over from time to time because existing precedents no longer represent current social or moral norms. This is where this law review has a useful role in disseminating the latest UK legislation or changes in common law to law students and lawyers in Singapore. The articles in this issue continue to serve this purpose. In no particular order, I offer my comments on the 11 articles published in this year’s review.

(1) In Between Two Fearns: A Comparison of Private Nuisance in Singapore and UK, Matthew Lee has written a thoughtful and well-argued piece on why English law on nuisance post Fearn v Board of Trustees of the Tate Gallery [2023] should not be followed since Singapore law on private nuisance as applied in Tesa Tape Asia Pacific Pte Ltd v Wing Seng Logistics Pte Ltd1 is more in tune with the social conditions in Singapore, since more than 80% of the population live in flats and condominiums. Given this reality where people have no choice but to live in close proximity with one another, mutual understanding and tolerance, give and take, and live and let live should be the norms of social behaviour and interaction in such an environment in Singapore.

(2) In Acquiring Air India: Turbulent questions for the Competition and Consumer Commission of Singapore, Tarun Rao thinks that the acquisition of Air India by Tata may pose distinctive questions for the Competition and Consumer Commission of Singapore (CCCS) in its oversight of Singapore’s merger control regime. The CCCS has experience in addressing competition issues in the airline industry, having approved a joint venture between Lufthansa and Singapore Airlines in 2016. However, Rao considers the legal issues to be different and that the CCCS might look to the approach of the UK CMA in approving a similar kind of merger between Asiana and Korean Air by securing appropriate undertakings to ensure that competition will not be substantially reduced. It would appear from Rao’s study that the reduction in competition caused by the Air India takeover by Tata is only in the premium segments of the market. The problem then is whether this is sufficiently important to businessmen travelling between India and Singapore for the CCCS to secure appropriate undertakings from the parties, and what these undertakings may be. Rao does not suggest an answer to the problem.

(3) In A Handshake is a Promise, Joshua Ng and Priyansh discuss the old problem of the need for consideration for a valid contract under Singapore law, centring on the distinction between Foakes v Beer (1884) 9 App Cas 605 (‘Foakes’) and Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1 (‘Williams’). The authors discuss the two Singapore judgments in Sunrise Industries India Limited v PT OKI Pulp and Paper Mills [2023] SGHC 3 (‘Sunrise’) and Ma Hongjin v SCP Holdings Pte Ltd [2020] SGCA 106, and argue that Sunrise demonstrates that consideration serves a primarily evidentiary function in Singapore law, serving as a marker that parties have willingly struck a bargain after negotiation. However, this is not perfectly mirrored in English law although consideration also serves an evidentiary function, it is to evidence that parties have agreed to the bargain in a fair manner. The authors do not say that this distinction is determinative of the outcome in any particular case.

(4) In Beyond ChiuTengand TanSengKee: the necessity of substantive legitimate expectation in Singaporean constitutional jurisprudence, Samuel Soh speculates on whether the current Court of Appeal is likely to recognise substantive legitimate expectation (“SLE”) as an independent ground of judicial review, given that the Court had applied it only to the exceptional (actually unique) situation in Tan Seng Kee. Soh does not find it difficult to imagine that the current Court of Appeal “may soon decide in favour of expanding the doctrine” because “Singaporean courts have displayed a remarkably consistent ability to shape and evolve the law for practical reasons.” The article concludes that the gradual expansion of SLE, and substantive judicial review more generally, should be welcomed by the judiciary.

(5) In Divide and Conquer: New Modes of Territorial Acquisition in Public International Law, Ning Teoh discusses the traditional modes of territorial acquisition in international law, being (a) original acquisition via occupation of terra nullius, i.e., abandoned land or land that has never belonged to anyone, and (b) derivative acquisition, whereby a state gains title by defeating a former owner via prescription, accretion, cession, or annexation, in the context of the ICJ’s decision in the Pedra Branca case.

In that case, the ICJ rejected Singapore’s argument that Pedra Branca was terra nullius, and concluded that the Johor Sultanate possessed original title over Pedra Branca which arose “... since it came into existence in 1512 [and] established itself as a sovereign State with a certain territorial domain under its sovereignty in this part of southeast Asia”.

Teoh points out that this categorisation, particularly original acquisition, is adequate to deal with post-colonial states. How did Malaysia acquire original title to Pedra Branca in 1957 when its predecessor state, the Federation of Malaya, was granted independence by Britain? The ICJ answered the question by holding that the British had always recognised the sovereignty of the Johor Sultanate, and that the Johore Sultanate had original title since 1512. The ICJ also held that the Johor Sultanate exercised control over Pedra Branca because the Orang Laut, who recognised the Sultan as their ruler, visited Pedra Branca (which was an uninhabitable rock island). The ICJ accepted these elements as further substantive evidence supporting Malaysia’s claim of ‘original title’.

Teoh criticises the ICJ’s analysis as it “ignores the tension between terra nullius and ‘original title’, thus failing to address the place of the former in contemporary international law.” When addressing ‘original title’ of Pedra Branca, the Court merely repudiated Singapore’s argument by establishing the Johor Sultanate’s authority over the surrounding islands, much like how it dodged the question in the dispute between Indonesia and Malaysia over the Sipadan and Ligitan Islands. …Hence, the relationship between terra nullius and ‘original title’ remains unclear.”

Teoh has made an interesting argument which is also logical. It is also a consequential argument because if Pedra Branca was terra nullius before 1512, so would Middle Rock and South Ledge. Perhaps, if only for academic reasons, the ICJ decision deserves another look.

(6) In Comparing Trade Union Laws & Labour Protections in the UK and Singapore, Khai Xing Chew uses the UK’s government’s new anti-strike bill to make a comparison with the UK’s trade union movement (which traditionally has been confrontational and disruptive) with that of Singapore’s more collaborative trade union movement which is a partner of the well-known tripartite model which has brought industrial peace and economic development to Singapore, and not least, financial benefits and rewards to trade union members. It is therefore not surprising that Chew finds Singapore’s collaborative model desirable, as it is able to promote and protects workers’ rights while also balancing the national objectives such as economic and social stability.

(7) In Doctors do not always know best - The vital triage of mediation as a viable alternative to litigious claims, Nickolaus Ng Cong Hin2 discusses the law on medical negligence in Singapore generally and advocates the economic and social advantages of mediation over litigation in respect of claims for medical negligence. He also refers to the role of the Government in promoting mediation in such claims.

(8) In Unfair Terms and Exemption Clauses in Consumer Contracts: The Need to Regulate Unfair Terms in Singapore? Zachary Lee highlights the differences in the way the Singaporean and UK courts determine when an exemption clause in a consumer contract is “unfair”, referring to specific examples in different types of consumer contracts, and the extent of protection from exemption clauses that is available to consumers. Lee concludes it is desirable for Singapore to adopt certain features of the UK’s legislation for better consumer protection, in particular providing greater clarity on the court’s jurisdiction in nullifying an unfair contract term.

(9) In The race to rescue: Evaluating the rollout of cross-class cramdowns in the UK and Singapore, Timothy Ang compares the insolvency restructuring regimes in the UK and Singapore which are both attractive jurisdictions for companies looking to restructure their debts. He evaluates the extent to which the “cross-class cramdown” (an ugly expression) has made the UK and Singapore’s laws more debtor-friendly. He argues that even though debtor-friendliness (and the parallel rescue culture) disfavours creditors, it is not necessarily undesirable if it is managed and carefully balanced. He favours the UK’s approach in giving courts discretion in deciding to apply a cramdown this allows the regime to test common law tests’ outcomes, and adjust them

2 The author expresses deep gratitude to Alexander Russell Penney, Nicholas Tong Wei Kai, and Ryan Lee Zheng Yuan for their assistance with reviewing, commenting, and providing insights regarding this article. All errors remain the author’s own.

with legislation if necessary, whilst maintaining the flexibility that the stakeholders of a company in distress need.

(10) In Digital Market Regulation: Lagging Behind? Liew Li Ren points out that while the CCCS has updated its guidelines in 2022 to keep pace with the concerns about the “unprecedented concentration of power amongst a small number of digital firms”, it may fall behind UK’s proposed Digital Markets, Competition and Consumers Bill (DMCC), which if passed, would implement drastic reforms to UK competition law. Liew provides an overview of the provisions in the Bill, and concludes that whilst foreseeability is an element in evaluating present or future market position, the DMA is backwards-looking (e.g., it examines whether the relevant thresholds of active business users were met in each of the last three financial years) while the DMCC is forwards-looking (e.g., the CMA is required to carry out a ‘forward-looking assessment of a period of at least 5 years’). Necessarily, this exercise requires a degree of speculation, including a counterfactual assessment on ‘expected or foreseeable’ developments due to the absent designation of SMS and other developments that ‘may’ affect the undertaking’s conduct in carrying out the digital activity. Liew argues that Singapore should have a new law specific to digital market regulation that allows the CCCS to have a broad ambit to intervene in the fast-evolving digital space while retaining the ‘old’ rules of competition law for other industries. Control measures like the countervailing benefits exception in the DMCC or the judicious employment of public and expert consultation before action would temper agency appetite and assuage industry concerns.

(11) Finally, in AI Regulation for the AI revolution, Dorian Chang endeavours to answer whether current AI law as a legal framework is adequate, and has the necessary tools to effectively deal with the most pertinent legal issues that Artificial Intelligence ("AI") development brings, including: human rights infringements of AI bias and (lack of) AI fairness, (intellectual) property right infringements of AI-generated content, inter alia. These two broad legal issues would be contextualised within recent developments in AI, including the advancements within the field of generative AI.

It is a full analysis of the current issues and problems that is worth detailed study. He refers to the four regulatory apparatus available which provide synergies when applied in parallel, and can be divided into the two main objectives of AI regulation - bulwark and empowering regulation, each serving different objectives (protecting rights and preventing stifling of innovation respectively) within AI regulation. As to the form AI regulation should take, the problem is whether AI regulation should be in the form of blanket AI-specific regulation (like the proposed AI Act) or decentralised sector-specific regulation (like the US’s incumbent approach). He prefers a middle ground. A baseline blanket regulation covering only the most fundamental issues, coupled with sector-specific mandatory or voluntary guidelines, could be the ideal fix.

Concluding Remarks

To conclude, this issue shows a slight shift in focus. There are more articles on regulatory issues than private or public law issues. That is good, as it shows that our law students are becoming more aware that more legislation is needed to meet the problems of a globalised world (in spite of the perceived need to “decouple” certain parts of it in the interest of national security). The

editorial board should be commended for bringing together the contributors to produce another useful product.

Chan Sek Keong Patron

15 August 2023

United Kingdom Singapore Law Student’s Society (UKSLSS)

Executive Committee

2022-2023

Ethan Teo President

Nikhita Nair Vice President

Felicia Ong General Secretary

Charmaine Tan Marketing Director

Luke Zhang Editor-In-Chief

Lee Xuan Yi Sponsorship Director

Joshua Tan Finance Director

Ning Teoh

Rachel Lim

Ong Zi Kee

Singapore Comparative Law Review

Singapore Comparative Law Review 2023

Editorial Committee

Editor-in-Chief

Luke Zhang

Managing Editors

Titus Soh

Evan Chou

Associate Editors

Samuel Soh

Yinno Teh

Rachel Tan Chia Shang En

Suriani Zaini Abdullah Charmaine Annabelle

Liew Li Ren

Singapore Comparative Law Review

President’s Address

Dear Readers,

This year we celebrate the 25th anniversary of the United Kingdom Singapore Law Students’ Society (“UKSLSS”) and the publication of the 18th Edition of the Singapore Comparative Law Review (“SCLR”). I would like to begin by extending my appreciation to our Editor-in-Chief, Luke Zhang, and the larger Editorial Team behind this year’s Edition for another successful publication, to which I am pleased to write an address for.

A Recap of the Year

Over the course of the last two and a half decades, the UKSLSS has moved from strength to strength. Established under the auspices of the Government of Singapore in 1998, the UKSLSS has been for many years a fully-fledged and thriving Law Society for all Singaporeans reading Law in the United Kingdom. Over the years, a whole generation of law students have been a part of the UKSLSS family, the first of whom are now senior members within the legal profession and beyond.

Our mission has remained the same through all these years - keeping our members close to home, through the organisation of both social and professional events. This year has been a particularly successful one for the UKSLSS. As we fully transitioned away from the pandemic and its associated restrictions on live events, the Academic Year 2022-23 saw a record number of activities held by the Society. Recruitment teas were held throughout the year with our sponsor firms; with lawyers from Allen & Gledhill, Rajah and Tann, WongPartnership, Drew & Napier, and Baker McKenzie Wong & Leow flying up to the United Kingdom to meet with students. The presence of firm events in the UK emphasises the deep relationship we have with our partner firms, and underscores the continued investment these firms actively make in the futures of our members.

With students back home in Singapore, firm events continued, with Rajah and Tann, Shook Lin and Bok, and TSMP holding firm events in consecutive weeks. Our portfolio of partners continues to grow, with successful collaborations with many more local and international firms beyond those mentioned, and to deepen our ties with institutional stakeholders, such as the Singapore Legal Service, the Singapore Judicial Service, the Singapore Institute of Legal Education, the Law Society, and the Ministry of Law.

Outside firm events, the UKSLSS continues to run activities which have become a mainstay of the Society’s annual calendar. The Vacation Scheme Helpdesk, held annually in November, brings together Singaporeans in practice as solicitors in London to advise our members on their own paths; while the Bar Careers Talk, held annually in December, brings together Singaporean barristers for the same purpose. Perhaps the most ambitious (and a novel addition to this year’s calendar) were the Chinese New Year Lunches, whereby our University Representatives organised and hosted meals across the United Kingdom, in all the cities in which the Scheduled Universities are located. Other mainstays of our calendar include our Annual A&G-UKSLSS Junior Moot, a Freshers Tea for our incoming first-years to meet their seniors before flying up, and of course our flagship event, the Singapore Legal Forum, at which this 18th Edition of the SCLR is scheduled to be published, just to name a few.

Finally, I come to the subject matter of this address, the 18th Edition of the Singapore Comparative Law Review. In the course of the last eighteen years, the Review has gone from strength to strength; drawing on the unique position of Singaporean Law students studying in the United Kingdom to analyse comparative legal issues across the two common law jurisdictions. It is once again the Review’s privilege to have former Chief Justice Chan Sek Keong as its patron, as we mark eleven years under Justice Chan’s valuable patronage and mentorship.

This year marks the second year of my involvement with the SCLR. Last year, I had the privilege of sitting as Editor-in-Chief of the 17th Review, to which I composed a Foreword. In that Foreword, I commented that it was not merely enough for one to be well-acquainted with the substantive law, though that will certainly occupy centre stage in a practitioner's life. Instead, the study of Law as a lifelong discipline, I thought, demanded more from us. It forces us to ask not what the law is, but what the law should be. Legal scholarship plays an important role in the facilitation of these debates, without which the law cannot do without.

Indeed, in a field of study so closely linked to a particular (and competitive) profession, there is a dangerous inclination towards over-focusing on one’s career-based goals. It should not be forgotten that the true value of a legal education lies not in the substantive content of the degree - certainly, practitioners will be quick to tell you that practice is vastly different from education - but rather in the manner in which a legal education trains you to write, to argue, and to think. That is the true value of a legal education, and it is what distinguishes the student of law from his contemporaries.

I shall leave Luke to properly introduce the contents of this year’s Edition, but I heartily commend the Contributors and Editors to this year’s edition of the Review for their contributions to the development and promotion of legal thought and reasoning. On a more personal level, I thank my Executive Committee for all the effort they have put in for another successful year for the UKSLSS.

It is my hope that you should enjoy the contents of this edition of the Review as much as I have, and to never stop questioning and determining for yourselves what the law should be, rather than taking for granted what it already is.

Legal academic writing, and the study of law more broadly, is ultimately a process of growth, of looking into yourself, and of escaping the prison of your own mind. The journey into the Law is long, but I borrow the words of Hugo, a poem from the last lines of Les Misérables. “It happens calmly, on its own / The way night comes, when day is done”.

I look forward to seeing where your paths shall take you, both within and outside the law.

Yoursfaithfully,

EthanJeremiahTeo

23rdPresidentoftheUnitedKingdomSingaporeLawStudents’Society

Editorial Foreword

Dear Readers,

I am proud to present the 18th edition of the Singapore Comparative Law Review on behalf of the United Kingdom Singapore Law Students’ Society. Traditionally, the former Chief Justice Chan Sek Keong has served as the patronage of the Review, offering his valuable and thought-provoking insights regarding the articles presented herewith. This year, we are once again honoured and privileged to have Justice Chan’s valuable patronage and tutelage as we enter a new decade of publication under his mentorship. The Review is also immensely grateful for the support of our sponsors. Without their support, this publication would not be possible.

Since its original inception as Lex Loci in 2006, the Review has rebranded itself with a strong focus on comparative law between the two common law jurisdictions. The strength of this publication lies herein, through the unique experiences of Singaporean students studying law in the United Kingdom, who have experience and knowledge of the law within both jurisdictions. These writers are perfectly placed to produce well-thought analysis of comparative legal issues between these two jurisdictions. This underlying philosophy remains to underpin this year’s edition of the Singapore Comparative Law Review. This 18th Edition of the Review contains eleven academic articles written by Singaporean law students studying in various universities in the United Kingdom.

As we emerge from a post-COVID world amidst turbulent global economic outlook and geopolitical tensions, the law remains steadfast in development. As law students, we are familiar with the ubiquitous nature of the study of law and how it permeates each and every field. It is not uncommon to find the recent developments of the law to be exciting; rather, it is the very nature of law for there to be constant developments and evolution. As students of the law, we are proud to be part of this process, to write and catalogue legal developments as we provide our unique insights and perspectives to new questions.

Indeed, Singapore and the United Kingdom both occupy the privileged space of being key players in a globalized world. As Justice Chan poignantly addressed, despite deglobalization trends stemming from the recent ‘decoupling’ rhetoric, legal regulations nevertheless permeate the global world. This edition of the Review focuses on this aspect of the law. As corporations remain an integral part of the global economy, so too will legal regulations be prevalent in keeping companies in check.

Understanding legal concepts on their own is not enough in today’s age. As good lawyers, we must understand the principles underpinning the law, forcing us to understand not only what the law represents in the present, but also what form the law should take in the future. This skill will no doubt facilitate a practitioner’s journey throughout their legal career. Academic debates thus stand hand-in-hand with legal practice. To the busy readers who do not have the time to keep up to date with such developments, it is my aspiration that this Review will aid you in furthering your knowledge

I am extremely proud of my talented editorial team for all their effort in producing this year’s edition of the Singapore Comparative Law Review, without whom this project would surely not be a success. Further, I would also like to especially thank my predecessor and the current President of the UKSLSS, Ethan Teo, for contributing his rich editorial experience and guiding me along the way. Last but not least, I am eternally grateful to my teammates in the Executive Committee for their support throughout the past year

I invite you, my dear readers, to walk with us on this long road that the law paves - the same road trodden by our predecessors since the conception of civilization. We have come a long way indeed since the days of Gaius and Ulpian, as we aspire to carry on their legacy. As we embark on this never-ending journey together, I invite you to think and ponder the legal issues contained within this Review

As malleable as the law is, it is only useful if jurists like ourselves constantly engage with its rich content. If this Review has served as a fine accompaniment in your journey in the law, I take pride in knowing that we have succeeded in our purpose.

Yours sincerely,

Zhang Qiwei, Luke Editor-In-Chief of the 18th Singapore Comparative Law Review

Between Two Fearns: A Comparison of Private Nuisance in Singapore and UK

Matthew Lee

INTRODUCTION

This article seeks to critically compare the law concerning the tort of private nuisance in Singapore and in the UK, especially in light of the recent development in Fearn v Board of Trustees of the Tate Gallery [2023] (henceforth referred to as “Fearn”).

The article will first set out the law in Singapore as regards private nuisance, the UK’s approach to private nuisance, how Fearn changed the law in the UK and finally the normative value of the UK’s position post-Fearn and what, if anything, one jurisdiction could adopt from another.

A. Singapore’s Approach to the Tort of Private Nuisance

To satisfy the requirements of private nuisance, the claimant must prove these four elements on the balance of probabilities:

(a) the conditions of and/or activities of the defendant on the land interfere with the claimants use and enjoyment of the neighbouring land;

(b) the defendant's interference was unreasonable;

(c) the claimant has possessory rights over the neighbouring land; and

(d) the damage is proved.

For the sake of comparison, only grounds (a) and (b) are of relevance. For the most part, grounds (c) and (d) are well-settled areas of law and consistent between the UK and Singapore. Rather, grounds (a) and (b) are where Fearn has changed the law of private nuisance in the UK and so will be the main area of discussion in this article.

1. Interference by the Defendant with the Claimant’s Land

For the claimant seeking to prove a prima facie case of private nuisance against the defendant, the starting point would be proving an interference with his land by the use of the defendant’s land. To prove an interference, the claimant must show that the use of the defendant’s land had

interfered with the use and enjoyment of the claimant’s land. Interferences can be broken down into two groups based on their resulting consequences.

The first form of interference is the causation of physical damage to the claimant’s land by a particular activity or the creation of dangerous state of affairs on the defendant’s land. Damages are immediately actionable upon the materialisation of physical damage to the claimant’s land.1 The second form of interference affect the claimant’s enjoyment of his land. This could take the form of excessive noise,2 noxious smells3, or infringement of the claimant’s right to light.4 In the absence of physical damage, if the impact on the claimant’s enjoyment of land is merely temporary or for a short duration, the courts will be unlikely to find an interference with the claimant’s land.

2. Unreasonable Interference

For liability to established, not only must there have been an interference with the claimant’s land by the defendant, that interference must have been objectively unreasonable. After all, the claimant’s use and enjoyment of land must be balanced against the right of the defendant to lawfully enjoy and conduct activities on his own land. To determine whether the interference was unreasonable, five main factors are considered by the Singaporean courts.

a) Unsafe Use

If the defendant had conducted an unsafe activity on his land which resulted in physical damage to the claimant’s land, that will be grounds for holding the defendant’s interference as unreasonable. In Tesa Tape Asia Pacific Pte Ltd v Wing Seng Logistics Pte Ltd, 5 the defendant had stacked several rows of containers up to seven tiers high near the perimeter fence separating the claimant’s premises. A gust of wind blew over the containers, causing them to fall onto the claimant's land and damage the claimant's property. In that case, the stacking of so many containers so close to the claimant’s property on the defendant’s premises was considered inherently unsafe and therefore amounted to an unreasonable interference with the claimant’s land once physical damage to the claimant’s land materialised.

1 Hygeian Medical Supplies Ple Ltd v T1i-Star Rotary Screen Engraving Works Pte Ltd (1993) 2 SLR(R) 411.

2 Halsey v Esso Petroleum Co Ltd (1961] 1 WLR 683

3 Ibid.

4 Colls v Home & Colonial Stores Ltd [1904) AC 179

5 Tesa Tape Asia Pacific Pte Ltd v Wing Seng Logistics Pte Ltd. (2006) 3 SLR{R) 116

b) Public Costs and Benefits

When the defendant’s use of land was potentially beneficial to the public, the courts would weigh the social costs of the defendant’s activity against the benefits conferred to the wider public.6 While a publicly beneficial use of land by the defendant does not automatically outweigh the private interests of the claimant, the claimant should not have to bear interference with his interests beyond what one can reasonably expect individuals to bear without compensation.

Notably, this is not the position in English law. Public costs and benefits are only considered when considering the remedy to the nuisance.7 Where the activities of the defendant that constitute nuisance may confer public benefit, such as the strengthening of national defence through fighter pilot training in Dennis v Ministry of Defence, the English courts will not consider public benefit when ascertaining whether the activity constituted unreasonable interference. That issue is relevant only to the grant of remedy, such as damages in place of an injunction.

c) Locality

Where the defendant’s interference with the claimant’s property results in material physical damage, locality tends to be less relevant to assessing the reasonableness of the interference. Where it is relevant is if the interference affects the claimant’s enjoyment of his land. Under those circumstances, locality becomes relevant as the hypothetical claimant who suffers only “sensible discomforts”8 as a result of the trade or general business that occurs in that place should not be able to complain; the public interest requires that business should continue per usual.

d) Malice

Rarely, a defendant may maliciously interfere with the enjoyment of the claimant’s property. Activities conducted just for the sake of annoying or otherwise causing some sort of deliberate reduction in amenity to the claimant’s land is an illegitimate use of land and so constitute an unreasonable interference with the claimant’s use of his land.9

6 Antrim Truell Centre Ltd v Her Majesty The Queen in Right of the Province of Ontario [2013] l SCR 594

7 Dennis v Ministry of Defence [2003] EWHC 793 (QB)

8 St Helen's Smelting Co v Tipping (1865) 11 HLC 642; 11 ER 1483

9 Hollywood Silver Fox Farm Ltd v Emmett [1936] 2 KB 468

e) Practical Considerations and Hypersensitivities

For the defendant whose activities conducted on his land potentially interfere with the use or enjoyment of his neighbour’s land, a duty is owed to his neighbours to take proper precautions and to ensure that the nuisance is reduced to a minimum. This includes measures such as restrictions on hours of operations and putting up of noise barriers where practical to do so. If, however, the defendant’s land is exceptionally susceptible to damage, his claim is likely to fail. In other words, if the damage caused to the claimant’s land was due to the hypersensitivity of the claimant’s activities or land to the defendant’s actions, the interference is unlikely to be unreasonable. Only if an ordinary claimant would have also suffered damage to his land as a result of the defendant’s activities can the interference by the defendant be said to be unreasonable.

To summarise, the Singaporean claimant must first prove to the court that the defendant’s activities had interfered with the use and enjoyment of his land. Following which, the court will, with reference to the five factors, decide whether the interference was unreasonable and impose liability accordingly.

B. UK’s Approach to the Tort of Private Nuisance

1. Defining Interference Prior to Fearn

To understand the change brought about by Fearn, we must first see what the law was pre-Fearn Before Fearn, interference that did not result in physical damage to the claimant’s land could only be determined with reference to the violation of some protected interest or right held by the claimant. In other words, there was no “test” for what actions could constitute nuisance. Rather, nuisance would only be established if there was interference with a claimant’s protected interest by the defendant. These interests included an interest in not being exposed to bad smells, 10 unreasonable vibrations11 or noxious fumes and smoke.12 Essentially, any examination of whether the actions of a defendant constituted nuisance had to be made with reference to a closed list of recognised, protected interests held by the claimant. Courts would very rarely have “opened” the list to recognise a new category of protected interest.

10 Adams v Ursell [1913] 1 Ch 269.

11 Hoare v McAlpine[1923] 1 Ch. 167

12 St Helen’s Smelting v Tipping (1865) 11 HLC 642; 11 ER 1483

In fact, there had been a history of courts being unwilling to recognise new protected interests. In AG v Doughty, 13 the courts refused to recognise that the claimants held a protected interest in the form of a right to a view while Bradford v Pickles saw the courts refuse to extend the right to ordinary above ground water flow to percolating, underground water flow beneath the claimant’s land. Indeed, in Fearn itself, the lower courts had refused to recognise that the claimants held a legally protected interest in not being exposed to constant, oppressive visual intrusion from the thousands of visitors that visited Tate Gallery’s viewing platform. Safe to say, the courts had always been reluctant to extend existing protected interests to cover new situations, much less create new ones where a novel situation may have demanded it.

2. Establishing Unreasonable Interference

Only having established the aforementioned invasion of the claimant’s interest can the court begin to assess whether such interference with the claimant’s enjoyment of land was unreasonable. The old “reasonable user” test asks what the normal person would find reasonable to have to put up with and whether the defendant’s actions go beyond that line. Similar factors such as locality,14 nature of the defendants conduct as regards malice15 and the hypersensitivity of the claimant’s land to damage 16 are all taken into consideration, the key difference being that public interest is straightforwardly not considered when determining whether the interference was unreasonable but rather the type of remedy granted to the claimant. The difference between how Singapore and UK define unreasonable interference are rather small and, in any case, not the main topic of discussion in this article. In the interest of brevity, I shall not expound further on this area.

C. Recent Change in the Law Brought about by Fearn

The recent case of Fearn has opened the once closed list and judges no longer need reference to violation of some legally recognised right or interest held by the claimant in order to find interference. Rather, the court will now ask itself this question: Has the defendant’s use of land caused a substantial interference with the ordinary use of the claimant’s land?17 Fearn introduces a new two-step test for the courts to determine whether the defendant’s actions are sufficiently serious to constitute private nuisance.

13 [1752] 28 ER 290

14 Sturges v Bridgman (1879) LR 11 Ch defendant 852

15 Hollywood Silver Fox Farm v Emmett [1936] 2 KB 468

16 Robinson v Kilvert (1889) LR 41 ChD 88

17 Ibid at [21]

1) Has the defendant’s use of land has caused a substantial interference with common and ordinary use of land by the claimant?

2) Is the defendant’s use of land common and ordinary?

1. Substantial interference

Fearn at [22]-[23] has drastically lowered the bar for what can be considered interference. According to Fearn, substantial interference is any interference exceeding a minimum level of seriousness and to be assessed objectively by the standards of an ordinary or average person in the claimant’s position. The court no longer has to examine the actions of the defendant with reference to a violation of some legally protected interest of the claimant. Instead, any action can constitute interference so long as the reasonable person in the claimant’s position would agree. Not only has the bar as to what constitutes interference been lowered, the once closed list of interferences, only ascertainable with reference to a specific list of legally protected interests that first had to be violated, has now been opened to allow for any action to constitute interference.

The reason for this change was explained by the majority earlier in the judgement.18 According to the majority, the previous method of establishing interference with reference to a closed list of protected interests was unhelpful as “there is no conceptual or a priori limit to what can constitute a nuisance”. In fact, the majority felt that “anything short of direct trespass on the claimant's land which materially interferes with the claimant's enjoyment of rights in land is capable of being a nuisance.”

Normatively, such an approach is far more prudent for the court to adopt as it creates greater flexibility and adaptability when deciding novel cases. The common law may very well have never envisaged the possibility of certain types of interferences being physically possible to begin with, making the approach of equating interference with a violation of some legally protected interest underinclusive and incapable of dealing with new situations that arise as technology and society progress. The majority quite rightly point out that the focus of the law on public nuisance is compensating “interference with the utility or amenity value of the claimant's land” due to “something emanating from land occupied by or under the control of the defendant”. Hence, the reformulation of the test for interference is normatively desirable and accords greater flexibility to

the courts to deal with novel situations and recognise new forms of interference hitherto unprotected by the common law.

While it should be noted that judges were theoretically always free to recognise new protected interests in the law, the cases previously discussed has shown conclusively that the old framework for determining interference made judges unwilling to “open the list” and accord legal recognition to a new interest that arose. Hence, while the change brought about by Fearn may not appear significant on paper, in practice, its value in granting more flexibility to the courts cannot be understated.

2. Common and ordinary use of land by the claimant

Not only must there be an interference, but the interference must also affect the common and ordinary use of the claimant’s land. The majority in Fearn, citing Fleming v Hislop, 19 opined that nuisance is “what causes material discomfort and annoyance for the ordinary purposes of life to a man's house or to his property". In other words, the common law of private nuisance prioritises general and ordinary use of land over more particular and uncommon uses.

This cuts two ways. Straightforwardly, if the interference of the defendant negatively affects the claimant’s ability to enjoy his land in a common and ordinary manner, the claimant should be compensated accordingly, or the defendant ordered to end his interference. This points to the heart of what each of the legally protected interests decided under the old law were trying to protect: the ordinary and common use of his land by the claimant. Bad smells and noxious fumes are undoubtedly interferences with the common and ordinary use of the claimant’s land by the defendant, and are best expressed as such, as opposed to piecemeal violations of separate protected interests such as an interest against living with bad smells or with the presence of noxious fumes respectively.

However, this also means that interference by the defendant with an extraordinary and uncommon use of his land by the claimant are not protected by the law. This ensures that defendants are not unfairly held responsible for damage that materialises due to an uncommon, extraordinary use of the land by the claimant that makes his land more susceptible to damage by the defendant. Instead, it preserves the Robinson position that only interference which would have resulted in damage to land used in an ordinary manner is protected by the law.

3. Uncommon and extraordinary use of land by the defendant

The principle of protecting common and ordinary use of one claimant’s land does not stand alone but instead in conflict with another principle: reciprocity between neighbours and give and take. The defendant also has a right to the common and ordinary use of his own property as well. Equal justice and fairness require recognition of the defendant’s rights to the common and ordinary use of his own land such as freedom to build structures and carry out everyday activities. Cases such as Hunter v Canary Wharf20 and Southwark LBC v Tanner21 protect these activities as common and ordinary use of land. Only if the defendant’s land was used in an uncommon and extraordinary manner would the claimant’s right to common and ordinary use of his land be favoured over defendant.

The newly defined second stage of the test replaces the old “reasonable user” test formulated by Bramwell B and restated by Lord Goff in Cambridge Water v Eastern Counties Leather 22 Fearn at [18][21] explains that while “unreasonableness” has always been used to describe interference that amounts to nuisance, it is not “unreasonableness” itself that leads to a finding of liability. Rather, the common law of nuisance seeks to protect the right to common and ordinary use of land by its owner and stop any interference with it caused by an uncommon and extraordinary use of the adjacent land. In fact, Fearn at [29] points out how Lord Goff’s remarks in Cambridge Water have been misconstrued to say that “unreasonableness” is itself the test for interference amounting to nuisance. In reality, Lord Goff was trying to point out that the true focus of the law of nuisance is protecting “common and ordinary use and occupation of land and houses”.23

While it can be noted that interference with common and ordinary use of land is itself unreasonable, the label of “unreasonableness” is underinclusive as it only looks at the impact of defendant’s activities rather than the way it comes about. The effect of defendant’s activities could very well be unreasonable interference with claimant’s ordinary and common use of land. However, the principle of give and take and reciprocity between neighbours requires that claimant put up with defendant’s activities, respecting defendant's right to common and ordinary use of his own land.

20 [1997] AC 655

21 [2001] 1 A.claimant. 1

22 [1994] 2 AC 264

23 Ibid at [299]

D. Comparison Between UK and Singapore’s Current Position

When it comes to interference, the bar in Singapore is admittedly higher than that in the UK. Where the UK takes an expansive approach to interferences to the point where nearly anything could reasonably constitute substantial interference post-Fearn, the subsequent stages of the test limits actionability to ensure that no defendant is unfairly held liable for any interference with the claimant’s property regardless of circumstances. In Singapore, the defendant’s actions only constitute interference where they cause physical damage or reduction in the claimant’s enjoyment of his land.

Ultimately however, I submit that the difference between the two jurisdictions’ definition of interference is rather artificial. In practice, whether an interference is considered substantial by the reasonable person in the UK will likely be analysed with respect to the two categories of interference laid out in Singapore’s law. In other words, only interferences that cause physical damage or reduction in the amenity of the claimant’s land would be considered substantial in the eyes of the reasonable person in the UK to begin with. Hence, the test laid out in both jurisdictions are fairly similar.

1. Unreasonable Interference vs Common and Ordinary Use Of Land

More salient would be the different approach each jurisdiction takes to determining the actionability of the interference. The consideration shared by Singapore and the UK’s pre-Fearn law in determining the unreasonableness, and hence actionability, of the interference are the purposes of the defendant, the nature of the activity and nature of the land. Post-Fearn, only nuisance which stems from an uncommon and extraordinary use of defendant’s land which affects the common and ordinary use of claimant’s land will be actionable.

On one level, the difference between the two approaches seems artificial. Would not all interferences with claimant’s common and ordinary use of land by defendant’s extraordinary and uncommon use of his land be ipso facto unreasonable? However, nowhere in the pre-Fearn “reasonable user” test is there any mention of common and ordinary use of land. Rather, it simply asked what objectively a normal person would find reasonable to have to put up with. One argument may be that the reasonable person should have to put up with all forms of ordinary and common use of his neighbour’s land.

However, an ordinary and common use of land can create interference which even a normal person may find unreasonable to put up with. The facts of Southwark LBC v Tanner illustrate this best. In that case, the absence of noise insulation between flats meant that the claimant was constantly exposed to the noises created by the common and ordinary use of the defendant’s flat above. In fact, it was said that “For the most part, they(defendant) are behaving quite normally. But the flats have no sound insulation. The tenants(claimant) can hear not only the neighbours' televisions and their babies crying but their coming and going, their cooking and cleaning, their quarrels and their love-making. The lack of privacy causes tension and distress”.

Clearly, nobody would find it reasonable to put up with interference to the duration and extent described in Southwark. Yet, the majority found such interference not to be unreasonable. This ostensibly supports the position of all ordinary and common use of land being reasonable but would be ultimately misleading. Throughout Southwark, the court focused almost entirely on the use of the land rather than the reasonable user test, making reference to unreasonableness only once but how the defendant used his flat multiple times throughout the judgement. Implicit in Southwark is the notion that hidden behind the fiction of the “reasonable user” is simply the equal protection of defendant and claimant’s right to common and ordinary use of their land.

Other judgements support this claim as well. Bramwell B in Bamford v Turnley24 saw the role of the tort of private nuisance as protecting “common and ordinary use and occupation of land and houses”. He even relied on the ‘rule of give and take, live and let live’, implying that the law had to protect both defendant and claimant’s rights to the common and ordinary use of their land. Later, in Cambridge Water, 25 Lord Goff came up with the “reasonable user” when referring to Bramwell B’s principles, ultimately giving credence to the notion that implicit behind the reasonable user test was always the notion of common and ordinary use of land. This was later used by Lord Leggatt to justify the change brought about by Fearn at [246], holding that Lord Goff’s used the term “reasonable user” as a shorthand for someone who uses his land in an ordinary manner rather than being a new, standalone test to be applied. The reasonable user test had taken on a life of its own ever since its inception in Cambridge Water. While it generally has been applied correctly, it fails to reflect the true purpose of the tort in protecting common and ordinary use of land rather than limiting what the reasonable person can be expected to bear. More broadly, reasonableness as a concept operates at a high level of abstraction and can be understood

differently by different judges leading to inconsistent application in the law. The change in the law brought about by Fearn provides greater clarity to the courts through a simpler test.

The minority in Fearn argue that the new approach distorts the tort of public nuisance and the need to balance the competing interests by placing the burden of avoidance of friction between neighbours on defendants. However, this seems misguided as the new test seeks to protect the defendant’s common and ordinary use of land as well and in fact absolves the defendant of liability where his activities constitute common and ordinary use of his own land. More interestingly, they argue that the emphasis the emphasis on common and ordinary use of land may hinder land development and prevent innovation. However, I submit that the law should protect the common and ordinary use of land over a novel one. Even if the novel use creates great potential public benefit, not only is there no guarantee that this benefit would materialise but development should be undertaken in such a way as to not interfere with the defendant’s ordinary and common use of land. If anything, Hunter v Canary Wharf26 protects the freedom to build and develop land in an innovative manner as a common and ordinary use of land so long as it is conveniently done without undue inconvenience to neighbours. Hence, I submit that the concerns of the minority are likely overblown and adequately accommodated for in the case law and in the new test.

2. Application to Singapore

The law of private nuisance in Singapore has by and large followed the law in the UK up till Fearn The question then becomes whether it would be normatively desirable for Singapore to follow the UK’s approach to public nuisance. I submit that normatively, the vastly different societal landscapes between the UK and Singapore makes the unreasonable user test more desirable in Singapore from a policy perspective.

The UK as a whole has had a long history of protection of land ownership and the use of one’s land, best represented by the Sir Edward Coke’s most famous saying that “an Englishman’s home is his castle”. English jurists from the 16th to 18th century have long prioritised the proprietary rights of landowners and the protection of one’s land from unwarranted interference such that even "[t]he poorest man may in his cottage bid defiance to all the forces of the crown. It may be frail - its roof may shake - the wind may blow through it - the storm may enter - the rain may enter - but the King of England cannot enter."

Ultimately, the English conception of land as tiny fiefdoms or castles to which the owner has ultimate control is justified by the UK’s legal history and past struggles with totalitarian monarchs seizing land for the crown’s purposes. Consequently, the emphasis on protection of landowner’s rights against unlawful trespass has bled over into the law of public nuisance, with English law normatively favouring the right of landowners to common and ordinary use of their land, even if at the expense of some interference with their neighbour. In this conception, the odds of an activity within the common and ordinary use of one’s land creating substantial interference is fairly low and so justifies greater protection of common and ordinary use of land as a subset of broader landowner’s rights.

However, the story is different in Singapore. Unlike the UK, land use tends to be in the vertical rather than horizontal dimension and the population density is much higher. Common and ordinary use of land is much more likely to create substantial interference to one’s neighbours if reasonable steps are not taken to minimise their impact. The smaller size and greater population density of Singapore justifies the need for “unreasonableness” as the test for interference constituting nuisance as the closer proximity to one’s neighbours elevates the importance of reciprocity and consideration. Thus, better protection is afforded to the enjoyment of one’s land in a more densely populated nation like Singapore if the standard of nuisance is what a reasonable person can be expected to bear as opposed to whether the interference affects common and ordinary use of land. Interference to the extent of Southwark would be far too much for the reasonable man to bear in Singapore even if one’s neighbours were acting within the common and ordinary use of their land. The standard of “unreasonableness” in private nuisance is arguably fossilised in statute by the Community Disputes Resolution Act 2015. Section 4(1) of the Act stipulates that a person may not by act or omission, directly or indirectly, and whether intentionally, recklessly or negligently, cause unreasonable interference with his neighbour's enjoyment or use of the latter's place of residence. Not only is the standard of unreasonableness explicitly captured by the act, it imposes strict liability on land owners interfering with their neighbour’s enjoyment of land even if the former’s use of land was common and ordinary i.e., it imposes a positive duty on land owners to be considerate and take reasonable steps to not interfere with their neighbour’s enjoyment of land, even if they were using their land in a common and ordinary way. While the English courts would object to such an approach, the architectural and geographical landscape in Singapore warrants greater consideration for one’s neighbours over wholesale protection of landowners’ rights.

Ultimately, it is policy reasons that justify the standard of unreasonableness in Singapore and the evaluation of nuisance with respect to what the reasonable man can be expected to bear rather than ordinary and common use of land alone. Such an approach better suits the needs of Singapore, a far more densely populated country than the UK, where most of the population lives in blocks of flats with many neighbours in close proximity as opposed to cottages on little parcels of land which can operate as tiny fiefdoms with little to no interference with one’s neighbour. Hence, I submit that while it is legally principled and normatively justified for the UK to eschew the “reasonable user” test and shift its focus to ordinary and common use of land in Fearn, societal differences in Singapore make her better suited to the “reasonable user” test to ensure greater consideration between neighbours in a more densely populated society that lives in close proximity with each other within high rise flats.

Acquiring Air India: Turbulent questions for the Competition and Consumer Commission of Singapore (CCCS)

Tarun Rao

The acquisition of Air India by Talace Private Limited, a holding company of Tata Sons Private Limited, has posed distinctive questions for the Competition and Consumer Commission of Singapore (CCCS) in its oversight of Singapore’s merger control regime. The merger carries the possibility of creating a significant reduction in competition within the air travel market connecting Singapore with major Indian cities such as Mumbai. The existing framework by which the CCCS requires airlines to make certain undertakings proves inadequate in addressing the implications of this acquisition, with limited precedents for the CCCS to consider in reaching a well-informed decision. The United Kingdom and Singapore share a similar merger control regime and an identical statutory test. Recently, the United Kingdom’s Competition and Markets Authority (CMA) approved a merger between Korean Air and Asiana Airlines which shared some of the characteristics with the acquisition of Air India by Tata Sons.1 The decision reached by the CMA therefore suggests a potential avenue for the CCCS to adopt in addressing the competitive concerns arising from the acquisition of Air India. This article aims to explore the legal context surrounding merger control in Singapore and the United Kingdom, as well as the commercial landscape within which the mergers of Air India-Tata and Asiana-Korean Air occurred. Additionally, it will address the competitive concerns associated with these mergers. Finally, this article will conclude with an examination of undertakings accepted by the CMA and additional concerns that will pose a challenge to the Air India acquisition.

A. Overview of merger control in Singapore and the United Kingdom

Merger control in Singapore is governed by the Competition Act 2004, which provides the basis for most of the substantive law relating to anti-competitive behaviour by companies in Singapore.2 Prior to the enactment of the Competition Act 2004, there was no statutory basis for merger control or the regulation of anti-competitive behaviour. The introduction of a statutory basis for

1 Julie Masson, “CMA approves Korean Air/Asiana Airlines with slot divestments” (1 March 2023) Global Competition Review < https://globalcompetitionreview.com/article/cma-approves-korean-airasiana-airlines-slotdivestments> accessed 16 July 2023.

2 Competition Act 2004 (Singapore).

regulating merger control and anti-competitive behaviour was motivated both by economic policy reasons, and by Singapore’s obligations under international treaties.3

By contrast, English law governs anti-competitive practices and merger control through the Competition Act 19984 and the Enterprise Act 2002,5 respectively. The latter focuses specifically on merger control, granting the CMA the authority to investigate mergers and acquisitions that have the potential to threaten healthy competition within markets.

1. Legal threshold for merger control in Singapore and the United Kingdom

The United Kingdom and Singapore share similarities in their merger control regime, with the Singaporean Competition Act 2004 being after provisions under English law.6 An essential aspect to any merger control regime is the substantive test used to decide if a proposed merger between two companies or entities should proceed or if such a merger should be prohibited or restricted. In determining if a merger between two entities should be allowed, competition authorities worldwide usually rely on either a market dominance test or a substantial lessening of competition test. 7 The former asks if a merger would create or strengthen a dominant position and is predominant across much of the European Union, while the latter has been adopted by competition authorities in Singapore and the United Kingdom. Both the CCCS and the CMA follow the same threshold in determining if a merger should proceed, namely if there is a ‘realistic prospect’ of the merger resulting in the significant reduction in competition.8 9

B. Background to the acquisition of Air India

Air India is India’s flag carrier and one of the largest airlines in the domestic and international air travel markets in India. A state-owned enterprise of the Indian Government from 1953 until 2022, the airline had in recent years suffered considerable financial losses and a poor reputation among

3 Daren Shiau, 'Chapter 10: Singapore', in Katrina Groshinski and Caitlin Davies, Competition Law in Asia Pacific: A Practical Guide, (Kluwer Law International; Kluwer Law International 2015) 573 - 633.

4 Competition Act 1998 (United Kingdom).

5 Enterprise Act 2002 (United Kingdom).

6 Burton Ong, 'The Origins, Objectives and Structure of Competition Law in Singapore', World Competition Law and Economics Review, (Kluwer Law International; Kluwer Law International 2006, Volume 29 Issue 2) 269 – 284.

7 OECD (2005), "Substantive Criteria Used for the Assessment of Mergers", OECD Journal: Competition Law and Policy, Volume 6/3.

8 Section 54 Competition Act 2004 (Singapore).

9 Section 22 Enterprise Act 2002 (As amended by the Enterprise and Regulatory Reform Act 2013) (United Kingdom).

consumers.10 Following several failed attempts at privatisation, the airline was sold in 2022 to Talace Private Limited, a holding company owned by Tata Sons. 11 Subsequently, the CCCS announced the commencement of a Phase 1 review of the acquisition, noting that the merger had the potential to result in a substantial reduction in competition. The CCCS also announced a further in-depth Phase 2 review of the acquisition.12

Tata Sons is one of India’s largest conglomerates, operating businesses across several industrial sectors, including Vistara, a joint venture with Singapore Airlines. In May 2023, Vistara was the third largest airline in India’s domestic air travel market with 9.0% market share, holding a similar share of the market to Air India with its 9.4% share of the domestic air travel market.13 Both airlines are considerably behind low-cost heavyweight IndiGo which held 57.5% of the market share.14 The highly consolidated nature of the passenger air travel market in India means that mergers between airlines could result in them obtaining significant market power. Given the high barriers to entry in the industry, it would be difficult for a new entrant to enter the market, potentially resulting in diminished competition at the consumer’s expense.

1. India’s international air travel market

In India’s international air travel market, the combined market share of the top five airlines with the largest international operations is approximately 55%, indicating a more diverse landscape compared to the domestic market.15 Behind the seemingly diverse international air travel market in India, there exists fragmentation, allowing airlines to exert notable market power on specific routes, such as those connecting Singapore and various Indian cities. At the time of the announcement of a Phase 2 inquiry by the CCCS, some competing airlines such as IndiGo were

10 Astha Oriel, “Tata Group Reclaims Air India After 68 Years” Outlook India (27 January 2022) < https://www.outlookindia.com/business/tata-group-reclaims-air-india-after-68-years-news-47918> accessed 17 July 2023.

11 Ibid.

12 “CCCS Raises Competition Concerns on the Acquisition by Talace Private Limited of Air India Limited” Competitor & Consumer Commission Singapore (3 June 2022) < https://www.cccs.gov.sg/media-andconsultation/newsroom/media-releases/talace-air-india-merger-competition-concerns-3jun2022> accessed 17 July 2023.

13 Directorate General of Civil Aviation (India), “Market share of airlines across India in financial year 2022, by passengers carried” in Handbook on Civil Aviation Statistics 2021-22 (DCGA, 2022).

14 Rajesh Naidu, “InterGlobe on recovery path as market share improves” The Economic Times (1 June 2023) < https://economictimes.indiatimes.com/markets/stocks/news/interglobe-aviation-on-a-path-to-recovery-amidimproving-market-share/articleshow/100625653.cms?from=mdr> accessed 17 July 2023.

15 Directorate General of Civil Aviation, “Market share of major airlines in India in financial year 2022, based on international traffic” in Handbook on Civil Aviation Statistics 2021-22 (DCGA, 2022).

already operating other flights between Singapore to other Indian cities including Chennai and Kochi.

Nevertheless, given the complexity of the Singapore-Indian air market, this article will focus its analysis on one of the most important routes between Singapore and India the SingaporeMumbai route which connects Singapore to India’s financial capital. Until April 2023, Singapore Airlines, Vistara, and Air India were the only operators of direct flights on this route. Vistara, being a joint venture between Tata Sons and Singapore Airlines to capitalise on the latter’s public image, would naturally be disinclined to offer stiff competition to its joint venture parent Singapore Airlines. More significantly, following the announcement by the CCCS of a Phase 2 merger review, Tata Sons has since announced its intention to merge Vistara and Air India. Singapore Airlines has approved this merger of Vistara and Air India, intending to take a 25.1% share of the new entity.16

The CCCS’s press statement notes the need for the CCCS to determine whether Singapore Airlines would be able to compete against Air India on routes between Singapore and major Indian cities.17

The 25.1% share that Singapore Airlines can expect to hold in Air India would be a strong disincentive against competition.

16 Saurabh Sinha, “Tatas & Singapore Airlines agree to merge Vistara into Air India by March 2024; 25.1% stake for SIA in 'new Al'” The Times of India (Mumbai, 29 November 2022)

< https://timesofindia.indiatimes.com/business/india-business/tatas-singapore-airlines-agree-to-merge-vistarainto-air-india-by-march-2024-25-1-stake-for-sia-in-new-ai/articleshow/95855970.cms> accessed 10 May 2023

17 CCCS, “CCCS Raises Competition Concerns on the Acquisition by Talace Private Limited of Air India Limited” (3 June 2022) < https://www.cccs.gov.sg/media-and-consultation/newsroom/media-releases/talace-air-indiamerger-competition-concerns-3jun2022> accessed 5 May 2023.

Figure 1 Chart showing the organisational structure of entities before and after the proposed acquisitions and mergers are completed.

2. Barriers to entry and the resulting challenge to competition

In addition to the high cost of entrance, further barriers to entry for new competitors seeking to enter the Mumbai-Singapore route due to limitations on available slots. Airports worldwide commonly employ the practice of allocating ‘slots’ to effectively manage capacity and ensure optimal utilisation of airport infrastructure by airline companies. Typically, airlines are limited to operating flights out of airports only where they hold allocated slots. These slots can effectively be a barrier to new competitors, preventing other airlines from running passenger flights to an airport even if they have the available staff, capital, and other necessary resources.18 Mumbai airport, due to its insufficient capacity and the presence of only one runway, has suffered a perennial shortage of available slots, restricting the ability of competitors to enter the Singapore-Mumbai passenger air travel market.

The acquisition of Air India by Tata Sons, occurring in the backdrop of an existing joint venture with Singapore’s flag carrier Singapore Airlines, poses a challenge to competition in the SingaporeIndia air market. The objectives of merger control aim to foster commercial activity while ensuring competitive markets, which may be jeopardised by the proposed acquisition of Air India by Tata Sons. At the same time, the consolidation of different airlines, each of which was suffering from profitability issues, might improve efficiencies and deliver cost savings that could be passed onto consumers. Given regulatory scrutiny, the outcome of a competition enquiry would be determined by the commitments which merging parties could offer to the CCCS and whether such commitments would mitigate the risk of a substantial reduction in competition.

To assuage the concerns of the CCCS, Tata Sons would likely be required to make certain commitments to address the competition concerns raised by the CCCS. These commitments are a common feature in regulators overseeing mergers and alliance agreements between competing airlines.

C. Existing Precedents of the CCCS

The CCCS has experience in addressing competition issues in the airline industry and specifically in evaluating the efficacy of commitments made by airlines seeking to assure the CCCS that markets would remain competitive. In addition to the Competition Act 2004, the CCCS also

18 Mihir Mishra, “Flying in and out of Mumbai to get costlier due to scarcity of landing slots” The Economic Times (Mumbai, 31 Mar 2016) https://economictimes.indiatimes.com/industry/transportation/airlines-/-aviation/flyingin-and-out-of-mumbai-to-get-costlier-due-to-scarcity-of-landing-slots/articleshow/51624716.cms?from=mdr accessed 11 May 2023.

relies on its Airline Guidance Note in regulating the market for passenger airline and air-freight services.19

An example of such a scenario where airlines made such commitments to the CCCS to secure its approval was in a joint venture between Lufthansa and Singapore Airlines in 2016.20 The alliance agreement between Lufthansa and Singapore Airlines, the flag carriers of Germany and Singapore respectively, had the potential to cause a substantial reduction in competition on routes connecting Singapore to various German and Swiss cities including Frankfurt, Munich, and Zurich.21 At the same time, both Singapore Airlines and Lufthansa highlighted the positive impacts for their customers, including cost savings, access to more destinations, and improved connectivity from the utilisation of each other’s resources. 22 To address competition concerns, both Singapore Airlines and Lufthansa made various voluntary commitments to the CCCS, which included increasing seat capacity on flights between Singapore and several German cities. 23 The CCCS responded favourably to such commitments, recognising that these commitments would mitigate competition concerns and ensure that the cost savings achieved by the merger were achieved.24

1. Limitations of existing precedents in the context of the Air India merger

The CCCS’s treatment of the Lufthansa-Singapore Airlines alliance offers some guidelines to the sort of undertakings Tata Sons would have to offer, however it is limited in some key respects. This is because the approach of the CCCS in this case, and the underlying law which governs alliance agreements, is distinct from that governing merger control, with a higher threshold being imposed on mergers which the CCCS reviews. The commitments that were offered by Lufthansa and Singapore Airlines directly mirror the possible commitments identified by the CCCS in its Airline Guidance Note.25 The CCCS in its Airline Guidance note adopts a more relaxed approach

19 CCCS, “CCCS Guidance Note for Airline Alliance Agreements” (5 September 2018) < https://www.cccs.gov.sg/public-register-and-consultation/public-consultation-items/public-consultation-on-ccsdraft-guidance-note-for-airline-alliance-agreements> accessed 6 May 2023.

20 Competition Commission of Singapore (‘CCS’), “CCS Consults on the Proposed Joint Venture between Deutsche Lufthansa AG and Singapore Airlines Limited” (5 April 2016) < https://www.cccs.gov.sg/media-andconsultation/newsroom/media-releases/proposed-jv-between-lufthansa-and-singapore-airlines> accessed 5 May 2023.

21 Ibid.

22 Singapore Airlines, “SIA and Lufthansa Group Forge Extensive Partnership Involving JV On Key Routes” (11 November 2015) < https://www.singaporeair.com/en_UK/br/media-centre/pressrelease/article/?q=en_UK/2015/October-December/11Nov2015-1739> accessed 17 July 2023.

23 CCS, “CCS Accepts Capacity Commitments by SIA and Lufthansa in Clearing their Proposed Joint Venture” (12 December 2016) https://www.cccs.gov.sg/media-and-consultation/newsroom/media-releases/ccs-acceptscapacity-commitments-by-sia-and-lufthansa accessed 5 May 2023.

24 Ibid.

25 CCCS, “CCCS Guidance Note for Airline Alliance Agreements”.

to the regulations of airlines, and this likely has its origins in the differences between Section 34 and 54 of the Competition Act 2004. 26 While Section 34 concerns the creation of agreements which are designed to stymie competition, Section 54 imposes a far higher threshold, permitting the prevention of mergers where there is a ‘realistic prospect’ of a substantial lessening of competition.27 This is likely reflective of the far more permanent nature of mergers in contrast to alliance agreements whose contents are limited to the agreement itself between airlines.

The extent of control and cooperation which would occur following the acquisition of Air India is far greater than that envisaged in the alliance agreement between Lufthansa and Singapore Airlines. The previously discussed merger of Air India and Vistara, alongside the considerable stake held by Singapore Airlines in the merged entity, represent a considerable disincentive for competition. The existing precedent for approaching agreements between airlines therefore does not provide a sufficient framework for the CCCS to approach the acquisition of Air India and its merger with Vistara. Given the lack of existing precedent, it is worth referring to other jurisdictions, notably the United Kingdom, which can provide a framework for the CCCS in approaching this merger.

D. Asiana and Korean Air: An approach for the CCCS

To examine what the approach of the CCCS can and should be towards the acquisition of Air India as well as possible undertakings which might be acceptable to the CCCS, it is worth examining the approach of the United Kingdom’s CMA towards a similar merger. The CMA had, following the announcement of a merger between Asiana and Korean Air, expressed concerns relating to a substantial reduction in competition in the market for passenger transport between the United Kingdom and the Republic of Korea.28 Nevertheless, following a series of undertakings by Korean Air, the CMA concluded that these promised undertakings would be enough to address concerns relating to the substantial lessening of competition.

1. Background and competition issues

The announcement of a merger between Asiana and Korean Air occurred in the backdrop of the COVID-19 pandemic, with both Asiana and Korean Air having come under financial pressure before and during the COVID-19 pandemic. The merger of the two airlines, bitter rivals in the

26 Competition Act 2004 (Singapore).

27 Ibid.

28 CMA, “Anticipated acquisition by Korean Air Lines Co., Ltd of Asiana Airlines Inc.”, ME/6924/21 (14 November 2022).

Korean market, was spearheaded by a Korean state-owned bank which sought to create a single large airline able to compete globally.29 Regulators in Singapore were sanguine on the merger, approving it following a Phase 1 inquiry. This was due to the continued presence of Singapore Airlines in the market for flights between Singapore and Korea which would limit the probability of there being a substantial lessening of competition. Contrastingly, in the United Kingdom, regulators were more concerned about the prospect of a substantial lessening of competition, particularly given that the United Kingdom’s flag carrier, British Airways, has stopped running flights between the United Kingdom and Korea.30 Following the merger, the merged entity would have a monopoly on the market for direct flights between London’s Heathrow Airport and the Incheon International Airport near Seoul.

These fact patterns, although different from the Singapore-Mumbai air travel market in some key regards, are sufficiently similar. It would therefore be useful for regulators in examining how the CMA, under the United Kingdom’s competition law, approached the prospect of a substantial lessening of competition.

2. Undertakings offered by Korean Air and Asiana

In response to the CMA’s concerns, Korean Air and Asiana made several undertakings to ensure regulatory approval for the merger. Following a Phase 2 inquiry, the CMA was able to conclude that these undertakings would ensure that even following the merger, there would not be a substantial lessening of competition. These undertakings were primarily concerned with Korean Air and Asiana, facilitating the entry of a new competitor into flights between Heathrow Airport and Incheon International Airport.31 In the context of the agreement between Korean Air and the CMA, this new competitor was to be Virgin Atlantic, a competing airline whose flights were primarily to destinations in the United States, the Caribbean, the Middle East, and South Asia. Operating a flight between London and Seoul would mark a significant milestone for the firm’s operations in East Asia, where the airline has only one other route between London and Shanghai.

Facilitating the entry of a new competitor required several other commitments from Korean Air, including a commitment to make some of their slots available for Virgin Atlantic,32 in addition to

29 Kim Jaewon, “Korean airline merger faces debt burden and antitrust concerns” Nikkei Asian Review (30 November 2020) https://asia.nikkei.com/Business/Business-deals/Korean-airline-merger-faces-debt-burden-andantitrust-concerns accessed 11 May 2023.

30 CMA, “Anticipated acquisition by Korean Air Lines Co., Ltd of Asiana Airlines Inc.”.

31 CMA, “Decision on acceptance of undertakings in lieu of reference”, ME/6924-21 (3 March 2023).

32 Ibid.

a codeshare agreement, providing ground handling services, and a frequent flyer cooperation programme, among other requirements. In commercial terms, the agreement entered between Korean Air and the CMA would require Korean Air to provide much of the required facilities and infrastructure, both physical and otherwise, for Virgin Atlantic to use in its flights between London and Seoul.

E. Feasibility of this approach in the Air India acquisition

The undertakings accepted by the CMA for the merger of Asiana and Korean Air offer a promising solution for allowing the acquisition to proceed. These undertakings would require Tata Sons to, after the merger, facilitate the entry of a new competitor into the market. There are few airlines which would be able to enter the market, with the two likely candidates being IndiGo and SpiceJet, both low-cost carriers which account for the two largest airlines in the Indian passenger market.

33

At the time the CCCS commenced its inquiry, the market for air-travel between Singapore and Mumbai was limited to just Singapore Airlines, Vistara, and Air India. However, in the year since the commencement of the inquiry has seen some indications of this changing. Low-cost carrier IndiGo, the main competitor to Air India in India’s domestic market, announced the commencement of flights to Singapore in March 2023,34 therefore being a competitor on the Singapore-Mumbai route following the conclusion of the merger of Air India and Vistara. It would stand to reason that with IndiGo already seeking to enter the Singapore-Mumbai passenger air market, that IndiGo could serve as an additional competitor in the market. While IndiGo’s position in the Singapore-Mumbai route is still nascent, an undertaking by Tata Sons to support IndiGo, including through the provision of slots and other required resources might assuage the competition concerns of the CCCS. Such an undertaking by Tata Sons to provide the necessary slots to a new entrant to the market, which in this context, would be IndiGo, might help assure the CCCS that the merger would not have the effect of a substantial lessening of competition.

34 Len Varley, “IndiGo boosts flight services from Mumbai” (AviationSource News, 20 March 2023) https://aviationsourcenews.com/airline/indigo-boosts-flight-services-from-mumbai/ accessed 20 May 2023.

33 Directorate General of Civil Aviation, “Market share of airlines across India in financial year 2022, by passengers carried”.

1. Key Market Differences

There are some limitations however, to the extent to which the entry of IndiGo or Spicejet, being low-cost carriers, can prevent there from being a substantial lessening of competition in the market, even if Tata Sons was required to facilitate their entry into the Singapore-Mumbai route.

Some key differences exist, however, between the markets which both companies seek to address. The exact business structure of Air India following the merger of Vistara is not known, however a crucial part of its target consumers will be consumers willing to pay more for higher quality customer service. Vistara, from its original launch, positioned itself as a ‘luxury’ carrier in the Indian market otherwise dominated by low-cost carriers.35 This contrasts with many other airlines operating in the Indian international market, including IndiGo, which has positioned itself as a low-cost carrier. Key aspects of a full-service carrier are missing within IndiGo as a result which could limit its ability to offer competition on the Singapore-Mumbai route. Firstly, IndiGo does not operate a ‘Business Class’ service on any of its airlines, although it has indicated interest in doing so in the future.36 Secondly, the airline’s current loyalty programme falls short of frequent flyer programmes offered by Air India, Vistara, and Singapore Airlines.37 These considerations are likely to result in a key segment of the Singapore-Mumbai air travel market, likely not benefitting from the additional competition arising from the entry of IndiGo.

CONCLUSION

Given that existing CCCS guidelines are insufficient to address the anti-competitive impact that the acquisition of Air India might have, it is necessary for the CCCS to look further in determining the sort of remedies or undertakings which would be necessary. The CMA’s approach to the Asiana-Korean Air merger illustrates what undertakings might address concerns that the acquisition of Air India by Tata Sons would result in a substantial lessening of competition. The similar thresholds required across Singapore and the UK means that facilitating the entry of a new competitor might seemingly be enough to justify a merger that would otherwise result in a

35 Saritha Rai, “As India’s No-frills Carriers Struggle to Earn Profits, Soon-to-launch Vistara Slots Itself as ‘Luxury’ Airline” Forbes (12 August 2014) https://www.forbes.com/sites/saritharai/2014/08/12/as-indias-no-frills-carriersstruggle-to-earn-profits-soon-to-launch-vistara-slots-itself-as-luxury-airline/?sh=4e1620ad13a2 accessed 11 May 2023.

36 Prajal Pande, “IndiGo Considering Business Class Seats for Its Airbus A321XLRs” (Simple Flying, 6 June 2022) https://simpleflying.com/indigo-a321-xlr-business-class/ accessed 20 May 2023.

37 Ajay Awtaney, “IndiGo to launch loyalty programme” (Live From a Lounge, 18 May 2023) https://www.google.com/url?q=https://livefromalounge.com/indigo-to-launch-loyaltyprogramme/&sa=D&source=docs&ust=1687127552596120&usg=AOvVaw3CBcYIzJaHES38q6xwb9d9 accessed 21 May 2023.

substantial lessening of competition. Nevertheless, given the circumstances of the specific market in which the acquisition of Air India would occur, this approach would not wholly mitigate the possibility that competition in more premium segments of the market might see a considerable reduction.

A Handshake is a Promise

Joshua Ng and Priyansh Shah

INTRODUCTION

The doctrine of consideration serves a pivotal function in contract law. Notwithstanding the fact that parties have exchanged offer and acceptance, and notwithstanding the fact that they have an intention to enter into legal relations, contractual obligations do not arise until parties have provided valid consideration to each other. At the same time, there is significant debate about the exact nature of this function. Some, like Atiyah, argue that ‘consideration’ is merely a moniker for any good reason to enforce a promise.1 Others, like Fuller, refer to the role of consideration as evincing that a promise was actually made, the promisor took care in making it, and understood its consequences.2

It is amidst this backdrop that Sunrise Industries India Limited v PT OKI Pulp and Paper Mills [2023] SGHC 3 (‘Sunrise’) was decided. The case was an opportunity for the High Court to apply the Court of Appeal decision in Ma Hongjin v SCP Holdings Pte Ltd [2020] SGCA 106 (‘Ma Hongjin’), and to shed light on the role of consideration in Singaporean law. In this case note, we examine the decision in Sunrise, and what it tells us about the function of consideration in Singapore. We then compare this to the role of consideration in English contract law, as seen in Foakes v Beer (1884) 9 App Cas 605 (‘Foakes’) and Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1 (‘Williams’) cases that were also considered in Sunrise itself. Ultimately, we submit that Sunrise demonstrates that consideration serves a primarily evidentiary function in Singapore law, serving as a marker that parties have willingly struck a bargain after negotiation. However, this is not perfectly mirrored in English law although consideration also serves an evidentiary function, it is to evidence that parties have agreed to the bargain in a fair manner.

A. The facts in Sunriseand Williams

It is first necessary to lay out the facts in Sunrise. The defendant Sunrise was a manufacturer of fittings like pipes and thermostats, and entered into a contract with the plaintiff OKI for the supply

1 Patrick Atiyah, ‘Consideration in Contracts: A Fundamental Restatement’ in Essays on Contract (OUP 1986), 181182

2 Lon L Fuller, ‘Consideration and Form’ (1941) 41 Columbia Law Review 799; see also Chen-Wishart, ‘In Defence of Consideration’ (2013) 13 OUCJL 209, 211 - 212

of pipes, fittings and manholes for OKI’s pump mill. 80% of the contract price was to be paid by a Letter of Credit.

This supply contract was subsequently amended twice, with the first amendment reflecting an increase in the contract price. Clause 5 of this amendment provided for the goods to be delivered by 25 November 2015 (the 'deadline').

The first amendment to the supply contract that reflected the increase in price resulted in two amendments to the Letter of Credit: one increasing the payment value, and another varying the 'last date of shipment' (ie., the date on which the supplied goods should be loaded on to a carrier to be shipped) to 29 February 2016.

The second amendment to the supply contract reflected both an increase in contract price and a widening of the scope of goods to be supplied. Clause 5 of this amendment provided for the goods to be delivered by 15 January 2016.

This second amendment to the supply contract resulted in a second Letter of Credit, which also provided for the 'last date of shipment' to be 29 February 2016, in accordance with the first Letter of Credit.

The project was beset by continual delays, and the goods arrived on 24 March 2016 well past the deadline on the supply contract amendments. In a claim for delay against Sunrise, OKI sought to argue that the Letters of Credit had also varied the deadline on the underlying supply contract.

The High Court ultimately found for OKI. In doing so, it noted on the question of whether there was consideration for the variation, that:

'[P]arties did not have such an agreement [to vary the contract …] Instead, OKI was faced […] with continued tardiness. No factual benefit was conferred by Sunrise’s continual delay. Nor did Sunrise offer anything in exchange for OKI agreeing to extended timelines; they simply assumed that OKI would accept the situation. With no proper renegotiation or fresh bargain struck, while Sunrise did eventually supply all the material it had promised to supply, the lateness remained a breach for which variation would have required fresh factual benefit. The facts of this case are more akin to Foakes v Beer (1884) 9 App Cas 605,

where it was held that a promise to accept part payment of a debt was unenforceable for lack of consideration, than to Williams.'3

As Williams is referenced in the judgment, and because we will be relying on it in our analysis later, it is helpful to also set out a brief summary of the case.

It was agreed between Williams and his counterparty, Roffey Bros, that Williams would receive bonus payments above and beyond the initial agreed sum for the same work because it became clear that it would not be financially feasible for Williams to complete the work otherwise. In that case, it was held that a practical benefit existed in exchange for the excess payment in that the work would be completed and on time in a position where it was unlikely that this would happen. Referring to the judgment, the practical benefits achieved by the contractual variation were as follows:

'(i) seeking to ensure that the plaintiff continued work and did not stop in breach of the sub-contract;

(ii) avoiding the penalty for delay;

(iii) avoiding the trouble and expense of engaging other people to complete the carpentry work.'4

It was found to be especially important that, on the merits of these benefits, Roffey Bros had been convinced or persuaded to pay the higher rates, and this was the case in the absence of any duress or undue influence. This hints at a matter that will be discussed at the end of this piece, regarding the role of negotiation in the doctrine of consideration.

B. Williamsinsufficiently distinguished

What is worth recognising in the case of Sunrise Industries is that, while the judgment likens the case to Foakes as opposed to Williams, it is difficult to see why this would be the case on the facts.

For one, both Foakes and Williams involved the contracting parties ostensibly agreeing to vary the contract. In Foakes, the parties had signed a memorandum of understanding5 – clear evidence that there was at least a meeting of the minds. Similarly, in Williams, the Court found that there was an

oral agreement between the two parties. 6 It is therefore apparent that Williams cannot be distinguished from Foakes on grounds that one case involved the parties agreeing, while another did not. Hence, if Sunrise were to be distinguished on grounds that it did not involve the parties agreeing, then it ought to be distinguished from both Foakes and Williams, rather than Williams alone.

The only useful distinction between Sunrise and Foakes on one hand, and Williams on the other, is therefore that of practical benefit – in Williams, there was a practical benefit, and in Sunrise and Foakes, there was not. However, considering the generality of what was classed as a 'practical benefit' in Williams (most notably, that the defendant would not have to find another contractor to complete the work that was owed7), it is unclear why this sort of benefit would be absent to OKI.

It therefore appears that, while recognising the authority of Williams, the Court of Appeal in Sunrise has chosen to willfully constrain its applicability. The quiet part of the judgment then, in this analysis, is that the proclivity in Singaporean law is to hang on to consideration in a more conventional sense as an evidentiary marker of parties’ intentions, presuming that parties do not make 'something for nothing' deals. This, coupled with the case of Ma Hongjin (discussed later), represents a narrower interpretation of 'practical benefits': accepting the premise in Williams that traditional conceptions of consideration are out of date, or do not reflect commercial realities, without incurring the result that consideration can be found in absolutely any agreement made in the absence of duress and undue influence.8

C. Evidentiary function of consideration in Singapore law

As Thean J appears to note in Sunrise, if the parties had come to an agreement to vary the deadline, Williams would not have been distinguishable from Sunrise thus, it was noted that 'in Williams, parties had come to an agreement. In the present case [...] parties did not have such an agreement'.9

It was only because there was 'no proper renegotiation or fresh bargain struck' that 'fresh' consideration (i.e., consideration that is not a mere practical benefit from the performance of

6 Williams at 6E

7 ibid

8 As was described to be the impact of Williams by Andrew Phang J in Sunny Metal & Engineering Pte Ltd v Ng Khim Ming Eric [2007] SGCA 36

9 Sunrise at [60]

existing contractual obligations) became a requirement for the variation of the underlying contract.10

It should be noted that 'fresh' consideration is the predominant form of consideration throughout contract law in Singapore the practical benefit exception only applies in commercial cases,11 and as we have seen, only when there is sufficient evidence that parties have struck a bargain. Hence, if fresh consideration is only necessary when it is unclear as to whether parties have come to an agreement, then it stands to reason that it primarily serves as a substitute for other evidence of such an agreement. It therefore follows that consideration serves a primarily evidentiary function, insofar as it evidences that parties have negotiated and willingly struck a bargain.

This view is supported by Phang JA’s judgment in Ma Hongjin. In Ma Hongjin, the argument that the requirements for consideration should be loosened for contract variation was rejected, on the grounds that although parties in an existing contractual relationship are already in a 'common enterprise', they enter into contracts 'for a myriad of reasons and may desire to vary or modify their contract for a myriad of reasons (not all of which might be as positive or sanguine as [in a common enterprise scenario])'.12 Thus, a loosening of the requirements for consideration would only be consistent with a scenario 'where the parties in an existing contractual relationship are seeking to cooperate with each other.'13 Again, this judgment appears to imply that consideration is necessary in order to conclusively evince that parties have willingly negotiated and willingly struck a bargain.

Finally, the evidential role of consideration also explains why parties are able to dispense with the need for consideration if they 'unambiguously (emphasis original) [state] so at the point the contract is formed.', 14 or if the parties 'vary the term(s) of their contract by way of a deed.' 15 Again, consideration is implied to act as a substitute for evidence of the parties’ intentions.

This prima facie mirrors the role of consideration in English law as well, as noted by Fuller. This is also borne out in case law one of the requirements for the loosened consideration requirement in Williams was that ‘B's promise is not given as a result of economic duress or fraud

10 ibid

11 ibid, where Thean J notes that very little is required by way of consideration ‘where parties are in a commercial relationship’.

12 Ma Hongjin at [64]

13 ibid

14 Ma Hongjin at [66]

15 ibid

on the part of A.’16 It therefore appears that the purpose of consideration in English law is similarly to conclusively evince that parties have willingly struck a bargain.

D. Two approaches to consideration

The above analysis serves primarily to show that Singaporean and English law have been taking the doctrine of consideration in different directions. Williams introduced a broad conception of practical benefits that, drawing from will-based theories of contract, suggests that even the mere convenience of having made the contract or contractual variation to avoid the difficulty of finding a new contract can serve as consideration.17 Axiomatically, the doctrine in England seems to be that one does not enter a contract that they do not benefit from, absent duress and undue influence, and thus, especially in commercial contracting, there must be a benefit to be found somewhere, and there must be consideration. This approach is exemplified in the recent case of MWB Business Exchange Centres v Rock Advertising Limited [2018] UKSC 24 (‘MWB v Rock’), wherein it was considered, in obiter, that the fact that a rental space would continue to be filled could provide valid consideration in terms of practical benefits for the accepting a less advantageous schedule of repayment of arrears incurred on that very space. In the same paragraph, Lord Sumption discusses the rejection of practical expectations of benefit in promises to accept reduced payment in common law, referring to In re Selectmove Ltd18 and, crucially, Foakes. 19 He concludes that a reexamination of Foakes may be necessary, and that this could likely result in the decision being overturned or refined. It seems, then, based on MWB v Rock, that the current attitude towards consideration in English law remains that espoused in Williams, at the expense of the more conventional approach in Foakes.

Comparatively, in Singaporean law, Foakes remains good law. Once again, referring to the judgment in Sunrise, Foakes is affirmed and followed as binding precedent in the matter. 20 Promising to complete a task already contractually required, or promising certainty of completing a lesser obligation is not sufficient consideration in Singaporean law. Similarly, in Ma Hongjin, consideration is construed narrowly, referring to specific and tangible promises or payments more so than intangible, if practical, promises of goodwill.

16 Williams at 16A

17 ibid

18 [1993] EWCA Civ 8

19 MWB v Rock, [18]

20 ibid

What is striking about this comparison, is that it seems that both jurisdictions agree with the premise that one does not agree to 'something for nothing'. Yet, this premise leads to opposite conclusions. In the conventional approach of Stilk v Myrick,21 Foakes, and even White v Bluett, 22 this presumption meant that the party that accepted something for nothing was pressured (duress; see Stilk) or manipulated (undue influence; see Foakes) and that it would thus be unjust to uphold the contract. This continues to be the approach taken in Sunrise, in that the facts are construed in the judgment to constitute a series of delays and rate hikes that OKI placidly agreed to as they did not have a suitable alternative. This interpretation resembles a claim in economic duress, and the argument that is made by the courts, quoted earlier in this case note, is that 'fresh consideration' would have turned this placid agreement into a genuine, binding agreement. Put simply, the courts suggest that, in Singapore, there is an evidentiary presumption that agreements involving fresh consideration are negotiated and agreed to fairly, while those without fresh consideration may not be. Thus, while it is accepted that practical benefits could constitute consideration, not every practical benefit will be sufficient for this purpose.

The English approach is the opposite. If one would not accept something for nothing, then the fact that one accepted a contract or variation under fair conditions provides evidence that there was something worth contracting for. Hence, where there is a valid agreement under normal conditions, there must be some sort of consideration, even in the case of relatively minor practical benefits. This is the approach taken in Williams and MWB v Rock, where it was found that the deal had been negotiated or agreed to fairly in any case, and there was consideration to back this deal in the form of a practical benefit. This is necessarily in tension with the first approach, as was recognised by Lord Sumption. In particular cases, the two approaches can lead to entirely different findings. In the case of MWB v Rock, requiring consideration to prove an agreement occurred would lead to the failing of Rock’s claim. Conversely, finding a practical benefit after establishing that there was a negotiated variation would result in Rock’s claim succeeding. Lastly, as occurred in MWB v Rock in actuality, finding that the parties agreed to a method of varying contractual terms beforehand that did not require consideration would also prove a negotiation had occurred according to the parties’ wills, and consideration need not be found at all. Thus, it is necessary to reconcile this tension, though perhaps not via the extreme approach of overturning Foakes suggested by Lord Sumption.

E. A rare case where regressing may be practical

Examining the two approaches to the 'something for nothing' problem, it is important to recognise that both are logically consistent. If one offers something for nothing, it is likely that something is wrong with the transaction (Stilk). Yet, if nothing is wrong with the transaction, then surely the party seeming to take nothing in fact took something (Williams). Thus, a question arises on which approach is to be preferred.

It is submitted here that the primary presumption to be taken is that parties, when negotiating fairly and intending to be legally bound on their promises, will indeed arrive at a quid pro quo. Thus, in the majority of cases, we submit that it is important to default to consideration as an evidentiary benchmark that can quickly settle questions of intention to be bound in one’s promises. Yet, there can be a narrow subset of situations in which 'something for nothing' deals could be totally intentional, fair, and even beneficial for the parties in a broader conception of practical benefits. It then stands to reason that the Williams approach can be taken in a constrained set of circumstances where one can prove that there has been a fair and reciprocal deal made despite the fact that one party does not supply fresh consideration. Additionally, parties have always been able to decide for themselves to waive the requirement of consideration for a variation in their initial contractual negotiations.23 On the evidence, it appears that it is the negotiation of a deal between agents, allowing them to construe their wills through a contract, that is in question in matters of consideration. Consideration is the most convenient and straight-forward, but not necessarily the only, way to prove that this negotiation occurred in fact. Recognising the value of consideration as a default, but not necessarily requiring its presence to bless an agreement, both approaches to the problem are exercised in the correct measure.

This is, theoretically, a very different idea of what consideration means in contracts. Consideration, under traditional theories of contract law, is a fundamental of forming contracts. Referring to cases like Combe v Combe, 24 the absence of consideration was held to distinguish informal agreements and gratuitous promises from contractual agreements. Indeed, it is probably for this reason that ideas like “peppercorn consideration”25 and “practical benefits” have come about; consideration must be found to enforce a contract that the courts decided should be enforced (or, as Atiyah put it,

consideration was twisted to include any reason to enforce a contract26). It is likely that for this reason, theories on consideration developed to explain the necessity of consideration in terms of reciprocity.27 Yet, it is submitted that consideration can be useful and meaningful without being a necessary ingredient of a contract.

It is clear the ability for courts to judge the objective intentions of parties more granularly and with reference to contextual factors allows courts to find contractual agreements through a very broad range of benefits that are now being classed as consideration. Yet, this makes it difficult to ascertain what precisely is meant by consideration. As was discussed earlier, in both the cases of MWB v Rock and Williams, it is implicit that the court recognised the validity of the negotiation and the agreement before assessing the presence or absence of consideration. Conversely, in Sunrise, it is explicit that the courts doubted the validity of the agreement on a lack of true negotiation. Surely, then, the courts in the two countries are talking about the same thing. Consideration as in practical benefits does little in and of itself to prove or disprove that a negotiation has occurred and parties intend to be bound. Upon finding the latter (the objective appearance of a contractual agreement), the former is easily found. This, in line with will theory, provides greater contractual freedom because it allows parties to decide what they value so long as they are negotiating fairly (which is to say, respecting each other’s will and freedom), after which consideration is found to ‘seal the deal’.

It is suggested, then, in this case note, that confusing the doctrine of consideration in this way is unnecessary. The premise that courts find contracts where it is objectively sound to do so is well accepted, and the English courts could simply develop this doctrine to no longer rely on checking off consideration as a necessary element. In the meantime, the Singaporean, traditional, more certain concept of consideration could be maintained for the purposes of providing strong evidence that a negotiation culminating in a reciprocal agreement has occurred. This is not to say that, in practice, there will be a significant difference in the way deals are concluded. So long as it is easier to prove one’s intentions with a single dollar rather than a barrister and lengthy litigation, consideration will remain an institution in contract law. This piece simply suggests that, in the edge cases where consideration of a material sort is not given, one dispenses with the facade that it is found in all things, preferring a direct analysis of the negotiation of said contracts and the context in which agreements are made. In this way, returning consideration to its roots can strengthen its

26 Atiyah, P. S., 'Consideration: A Restatement', Essays on Contract, Clarendon Paperbacks (Oxford, 1990; online edn, Oxford Academic, 22 Mar. 2012), 206

27 Mindy Chen-Wishart, ‘In Defence of Consideration’ [2013] Oxford University Commonwealth Law Journal 13(1):209

practical and evidentiary value. In a modern world with far more developed doctrines of unfair contracting, greater availability of evidence, new methods of processing that evidence into an objective framework of agreement, and a much more complex commercial landscape, this is the most natural way to develop the doctrine of consideration; maintaining its practical benefits to adjudication while doing away with the need to do lip-service to a 300 year old requirement for validating agreements.

Beyond ChiuTengand TanSengKee: the necessity of substantive legitimate expectation in Singaporean constitutional jurisprudence

Samuel Soh

INTRODUCTION

For the first time in Singapore’s judicial history, the Court of Appeal found that an enforceable substantive legitimate expectation (“SLE”) had risen in Tan Seng Kee v Attorney-General and other appeals 1 Albeit confined to facts that the Court described as “wholly exceptional”,2 the judgment reinvites discussion of the role that SLE should play in Singaporean constitutional jurisprudence. This article examines the state of SLE as an independent ground of judicial review in Singapore post-Tan Seng Kee, and questions whether an expanded role akin to the British position may be more appropriate. It does so in two parts. First, a brief history of SLE doctrinal developments in United Kingdom and Singaporean constitutional law. Second, a normative defence of the doctrine, with which suggestions for the implementation of SLE in practice are briefly noted. The article concludes that the gradual expansion of SLE, and substantive judicial review more generally, should be welcomed by the judiciary.

A. Brief History of Substantive Legitimate Expectations

1. The British Position

A legitimate expectation was first recognised in Council of Civil Service Unions v Minister for Civil Service3 (“GCHQ”), where the British House of Lords held that the appellants enjoyed an enforceable procedural right to consultation that had been infringed by the relevant authority. Lord Diplock’s definition of SLE 4 is well summarized by the Singapore Court of Appeal’s decision in SGB Starkstrom Pte Ltd v Commissioner for Labour: “…[T]he doctrine of substantive legitimate expectations seeks, in essence, to bind public authorities to representations, whether made by way of an express undertaking or by way of past practice or policy, about how these authorities will exercise their

1 Tan Seng Kee v Attorney-General and other appeals [2022] SGCA 16

2 Ibid, [154] (Menon CJ)

3 Council of Civil Service Unions v Minister for Civil Service [1985] AC 374

4 Ibid, [408] (Diplock LJ)

powers or otherwise act in the future, in circumstances where a representation has been made by the authority in question and relied on by the plaintiff”.5

British recognition of legitimate expectations in a substantive sense was much slower. Sedley J flirted with the concept in R (Hamble (Offshore) Fisheries Ltd) v Ministry of Agriculture Fisheries and Food,6 opining that an SLE may not be frustrated unless the court “itself [was] satisfied that the public interest in doing so outweighs” any unfairness to the individual.7 This was rejected, however, in R v Secretary of State for the Home Department, ex p Hargreaves, with Hirst LJ strongly opposing such an invasive form of review, and instead preferring to review the authority’s decision under the wellestablished unreasonableness test set out by Lord Greene in Associated Provincial Picture Houses Ltd v Wednesbury Corporation, an undoubtedly higher threshold.

It was not until R v North and East Devon Health Authority, ex p Coughlan, 8 that the English Court of Appeal definitively recognised SLE as a ground of review. Its modern principles, as articulated by subsequent case law, can be distilled into a three-stage test, summarized below:9

a) “Was there a legitimate expectation?”

b) “Did the public authority unlawfully frustrate it?”

c) “What remedial consequences flowed from this finding?”

Before turning to the Singaporean position, it is worth caveating a number of constraints on the position of SLE in the UK. As noted by Mark Elliott, Coughlan “concerned an individualized promise rather than… a general statement of policy”,10 and subsequent cases have come to reflect the view that SLEs are more likely to arise where the groups affected are numerically small11 (although Laws LJ also noted in Niazi12 that there was nothing “in theory” to stop an unlimited number of affected

5 SGB Starkstrom Pte Ltd v Commissioner for Labour [2016] SGCA 27, [41] (Menon CJ)

6 R v Ministry of Agriculture Fisheries and Food (ex p Hamble (Offshore) Fisheries Ltd) [1995] 2 All ER 714

7 Elliott, Mark and Varuhas, Jason N. E., Administrative Law: Texts and Materials (5th edn, Oxford University Press 2011) 209-210

8 R v North and East Devon Health Authority, ex p Coughlan [2001] QB 213

9 Shaik, Siraj Aziz and Sui, Yi Siong. Expecting the right thing: The imperative for recognising substantive legitimate expectations in Singapore. (2012). Singapore Law Review. 30, 147-164. 2008 Asian Business & Rule of Law initiative. The relevant case law, as expounded by the authors, include the following: “Coughlan, supra note 1, R. v. Secretary of State for Education and Employment, ex parte Begbie, [2000] 1 W.L.R. 1115 (C.A.), R. (Bibi) v. Newham London Borough Council, [2002] 1 W.L.R. 237 (C.A.) [Bibi], Nadarajah v. Secretary of State for the Home Department, [2005] EWCA Civ 1363, R. (on the application of Niazi) v. Secretary of State for the Home Department), [2008] EWCA Civ 755, R. (Bancoult) v. Secretary of State for Foreign and Commonwealth Affairs (No. 2), [2009] 1 A.C. 453 (H.L.), and Paponette v. Attorney General of Trinidad and Tobago, [2011] 3 W.L.R. 219 (P.C.).”

10 Elliott, Mark and Varuhas, Jason N. E., Administrative Law: Texts and Materials (5th edn, Oxford University Press 2011) 210-211

11 See R (Patel) v GMC [2013] EWCA Civ 327

12 R (Niazi) v Secretary of State for the Home Department [2008] EWCA Civ 755, [50] (Laws LJ)

individuals). Likewise, the degree of scrutiny between each case of SLE may differ, with “the facts of the case… steer[ing] the court to a more or less intrusive quality of review.”13

2. The Singaporean Position

Judicial consideration of the position of SLE in Singaporean constitutional law is a rather modern phenomenon. Early attempts to introduce the doctrine were rejected by the High Court in Re Siah Mooi Guat and UDL Marine (Singapore) Pte Ltd v Jurong Town Corp. This long-standing position was reversed by Chiu Teng @ Kallang Pte Ltd v Singapore Land Authority, 14 in which the High Court suggested that the doctrine be welcomed in Singapore15 subject to the following safeguards: that the statement be (a) unequivocal, (b) made by someone with actual authority to do so, (c) directed to the applicant or a “class of persons to which he clearly belongs”,16 (d) it was reasonable for the applicant to rely on the statement, (e) and that the applicant did rely on the statement and suffered a detriment as a result. Moreover, even if these factors were satisfied, it had to be balanced against (f)(i) legal and international obligations, (f)(ii) the rights of the public, and/or (f)(iii) an “overriding national or public interest which justifies the frustration of the applicant’s expectation.”17

SLE was further considered by the Court of Appeal in Starkstrom. Although the doctrine was considered inapplicable on the facts (which involved a dispute between private parties), the Court stressed three factors weighing against a finding of SLE: (a) the distinction between review and appeal, with the former being limited to the “decision-making process, as opposed to the merits of the decision”.18 (b) Recognising SLE would constitute a “significant departure” 19 from the scope of judicial review in Singapore, possibly causing the courts to “redefine their approach to the… separation of powers”.20 (c) Application of SLE would also involve considerable judicial weighing of “private interests against public interests”,21 a position the Court was understandably hesitant to adopt.

13 R (Begbie) v Department of Education and Employment [2000] 1 WLR 1115, [1130-1] (Laws LJ)

14 Chiu Teng @ Kallang Pte Ltd v Singapore Land Authority [2014] 1 SLR 1047

15 Ibid, [119] (Tay Yong Kwang J (as he was known then))

16 Ibid, [119]

17 Ibid, [119]

18 Starkstrom, [56]

19 Ibid, [56]

20 Ibid, [59]

21 Ibid, [62]

3. The Judgment in Tan Seng Kee

Tan Seng Kee’s added benefit to the doctrinal debate was to provide the first, albeit constrained, instance of an SLE being enforced in Singapore. The facts of the case are particularly novel. In 2018, Attorney-General Lucien Wong made several representations (largely recognised as giving effect to the 2007 ‘political compromise’ over s 377A, 22 although prosecutorial discretion is independent of the Government’s position23) that s 377A would not be proactively enforced. For two reasons, the Court decided to invoke the SLE doctrine in imbuing the AG’s representations with legal force. First, “a failure to recognise the legal effect of AG Wong’s representations may expose some individuals to the grave threat of prosecution”. 24 Second, the circumstances surrounding the AG’s representations were “exceptional”, involving a decision by Parliament to preserve “the legislative status quo” while “accommodating the concerns of those directly affected”.25 Applying the factors in Chiu Teng, 26 the Court held that an SLE had arose under the facts.

Importantly, the Tan Seng Kee Court stressed that its decision did not mean that SLE was now an accepted ground of judicial review in Singapore. Its decision was meant to give effect to the intent of Parliament and Executive27 in circumstances that were unlikely to arise again, and under which the “thorny issues surrounding the acceptance of the doctrine of substantive legitimate expectations as part of Singapore law do not arise”.28

4. Contrasting the UK and Singapore

The position of SLE in Singapore post-Tan Seng Kee remains expectedly unclear. The Chiu Teng test, albeit impressively more systematic in its approach, does not differ in principle from Coughlan Both ask similar questions and invoke a balancing test to determine whether frustration of a legitimate expectation is justified. There is one notable difference requirements (e) and (d) of the Chiu Teng test invoke “concepts of ‘reasonable reliance’ and of detrimental reliance’”, 29 a requirement that was implicitly rejected by Hoffmann LJ in R (Reprotech (Pebsham) Ltd) v East Sussex County Council. 30 The British refusal to introduce such requirements is possibly rooted in the purposes of public law,31 as suggested by Sedley LJ (in R (Begbie) v Secretary of State for Education and

22 Tan Seng Kee, [115]

23 Ibid, [102]

24 Ibid, [133]

25 Ibid, [134]

26 Ibid, [147]

27 Ibid, [140]

28 Ibid, [154]

29 Charles Tay Kuan Seng, Substantive Legitimate Expectations, The Singapore Reception. (2014) 26 SAcLJ 609 at 634

30 [2003] 1 WLR 348, [34]-[35] (Hoffmann LJ)

31 Ibid at 635

Employment32) who stated that the Government “‘may be held to its word irrespective of whether the applicant has been relying specifically on it.’” 33 By contrast, Singapore’s addition of the requirements may be more pragmatic. Given the hesitance of Singapore courts to adopt substantive review, it is unsurprising that an element of reasonableness which would likely constrain future application of the SLE doctrine and offer courts more discretion was included in Chiu Teng.

Nonetheless, Tan Seng Kee suggests that Singapore’s hesitance may, on occasion, be overcome. There is at least some judicial willingness to forgo concerns of a breach of the separation of powers34 or issues of institutional competence35 in exceptional cases. It is against this backdrop that the article now turns to a normative defence of SLE.

B. Normative Defence of Substantive Legitimate Expectations

Four reasons are provided for expanding the application of SLE beyond its current confines. The first is that concerns of a breach in the separation of powers (as raised in Starkstrom36) are illfounded. Second, current grounds of substantive review, most notably Wednesbury unreasonableness, are insufficient to cover situations that fall within the remit of SLE. Third, that SLE enables legal certainty to be upheld. Fourth, that the doctrine would benefit the Executive by encouraging public confidence in governance.

1. Permissibility of SLE Under Separation of Powers

The first two concerns raised in Starkstrom are whether SLE would require judicial review of substantive decisions and, in turn, whether this would be justified under the constitutional principle of separation of powers.37 Given the concerns levied above, it is quite clear that the doctrine inextricably involves judicial review of substantive decisions, being concerned with the frustration of substantive expectations involving outcomes, as opposed to mere procedure. The more

32 Begbie, 1133 (Laws LJ)

33 Ibid, a similar position is articulated by the Court in R (Bibi) v Newham London Borough Council; R (Al-Nashed) v Newham London Borough Council [2001] EWCA Civ 607 at [28] and [30].

34 Starkstrom, [59]

35 Ibid, [62]

36 Ibid, [61]-[62]

37 Ibid, [61]: (a) Would the doctrine of substantive legitimate expectations require the courts to review the substantive merits of executive action as opposed to questions of process and of legality and jurisdiction? (b) If so, can this be reconciled with the doctrine of separation of powers where the judiciary would be engaging in reviewing the merits of a given executive action?

pressing issue is the latter point, for which a conceptual analysis of the separation of powers is necessary.

The scope and content of the separation of powers principle remain the subject of academic debate. It is clear, however, that neither the UK nor Singapore subscribes to a traditional ‘pure’ conception of the doctrine. Under a pure account of the separation of powers, the three branches of state remain isolated from one another, each with its distinct functions and powers.38 Substantive review of any kind would clearly infringe such a principle, as the courts would be overstepping into the functions of the executive. This rigidity, however, is unwelcome. Institutional separation does nothing to prevent one actor from garnering excess power, failing to serve the very function that the separation of powers is meant to achieve. It is a well-established principle that executive discretion is never unfettered.39 Naturally, both nations have long accepted that for the principle to serve any meaningful purpose some degree of overlap is required. In Singapore, this is most clearly illustrated by judicial acceptance of Wednesbury unreasonableness as a ground of substantive review. Likewise, the Court in Tan Seng Kee noted that the separation of powers is “premised on the notion that the Judiciary, the Executive and the Legislature are co-equal branches.”40

If the preferred model of separation of powers adopted in Singapore is a ‘partial’ concept whereby scrutiny by other state actors is welcomed, then there is nothing prima facie unconstitutional about substantive review of executive decision-making. Concerns over the separation of powers therefore concern the degree of intrusiveness that substantive review entails, as opposed to the faithfulness of substantive review to constitutional principle. The answer is not black and white it depends on whether or not the underlying justifications for SLE warrant the degree of intrusion that it necessarily entails. In other words, the question is whether the underlying justifications for SLE promote the aims of the separation of powers doctrine, such that they are “constructive breaches”41 permissible under a partial account. These are ultimately questions of policy, and thus the policy grounds of legal certainty and administrative trust are discussed below. Before that, it is worth answering why Wednesbury unreasonableness is insufficient to curb the problems tackled by SLE.

38 Elliott, Mark and Thomas, Roberts. Public Law (4th edn, Oxford University Press 2020) 110

39 Elliott, Mark. “Public Law for Everyone” (publiclawforeveryone.com/2013/09/09/richard-iii-unfettereddiscretion-and-the-foundations-of-judicial-review). “Public law orthodoxy is – and, these ill-considered comments notwithstanding, doubtless remains – that there is no such thing as an unfettered discretion.”

40 Tan Seng Kee, [12]

41 Elliott, Mark and Thomas, Roberts. Public Law (4th edn, Oxford University Press 2020) 110

2. Wednesbury Unreasonableness

In Hargreaves, the English Court of Appeal expressed its reluctance to adopt SLE at the time, instead preferring the test in Wednesbury as the sole ground for substantive review. The present reluctance of Singapore’s judiciary to open itself to SLE marks a similar position. However, two criticisms can be levied at the Wednesbury test. The first is its inadequacy as a ground of review. To be unreasonable, an administrative decision must be “so absurd that no sensible person could ever dream that it lay within the powers of the authority”.42 This leaves immense discretion for any decision that is not wholly unsensible, meaning it is unlikely that the high threshold of Wednesbury will be satisfied by applicants whose expectations have been frustrated. In most cases, an executive decision will at least have some connection to the public interest, thereby creating a “zone of immunity… around many unabsurd, albeit improper, decisions”. 43 The second issue is a normative one. Although far less intrusive as a ground of review, the existence of Wednesbury unreasonableness implicitly demonstrates that substantive review can and is a recognised part of Singaporean constitutional jurisprudence, further supporting the argument that justifications for SLE rest in its pragmatic or normative strengths, and not in a principled argument against substantive review as a whole.

Wednesbury’s inadequacy ultimately suggests that upholding the rule of law requires a more demanding ground of substantive review than mere rationality. Amongst those currently accepted in English law (notably proportionality review), substantive legitimate expectations is a rather palatable doctrine with modest aims. The moral weight behind the argument that public authorities should usually be accountable for representations made is one that is hard to deny, but its importance is further demonstrated by two points below.

3. Legal Certainty

The foremost normative justification for SLE lies in the principle of legal certainty, a key tenant of the rule of law. In a modern state riven with complexities, SLE provides individuals with the ability to rely on representations made by authorities as to the exercise of discretionary power. 44 Although the need for certainty is not unlimited (such that administrative bodies have adequate

42 Wednesbury, [229] (Greene MR (as he was known then))

43 Shaik, Siraj Aziz and Sui, Yi Siong. Expecting the right thing: The imperative for recognising substantive legitimate expectations in Singapore. (2012). Singapore Law Review. 30, 147-164 at 152

44 Schønberg, Legitimate Expectations in Administrative Law (Oxford 2000) in Elliott, Mark and Varuhas, Jason N. E., Administrative Law: Texts and Materials (5th edn, Oxford University Press 2011) at 189

space to plan for the future) there must at least be a “certain measure of constancy in the law”45 for individuals to plan their lives. The fact that these considerations operate as constraints on government action46 is a well-documented principle in Singaporean law, as articulated by the judgment in UDL Marine (Singapore) Pte Ltd v Jurong Town Corp47 where the Court examined the “need to check against inconsistent treatment” 48 with unduly restrictive review. Crucially, the Court in Chiu Teng appeared to weigh this test in favour of the former principle (of legal certainty), stating that a public authority must “show that the change [in policy] was necessitated by the ‘public interest’”49 before “thwart[ing]” a legitimate expectation.

Chiu Teng’s balancing test is relatively similar to Coughlan, with both judgments holding that some measure of justification can enable an SLE to be overcome. As a practical measure this is important, as it blunts the argument that SLE would be immensely overbearing on executive action. The reluctance of Singapore’s judiciary to adopt substantive review illustrates a predisposition in favour of the executive. There is no reason to think that courts would be so harsh in seeking justification for frustration of an SLE, particularly in circumstances where the underlying right affected or consequence to the individual is not so great. On the other hand, where substantive rights of paramount importance are affected (e.g. freedom from the threat of prosecution under s 377A), there is all the more reason that courts should have the capacity to review such decisions and enforce SLEs.

4. Legitimacy and Trust

If the need to protect against unfettered discretion is a “red light”50 justification for SLE in that it seeks to prevent harmful outcomes, there is also a positive argument premised on “administrative efficacy”. As Schønberg notes, an environment of legal certainty fosters a positive relationship between citizens and the state, encouraging “[cooperation] with administrative initiatives” and “greater compliance”. This argument should find even greater traction in Singaporean law, which has consistently emphasized the need for public trust to ensure good governance.51 In Yong Vui Kong v Attorney-General, 52 Chan Sek Keong CJ noted that “[the] court… should proceed on the basis

45 Ibid

46 Paul Craig, “Substantive Legitimate Expectations in Domestic and Community Law” (1996) 55 CLJ 289 at 303

47 UDL Marine (Singapore) Pte Ltd v Jurong Town Corp [2011] 3 SLR 94

48 Ibid, [65] (Lai Siu Chiu J)

49 Chen Zhida, Substantive Legitimate Expectation in Singapore Administrative Law (2014) 26 SAcLJ 237 at 241

50 Schønberg, Legitimate Expectations in Administrative Law (Oxford 2000) in Elliott, Mark and Varuhas, Jason N. E., Administrative Law: Texts and Materials (5th edn, Oxford University Press 2011) at 189

51 See Tham Lijing, Legitimate Expectations and Good Administration

52 Yong Vui Kong v Attorney-General [2011] 2 SLR 1189

of presumptive legality encapsulated in the maxim ‘omnia praesumuntur rite esse acta’ – all things are presumed to have been done rightly and regularly”. Similarly, Chen Zhida references the High Court decision in Lee Hsien Loong v Singapore Democratic Party, which noted the “human proclivity… that people are apt to listen to those whom they trust”.53 In a nation where public confidence is held to such high esteem, the ability of SLE to enforce public expectations of the policies that their elected representatives have decided and informed them of should not be understated.

CONCLUSION

The above arguments contend that an expansion of the SLE doctrine would be appropriate in Singapore. Three conclusions can be drawn from the normative discussion. First, that there is nothing inherently unconstitutional about substantive review, leaving its value to be judged on pragmatic grounds. Second, Wednesbury is inadequate as a form of substantive review. In trying to conform to a mild conception of the separation of powers, it fails to serve any major purpose. Third, there are two policy grounds in favour of expanding SLE: as a method of executive accountability, and as a matter of public trust and good governance. It is worth noting three unanswered questions beyond the remit of this brief article, as expounded by Swati Jhaveri. These concern the “standard of review” applicable in SLE, the interpretation of representations, and the size of the “class of persons” to which an SLE can be said to arise.54 Given the Tan Seng Kee Court’s willingness to read-in a generous SLE from the AG’s representations (which rendered s 377A unenforceable in its entirety, a position that the Court recognised would differ from the AG’s remarks but took anyways55), it is not difficult to imagine that the judiciary may soon decide in favour of expanding the doctrine. Singaporean courts have displayed a remarkably consistent ability to shape and evolve the law for practical reasons. 56 As the nation’s own sociopolitical landscape changes, perhaps an increased focus on individualism and rights protection may prompt courts to (once again) consider developing substantive review even further than its current remits, suggesting that the evolution of the law has not ended just yet.57

53 Chen Zhida, Substantive Legitimate Expectation in Singapore Administrative Law (2014) 26 SAcLJ 237 at 242: citing Lee Hsien Loong v Singapore Democratic Party [2009] 1 SLR(R) 642 at [102]-[103]

54 Swati Jhaveri, Contrasting Responses to the ‘Coughlan Moment’: Legitimate Expectations in Hong Kong and Singapore

55 Tan Seng Kee, [151]

56 See cases such as Spandeck Engineering v Defence Science and Technology Agency [2007] SGCA 37 where the Court of Appeal was willing to adopt a novel approach in establishing a duty of care, moving past the long controversial Caparo doctrine in English law.

57 See Marcus Teo, A Case for Proportionality Review in Singaporean Constitutional Adjudication, Singapore Journal of Legal Studies [2021] 174-205

Divide and Conquer: New Modes of Territorial Acquisition in Public International Law

Ning Teoh

INTRODUCTION

The rise of decolonisation and newfound political realities required the rethinking of traditional modes of territorial acquisition in international law in order to redraw state boundaries. The oftused justification in support of supposedly original acquisition, terra nullius, is now recognised as troubling; when adjudicating on the status of Pedra Branca, the International Court of Justice (ICJ) rejected Singapore’s argument that the island was no man’s land, preferring to recognise the ancient Johor Sultanate’s title. Several remediatory concepts have gained traction within the international community even long after the beginning of the decolonisation process, notably the concept of ‘original title’ employed in Southeast Asia, as illustrated by the ICJ’s decision on Pedra Branca, and ‘uti possidetis’ most prominently in the context of South America and Africa. This article will examine the distinct application of territorial concepts based on regional socio-political nuances, and argue that these concepts in their current form are inadequate to address disputes over state boundaries.

A. General Conceptions of Territorial Acquisition

Under public international law, there are several traditional means by which a country may acquire sovereignty over a defined territory, which may also be referred to as modes of territorial acquisition.1 The term territorial sovereignty, in a parallel to domestic ownership, generally refers to a legal foundation for the establishment of the state’s rights over territory.2 It is trite law that modes of territorial acquisition are generally classified into two groups, as recognised by the International Court of Justice (ICJ) in the Western Sahara (Advisory Opinion) of 1975.3 The first kind is original acquisition via occupation of terra nullius, i.e. abandoned land or land that has never

1 United Nations Security Council Resolution 242 (1967)

2 Territory, Acquisition Marcelo G Kohen, Mamadou Hébié

https://opil.ouplaw.com/display/10.1093/law:epil/9780199231690/law-9780199231690-e1118?print=pdf

3 Western Sahara, Advisory Opinion, ICJ GL No 61, [1975] ICJ Rep 12, ICGJ 214 (ICJ 1975) [79-80], 16th October 1975, United Nations [UN]; International Court of Justice [ICJ]

belonged to anyone. The second is that of derivative acquisition, whereby a state gains title by defeating a former owner via prescription, accretion, cession, or annexation.

However, territorial disputes in the postcolonial era have revealed the inadequacy of this categorisation, particularly original acquisition.

Justifying original acquisition proved the most problematic because determinations as to whether a piece of territory was terra nullius were inextricably tied to the ideology of civilisation: 4 the Westphalian notion of sovereignty is fundamentally a European concept, containing the implicit assumption that non-European states were uncivilised and therefore unfit to acquire sovereignty.5

This is clear also from the political rationale behind colonial conquest:6 colonisers invoked the idea of the ‘civilising mission’ to justify gaining power over what they perceived to be primitive, inferior cultures.

Hence, by virtue of its inherently political nature, the term terra nullius can never be free from colonial bias. The ICJ has itself voiced concerns over the term, noting the exclusion of nonEuropean states from sovereignty.7 In 1975, it explicitly rejected the classification of territory inhabited by tribes or people “having a social or political organisation” as terra nullius in the context of colonisation, hence defeating claims of occupation any agreements made with local rulers are then seen as roots of derivative acquisition instead. 8 This is in stark contrast with previous reasoning, most prominently in the Island of Palmas arbitration where Huber categorically determined that “native princes or chiefs of peoples” would not be “recognised as members of the community of nations”, demonstrating effective occupation of terra nullius and thereby examining whether either party acquired the island.9 The nullification of indigenous occupation in the past is hence rightly condemned.

4 Fisch, J. (1986). International Law in the Expansion of Europe, Law and States: A Biannual Collection of Recent German Contributions to These Fields

5 Westlake, J. (1894). Chapters on the principles of international law (pp. 131-142). University Press

6 Conklin, A. (2011). The Civilizing Mission. In E. Berenson, V. Duclert & C. Prochasson (Ed.), The French Republic: history, values, debates (pp. 173-181). Ithaca, NY: Cornell University Press

7 Western Sahara, ICJ Pleadings (1975), vol. IV, 445

8 Western Sahara, Advisory Opinion, ICJ GL No 61, [1975] ICJ Rep 12, ICGJ 214 (ICJ 1975) [79-80], 16th October 1975, United Nations [UN]; International Court of Justice [ICJ]

9 The Island of Palmas Case (or Miangas): United States of America v. The Netherlands, Permanent Court of Arbitration, 4 April 1928, p. 39

B. ‘terranullius’

C. The concept of ‘original title’

Due to reluctance to recognise territory as terra nullius, a key deficiency arising in the decolonialisation era in traditional international law was the question of territorial acquisition by a newly-formed state. When and how could a new state acquire title? New states faced a catch-22: the old framework of territorial acquisition required statehood before a title could be established, but title to territory is necessary for legal statehood in the first place.

In response, the ICJ developed the remediatory concept of ‘original title’, which must be distinguished from ‘historic title’, another commonly invoked term.

The former, which literally refers to title originally acquired, refers to the situation where a state is considered sovereign over a piece of territory, from the state’s inception.10 In 2001, both Qatar and Bahrain claimed ‘original title’ to the Hawar Islands from their “very origin as individual political entities or States”. 11 Similarly, the ICJ concluded that the Johor Sultanate possessed original title over Pedra Branca 12 which arose “... since it came into existence in 1512 [and] established itself as a sovereign State with a certain territorial domain under its sovereignty in this part of southeast Asia”.

On the other hand, ‘historic title’ refers to title established through a state’s longtime assertion of title over territory outside of its established boundaries, for example through occupation of maritime features. As Kohen identifies,13 the United Nations Convention on the Law of the Sea (UNCLOS) employs the language of ‘historic title’ in reference to territorial sea treated as falling under state territory despite how they should have been treated otherwise.14 Rather than being a exception to established rules of international law, the International Law Commission (ILC) agreed

10 Kohen, M. (2013). Original title in the light of the ICJ judgement on sovereignty over Pedra Branca/Pulau Batu Puteh, Middle Rocks and South Ledge. Journal of the History of International Law/Revue d'histoire du droit international, 15(2), pp. 151-171

11 Maritime Delimitation and Territorial Questions between Qatar and Bahrain (Qatar v. Bahrain), Judgment, 16 March 2001, ICJ Reports (2001) 40, para 64 (dissenting Judge Santiago Torres Bernárdez)

12 Sovereignty over Pedra Branca/Pulau Batu Puteh, Middle Rocks and South Ledge (Malaysia/Singapore), Judgment, I.C.J. Reports 2008, p. 12

13 Kohen, M. (2013). Original title in the light of the ICJ judgement on sovereignty over Pedra Branca/Pulau Batu Puteh, Middle Rocks and South Ledge. Journal of the History of International Law/Revue d'histoire du droit international, 15(2), pp. 151-171.

14 Art. 7, para. 6 of the Convention of the Territorial Sea and Contiguous Zone; Art. 10, para. 6 of the United Nations Convention on the Law of the Sea

that such title is based, in part, on the acquiescence of other states.15 This reflects the importance of mutual agreement in establishing territorial rights.

Essentially, the distinction can best be seen from Malcolm Shaw’s classification of the acquisition of title to territory into two categories: the acquisition of territory from the birth of newlyindependent states, and additional acquisitions by existing states.16

This circumvents the prior problem of classifying territory as terra nullius: the constitutive concept of statehood, connected to the birth of a political entity, is made more prominent. As opposed to the traditional categories, one does not care whether ‘original title’ is truly original or prescriptive. Decolonised territories forming new states may then effectively employ ‘original title’ as a tool to justify their title to territory, leaving the doctrine of terra nullius a legacy of colonisation in the past.

D. Application in Pedra Branca

1. Recognition of the Johor Sultanate’s title

Although the ICJ made key points about establishing title by acts à titre de souverain, the focus here shall be on the ICJ’s reasoning with regards to the initial status of Pedra Branca.

To assert her claim, Singapore posited the British Crown had acquired title to the island from 1847-1851 and as the lawful successor, she had maintained this title. The reasoning went that the British Crown had acquired title because “[i]t is obvious that the status of Pedra Branca in 1847 was that of terra nullius” after the 1824 Anglo-Dutch Treaty divided the Sultanate and left Pedra Branca open for occupation.17 She further emphasised that Malaysia had failed to fulfil the burden of proof in producing evidence that the Johor Sultanate enjoyed sovereignty over the island, or that they even retained effective control of the region.18

15 Juridical Regime of Historic Waters, Including Historic Bays, Study prepared by the Secretariat, A/CN.4/143, YILC, 1962, vol. II, pt 54

16 M.N. Shaw, International Law (5th edn, 2003), pp. 414–44

17 Sovereignty over Pedra Branca/Pulau Batu Puteh, Middle Rocks and South Ledge (Malaysia/Singapore), Judgment, I.C.J. Reports 2008, p. 40

18 Ibid, p. 51

The ICJ rejected Singapore’s arguments, taking a different interpretation of the 1824 Treaty and characterising it as a political settlement whereby Pedra Branca was decisively established under the Sultanate’s control.

The ICJ affirmed Malaysia’s claim of ‘original title’ by establishing that the Johor Sultanate had existed as a sovereign state from 1512 comprising an “extensive maritime element”, with the power to declare war and control territorial waters.19 Given that Pedra Branca was not unknown, the Court drew the conclusion that the Sultanate had knowingly exercised territorial control over it.20 This control had not been challenged, and following the PCIJ in the case of Legal Status of Eastern Greenland, the ICJ found that the Sultanate’s possession of the islands constituted a “continuous and peaceful display of territorial sovereignty”,21 satisfying the requirements for ‘original title’.

More strikingly, perhaps, Malaysia had emphasised two elements relating to the nature of control enjoyed by the Johor Sultanate to prove ‘original title’. Firstly, the Orang Laut, a class of the Sultan’s subjects, resided on and around surrounding islands including Pedra Branca. By enjoying a close relationship with the Orang Laut, the Sultanate exercised authority over the islands. Secondly, the Sultanate was recognised as a sovereign entity. The British were engaged in a protectorate relationship with Johor, where the Sultan retained authority, as opposed to how Singapore and other islands had lost their sovereignty.22 The Court accepted these elements as further substantive evidence supporting Malaysia’s claim of ‘original title’.

2. Problems in application

The ICJ’s analysis in the Pedra Branca case ignores the tension between terra nullius and ‘original title’, thus failing to address the place of the former in contemporary international law. When addressing ‘original title’ of Pedra Branca, the Court merely repudiated Singapore’s argument through establishing the Johor Sultanate’s authority over the surrounding islands, much like how it dodged the question in the dispute between Indonesia and Malaysia over the Sipadan and Ligitan Islands.23

19 Ibid, pp. 53-36

20 Ibid, p. 61

21 Legal Status of Eastern Greenland, Permanent Court of International Justice, Ser. A./B., No. 53, 1933, p. 839

22 Turnbull, C. M. (1972). The Straits Settlements, 1826-67: Indian presidency to crown colony

23 Sovereignty over Pulau Ligitan und Pulau Sipadan (Indonesia/Malaysia), Application for Permission to Intervene, Judgment, I.C.J. Reports 2001, p. 575

Hence, the relationship between terra nullius and ‘original title’ remains unclear. The ICJ’s judgement itself emphasised the importance of the absence of competing claims to the Sultanate’s title, which signals the acquiescence of other states, and proof of effectiveness of the Sultanate’s control. Yet in the colonial era, what if the Sultanate’s authority was not recognised and it was not deemed a state? The nemo dat maxim, that no one can give what they do not have, was emphasised in the Island of Palmas case and remains an essential principle today.

Consequently, the ICJ avoided the tension between the two concepts. In its attempt to separate ‘original title’ from terra nullius, the Court simply took ‘original title’ for granted through examining the nature and extent of authority held by the Sultanate in the region.

Arguably, the ICJ was only able to avoid addressing this tension by virtue of the unique nature of sovereignty in Asia during the colonial era. The Johor Sultanate’s status as a British protectorate empowered it to retain its authority as a sovereign state. This is in contrast with how the European states sought to acquire sovereignty through effective occupation in other parts of the world, such as in the African continent, under the Conference of Berlin 1888.24 In Southeast Asia, colonial powers tended to recognise local authority, instructing their agents to work with and respect them, hence allowing the kingdoms to claim ‘original title’.25

However, what are the specific features of control required for the establishment of ‘original title’?

Prima facie, the test is the actual exercise of effective control which Malaysia failed to prove over Pedra Branca specifically – even the ICJ acknowledged that Malaysia was not able to produce evidence attesting to any specific activity à titre de souverain of the Sultan of Johor over the island, much like the situation in Eritrea v Yemen, and simply retaining control over the region was sufficient.26 This is understandable given the island’s rocky terrain, but might lead to the paradox where the more difficult it is to establish control of a particular area, the easier it is to prove title.

Furthermore, the question of who may claim the potential legal effects of such title remains unanswered. In line with Singapore’s arguments in the Pedra Branca case, it may prove difficult to establish the successor to a particular kingdom or state (although it was easier in the Johor Sultanate’s case). The ICJ failed to address this question.

24 Arbitral awards by the King of Italy Victor Emanuel III in the Clipperton Island case (France/Mexico). RIAA, vol. II, p. 1110

25 Recopilaciones de las leyes de los Reinos de las Indias, Libro Tercero, Titulo IV, De la guerra, ley XVIII

26 Award of the Arbitral Tribunal in the second stage of the proceedings between Eritrea and Yemen (Maritime Delimitation) Decision of 17 December 1999, p. 311, para. 449

E. The Doctrine of utipossidetisjuris

Another way that decolonised states have sought to legitimise their claims to territory is by invoking the doctrine of uti possidetis juris, transposed from Roman private law, which effectively means “you possess, so shall you possess”.

The concept first emerged in the Spanish Americas during the 19th century, whereby newlyindependent states drew boundaries according to the colonial administrative divisions at independence. This explains how uti possidetis juris is fundamentally tied to the geopolitics of the Spanish Americas – in the 1977 Beagle Channel arbitration, the ICJ noted that even when the doctrine was subject to divergent interpretations, with uncertain scope and application, uti possidetis juris constituted “an important element in the interrelationships of the continent”.27

Today it serves as a general principle to be broadly applied and is definitively connected with the birth of new states; many of the newly formed African states adapted the principle in delineating their own boundaries throughout the 20th century. As recognised by the ICJ in the landmark Frontier Dispute case,28 much like how the former Spanish American colonies at the time sought to prevent other colonising powers from making inroads into uninhabited territory, the rationale underpinning uti possidetis juris is to “prevent the independence and stability of new States being endangered by fratricidal struggles provoked by the challenging of frontiers following the withdrawal of the administering power”.29

1. Narrow scope

Notwithstanding such benefits, its universal applicability is limited by a crucial element: consent. In Frontier Dispute, the ICJ emphasised that their incorporation of uti possidetis juris was “based upon the principle of common consent to the delimitation of territory”, whereby both parties had to agree to adhere to previous colonial boundaries, or at least agree on common amendments to them. This was confirmed by its jurisprudence in later cases: the Court discussed the doctrine in neither the Western Sahara advisory opinion due to Morocco’s objections, nor the Eritrea v Yemen dispute30 given a lack of consent.

27 Case Concerning the Dispute between Argentina and Chile concerning the Beagle Channel, 18 February 1977, Arbitral Award, para. 9

28 Frontier Dispute, Judgment, I.C.J. Reports 1986, p. 554

29 Ibid, p. 554

30 Award of the Arbitral Tribunal in the second stage of the proceedings between Eritrea and Yemen (Maritime Delimitation) Decision of 17 December 1999, p. 311, para. 449

Perhaps the doctrine works best when all states involved have been dominated by a single colonial power, and existing boundaries are relatively uncontroversial. Even within the Americas, Brazil which came under Portuguese rule has rejected its applicability, arguing that the legitimacy of her title was underpinned by the relevant treaties between Portugal and Spain.31 She has hence advocated the alternative doctrine uti possidetis de facto, whereby she obtains title of territory under her effective factual possession at independence. The lack of established boundaries renders uti possidetis juris inappropriate in this case. The rivalry between Spain and Portugal in the region meant that both sides would be self-aggrandising and unwilling to concede territory.

Consequently, despite its potential universal applicability, uti possidetis juris has been found at most to be a complement of existing legal frameworks rather than a replacement. The inherently political nature of the doctrine renders it highly malleable to suit various circumstances, but cannot fully substitute current theory. Numerous cases involving non-Spanish states, such as the Guiana Boundary Case32 and the Western Sahara dispute, have applied alternative principles such as that of self-determination and claims to ‘ancient title’ (instead of colonial title) in the latter.33 The underpinning purpose of the doctrine, to negate terra nullius, limits its application from the very beginning; it is applied on a case-by-case basis, rather than being customary.

Thus the application of uti possidetis juris is more limited than its counterpart, ‘original title’, by virtue of their different raisons d’être. Uti possidetis juris, conceived as a solution in the postcolonial era, relied heavily on the successor states working together to prevent further conflict and colonial intrusion. This is opposed to ‘original title’, a concept applied regardless of colonial presence, focusing more on the constitutive nature of statehood and how its very validity gives rise to territorial rights. While ‘original title’ is also predicated on the absence of competing claims, their presence does not automatically nullify title. Instead, the ability to quash rivalrous claims simply serves to validate whether a state truly exercises effective control over a defined area.

F. Possible Application: The Falkland Islands

In the dispute over the Falkland Islands between the United Kingdom (UK) and Argentina, Argentina predicated her claim upon her status as the successor state to Spain. Most significantly,

31 Arbitral Award Relating to the Question of the Boundaries between Brazil and French Guyana, 1 December 1900, Arbitral Award, pp. 376–377

32 Ibid.

33 Sarvarian, A. (2015). Uti Possidetis Iuris in the Twenty-First Century: Consensual or Customary?. International journal on minority and group rights, 22(4), pp. 511-532

she claims the right of uti possidetis juris to postulate that she inherited the Falkland Islands from Spain after effective Spanish occupation,34 with the backing of other Spanish states in the region.

1. Key Problems

Apart from other issues relating to the nature of Spanish occupation and apparent Argentinian acquiescence later on, Argentina’s claim of uti possidetis juris will likely fail here.

The lack of British acceptance of uti possidetis juris precludes Argentina from relying on the doctrine in the first place.

Even if the concept were accepted, the concept of uti possidetis juris was not widely accepted as custom in the Spanish Americas from the beginning. Rather than being explicitly embodied in the treaties between the newly-independent states at the time, it grew to be accepted as a regional principle only over time, notably at the 1848 Congress of Lima. 35 This was some time after Argentina’s declaration of independence in 1816, Britain’s recognition of such independence in 1825 and Britain’s move to reassert control over the Falkland Islands in 1833.

Moreover, complications arise from Spain’s failure to recognise Argentina as a legitimate state until 1859, 26 years after the beginnings of Britain’s occupation of the Islands. Argentina’s claim, that sovereignty was transferred in 1816, fails because of the aforementioned nemo dat maxim.

Following Britain’s argument, Spain could not have transferred sovereignty to an entity it viewed as illegitimate. This echoes the ICJ’s reasoning when resolving the maritime dispute between Nicaragua and Colombia in 2012, whereby it rejected both sides’ claim of uti possidetis juris as “nothing clearly indicates these feature were attributed to the colonial provinces of Nicaragua or of Columbia”.36

G. Criticisms of Both Doctrines

1. Problems with terra nullius and questions of sovereignty

Despite how the emergence of the above doctrines illustrates the flexibility of territorial concepts in aligning themselves to the unique geopolitical norms in the context of each dispute, their incorporation still fails to remedy the problems inherent to terra nullius – the right of a political

34 Hassan, F. (1982). The sovereignty dispute over the Falkland Islands. Va. J. Int'l L., 23, 53. p. 67

35 Ireland, G. (1938). Boundaries, possessions, and conflicts in South America, p. 327

36 Territorial and Maritime Dispute (Nicaragua v. Colombia), Judgment, I.C.J. Reports 2012, p. 624

entity to territory is still dependent on colonisers’ attitudes towards its legitimacy. Argentina struggles to establish title over the Falkland Islands in part due to Spanish reluctance to recognise their sovereignty, as opposed to how Malaysia was readily able to establish the Johor Sultanate’s ‘original title’ to Pedra Branca predicated upon colonial acceptance.

Importantly, ‘original title’ and uti possidetis juris may only be applied after statehood is established, rather than during the process of acquiring it. This means they do not provide effective independent guidance as to determining title to territory – the precise moment at which statehood is acquired, particularly in the colonial context, is typically contested and cannot be objectively determined with reference to a singular authority. As Peters contends, the recognition of statehood by other political actors has mere declarative value, but what matters is effective control, which is often difficult to measure.37

In spite of such problems, perhaps it is unavoidable that competing territorial claims are resolved in such a manner. This is evident from how even now, indigenous peoples’ rights to land are recognised as having survived colonialism, but they are highly restricted and do not extend to the level of sovereignty.38 Much like the inhabitants of the Johor Sultanate, indigenous peoples also governed their territory for generations prior to colonisation. Yet they are denied title today because of the competing claims of states such as Australia and Canada. States such as Malaysia only succeeded as the natives managed to achieve statehood eventually. Ultimately, title to territory may be characterised as relative rather than absolute – recognition from other actors cannot be extricated from statehood, and thus legitimacy of title.

Nonetheless, in order to fully address the tension between recognition of terra nullius and newfound conceptions of title, the status of terra nullius in international law today must be explicitly addressed and a more substantive way of confronting claims from the colonial era must be derived. This is to avoid situations such as the dispute over Pedra Branca, where Singapore’s argument was rejected without further explanation, which may prove perplexing especially since both parties were noncolonisers.

37 Peters, A. (2014). The Principle of" Uti Possidetis Juris": How relevant is it for Issues of Secession?. In Selfdetermination and secession in international law (pp. 95-137). Oxford University Press

38 Gilbert, J. (2007). Historical Indigenous People’s Land Claims: A Comparative and International Approach to the Common Law Doctrine on Indigenous Title, International and Comparative Law Quarterly 583 (2007), p. 585

Comparing Trade Union Laws & Labour Protections in the

UK and Singapore

Khai Xing Chew

In the light of the intensifying strikes in the UK and their government’s new anti-strike bill, it is a good opportunity to compare the confrontational climate of the UK's trade union movement to that of Singapore’s ostensibly more collaborative trade union model. This article will analyse (i) the historical and legal developments leading up to the status quo of the trade union movement in both countries and (ii) compare the effectiveness of both models in protecting workers’ rights without seriously compromising economic stability in both countries.

A. Brief overview of trade unions and industrial action

A trade union aims to protect and promote the interests of its members such as securing pay rises and better employment protections. 1 Generally, the advancement of these aims is achieved through collective bargaining, where representatives will negotiate agreements with employers for better pay and working conditions - and where that fails, trade unions will then undertake industrial action (subjected to what is allowed under the country’s legislation). Many rights that workers enjoy today, such as sick pay and annual leave, have been secured through industrial action by previous generations. Any restrictions imposed on industrial action will infringe on workers’ rights and ability to secure better conditions, though this has to be weighed against the need to uphold economic and social stability.

B. The historical and legal development of the trade union movement in the UK

While the 1871 Trade Union Act recognised unions as legal entities entitled to legal protection in the UK, the right to take effective strike action was only provided later through the Conspiracy and Protection of property Act 1875. Trade union activity rose to unprecedented levels in the 1970s where 21.9 million working days were lost to strike action, rising to 24.97 million in what has been dubbed the ‘winter of discontent’ in 1979 after the Labour government under PM James

1 Introduction to trade unions. nidirect. (2021, August 24). https://www.nidirect.gov.uk/articles/introduction-tradeunions

Callaghan suppressed wage rises in the public sector to alleviate inflation.2 However, trade unions faced increasing challenges after Callaghan’s government was replaced by the Conservative government under PM Margaret Thatcher that was determined to curb the power of trade unions through a strategy of incremental change after witnessing their politically and socially destabilising effects.3 Firstly, the Conservative government privatised many former nationalised industries such as railways, gas and electricity while public services that were not privatised increasingly used private contractors to carry out key activities.4 This reduced the importance of the workers and by extension, union influence and leverage. In response to the 1984 miner strikes (against the planned closures of coal mines), Margaret Thatcher labelled the strikers as ‘the enemy within’ - and what resulted was ‘one of the most divisive conflicts in post-war Britain with high levels of police violence and mass arrests’.5 After the strikes were successfully suppressed, Thatcher’s conservative government passed five legislations between 1979 and 1990 including making secondary industrial action illegal, compelling union leaders to first win a ballot of the union membership before calling a strike, and preventing unions bringing their members out in support of other unions - whereby violations would invoke severe penalties such as hefty fines and seizure of assets.6 It is worth noting that Tony Blair’s Labour government did not reverse these measures. Overall, such measures drastically undermined the power and influence of trade unions - and effectively prevented a recurrence of the aforementioned large-scale industrial actions in the short run.7

Since the abovementioned restrictions, resolutions of industrial disputes were increasingly sought through individual action in employment tribunals rather than through large-scale collective action.8 However, not all workers can afford to take successful legal action through employment tribunals, considering employers generally have far greater resources than the underpaid workers.

To the further disadvantage of employees, the Coalition government introduced a £1200 fee to bring a typical case (such as sexual harassment or race discrimination complaints after unfair dismissals) to an employment tribunal through the Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013. While the government defended the move as one that will save

2

3 ibid

4 ibid

5 ibid

6 Keith Laybourn, Professor Emeritus of History. (2023, January 31). UK strikes: How Margaret Thatcher and other leaders cut trade union powers over centuries. The Conversation. https://theconversation.com/uk-strikes-how-margaretthatcher-and-other-leaders-cut-trade-union-powers-over-centuries-186270

7 ibid

8 Striking women, (n 2)

Striking women. Claiming rights: Role of trade unions in the UK | Striking Women. (n.d.). https://www.strikingwomen.org/module/rights-and-responsibilities/claiming-rights-role-trade-unionsuk#:~:text=The%201970s%20was%20a%20period,1979%20(ONS%2C%202003).

money for businesses and taxpayers, trade unions rightly criticised this move as an excessive infringement of workers’ rights. As the TUC general secretary, Frances O’Grady said, ‘by charging upfront fees for harassment and abuse claims, the government is making it easier for employers to get away with the most appalling behaviour’.9 Indeed, reports show that the new policy resulted in an 80% fall in sex discrimination claims and an 85% fall in unpaid wage claims.10 However, the ‘Fees Order’ was eventually defeated in Unison in 2017 when the courts ruled that employment tribunal fees were unlawful.11 Meanwhile, in 2015, the Trade Union Bill was passed, requiring a minimum 50% turnout and public sector strikes would need the support of at least 40% of those eligible to vote.12 The new laws would force unions to give employers 14 days’ notice of strike action and allow them to bring in agency staff to cover for striking workers and help break the strike action. 13 The legislation also cuts the amount of money unions have to initiate industrial action by requiring members to ‘opt-in’ to pay a fee (as opposed to the previous ‘opt-out’ model).14

C. The historical and legal development of the trade union movement in Singapore

Turning to the developments in Singapore, starting from 1959, months before they won the general election and formed the new government, the PAP sought to an economic development policy which – by necessity – came at the cost of placing restraints on an independent labour movement.15 A series of papers published in Petir, the party journal, revealed concerns that the industrial strife during that period would lead to the flight of capital and diminish the ‘means of developing pools of investment capital within Singapore’.16 Prioritising the creation of a favourable investment climate to promote economic growth, the PAP sought to depart from previous models of democratic socialism and curb the power of trade unions. Within a year of taking office, the PAP government first introduced the Trade Union Bill which provided for the ‘re-registration of federations of trade unions’ and significantly changed the conditions for trade union registration, thereby enabling the government to de-register many of the communist-dominated unions. By 1960, stressing the need for ‘industrial peace’, the PAP leadership criticised ‘slogan-shouting’ union leaders and either imprisoned or banished the main communist union leaders.17 From there, the

9 Financial Times. (n.d.). Employment tribunal fees a “victory” for worst employers. Subscribe to read | Financial Times. https://www.ft.com/content/ed37fc7a-1676-11e4-8210-00144feabdc0

10 ibid

11 R (on the application of UNISON) (Appellant) v Lord Chancellor (Respondent) [2017] UKSC 51

12 Striking women, (n 2)

13 ibid

14 ibid

15 Trocki, C. A. (2008). The politics of independence. In Singapore: Wealth, power and the culture of Control. essay, Routledge.

16 ibid

17 ibid

trade unions were gradually unified under the National Trade Union Congress (NTUC), allowing the government to exercise substantial control over the labour movement, thereby rendering the industrial strife of the 1950s a thing of the past. Today, Singapore adopts a tripartite model - a collaboration between NTUC, the Singapore National Employers Federation (SNEF), and the Ministry of Manpower (MOM) - to both protect workers’ rights while maintaining harmonious relations between employers, employees, and the government. For wage-related issues, the NWC convenes every year to formulate wage guidelines in line with Singapore's social development and long-term economic growth, based on tripartite consensus.

D. Effectiveness of the Singapore model over the UK model

In Singapore, the tripartite members work together to implement employment policies that would promote workers’ rights and economic development - such as job re-creation, raising the effective retirement age, skills training and upgrading of the workforce, and the promotion of fair and progressive employment practices. This cooperative model departs from traditional confrontational industrial action such as strikes - instead, union leaders in Singapore sit on major statutory boards and are actively involved in state policymaking, allowing them to use negotiation, conciliation and arbitration to settle labour disputes. This explains the rare occurrence of major strikes in Singapore. Indeed, only two major strikes happened in recent history - the 1986 shipyard workers strike and the 2012 wildcat strike by SMRT Corporation’s bus drivers,18 thereby painting a picture of relative social stability free from industrial strife which facilitates a favourable investment climate that contributes to Singapore’s economic growth and stability.

In contrast, the UK trade unions’ practice of the confrontational model has created a series of labour strikes and industrial disputes in various industries of the UK economy in the past yearmost notably the largest NHS action in history and the biggest walkout of ambulance staff in 3 decades19. Tens of thousands of workers have gone on strike for better working conditions and pay increases that would keep pace with the rising inflation.20 These labour strikes have undeniably

18 Guardian News and Media. (2012, November 28). Singapore’s first strike in 25 years shines spotlight on racial tensions. The Guardian. https://www.theguardian.com/world/2012/nov/28/chinese-bus-drivers-strike-singapore

19 Emily Craig Senior Health Reporter For Mailonline. (2023, February 6). NHS’s biggest ever strike kicks off: Up to 40,000 nurses and ambulance workers take to picket lines. Daily Mail Online https://www.dailymail.co.uk/health/article11717435/NHSs-biggest-strike-kicks-40-000-nurses-ambulance-workers-picketlines.html#:~:text=Up%20to%2030%2C000%20nurses%20are%20striking%20at%2070%2Dplus%20trusts,year%2 0history%20of%20the%20NHS.

20 Reid, J. (2023, February 1). Britain hit by biggest strike in more than a decade with schools shut and rail networks disrupted CNBC. https://www.cnbc.com/2023/02/01/uk-strikes-half-a-million-brits-are-taking-part-in-the-biggest-walkoutfor-12-years.html

left a negative impact on businesses in various sectors - with the ONS reporting that one in eight businesses had been affected by industrial action while the mass walkouts were estimated to have cost the London economy alone almost £2 billion in lost sales over the festive period. Leading up to the end of 2022, the negative impact on businesses - ranging from large corporations to SMEs - has been substantial. Royal Mail has taken a £200m hit from strikes21 amidst ongoing disputes with postal workers and staff walkouts whereby the financial blow is expected to increase beyond £450m if the strikes continue. The adverse effect of postal services’ strikes on SMEs are not to be understated as well - SME owners have expressed worrying concerns over how disruptions in delivery services are ‘crippling’ as the widespread delays to the shipping of items to their customers affect consumer confidence and satisfaction.22 Meanwhile, rail strikes have cost Britain’s F&B and hospitality sector £1.5bn23 in lost business in December alone, a negative outlook expected to turn gloomier. Kate Nicholls, chief executive of UK Hospitality, predicted that the wave of cancellations of events, along with high energy bills and the wider cost of living, formed a ‘perfect storm’ that would ‘undoubtedly’ cause more business failures in the upcoming months.24 Indeed, there have already been about 2,500 closures of hospitality premises in the past three months after the usually-busy December holiday period turning quieter than usual due to the transportation difficulties from railway strikes.25

Perceiving the need to further restrict trade union power due to the severe social and economic disruptions brought by industrial action, Business Secretary Grant Shapps introduced the Strikes (Minimum Service Level) Bill 26that will give the government the power to ensure that vital public services will have to maintain a basic function by delivering minimum safety levels ensuring that lives and livelihoods are not lost. Under the bill, while the government expects parties in the sectors included in the bill to ‘reach a sensible and voluntary agreement between each other on delivering a reasonable level of service’ when there is strike action, the government holds the power to step in and set minimum service levels should the government deem it necessary. In the event of non-

21 Telling, O. (2023, January 26). Royal Mail takes £200mn hit from postal strikes. Subscribe to read | Financial Times. https://www.ft.com/content/8c68dc3d-c28b-48ca-92b9-6c0b6b907fdd

22 Dates of all strike action in the UK – how will this affect smes? (n.d.).

https://moblox.com/login?redirectUrl=/content/articles/dates-of-all-strike-action-in-the-uk-how-will-this-affectsmes

23 Pickard, J. (2022, December 30). Rail strikes caused £1.5bn hit to hospitality sector in December, says trade body. Subscribe to read | Financial Times. https://www.ft.com/content/dc3bf266-3f55-4728-8d82-b32e1c1fe2c5

24 Guardian News and Media. (2022, December 30). Rail strikes “cost UK hospitality sector £1.5bn in December alone.”The Guardian. https://www.theguardian.com/business/2022/dec/30/rail-strikes-cost-uk-hospitality-sector

25 ibid

26 Department for Business, E. & I. S. (2023, January 10). Government introduces laws to mitigate the disruption of strikes on the public. GOV.UK. https://www.gov.uk/government/news/government-introduces-laws-to-mitigate-thedisruption-of-strikes-on-the-public

compliance with the obligations set out in the bill, the union will lose its legal protection from damages. This move towards a greater restriction on the scope of industrial action arguably aligns the UK model one step closer to Singapore’s restrictive model, though the antagonistic rather than collaborative focus in the new proposed bill leaves much to be desired.

E. Potential limitations of the Singapore model

However, concerns have been raised that the unequal power dynamics - due to PAP’s long-held political dominance - in the tripartite model might result in an insufficient protection of workers’ rights in Singapore. Garry Rodan, director of the Asia Research Center at Australia’s Murdoch University, argues that ‘the failure of the NTUC to play an independent and active role in defining and representing the rights of its members has generally left workers without adequate representation’.27 Indeed, Singapore’s labour movement has been criticised for its reluctance to push for more institutional changes. For example, the Progressive Wage Model (which effectively introduces a minimum wage for certain roles by stipulating a wage structure for specific industries) is only mandatory for Singaporean or permanent resident workers, and currently applies to a limited number of industries, unlike a minimum wage system which would apply across the board. Meanwhile, when a group of migrant bus drivers from China went on strike in 2012 to protest low salaries and poor living conditions, the NTUC endorsed the government’s labelling of the action as an “illegal strike”.28

Meanwhile, the UK labour movement, while confrontational and disruptive, has proven to contribute to better workers’ rights through industrial action. Putting aside past victories, the recent strikes which highlighted (in full force) the dismal pay and work conditions in the public health sector, have pressured the Scottish government to ‘offer NHS workers the largest pay package in the history’ of the health service. The effectiveness of such disruptive industrial action is exemplified in UCU General Secretary Jo Grady’s proclamation that real progress is being achieved since ‘employers know that [they] will not walk away from this dispute until it is won’.29

27 Han, K. (2020, February 18). Recalling Singapore’s forgotten unions. Asia Times. https://asiatimes.com/2017/12/recalling-singapores-forgotten-unions/

28 Migration. (2016, January 19). SMRT Bus Drivers’ Strike: NTUC says it supports government’s action. The Straits Times. https://www.straitstimes.com/singapore/transport/smrt-bus-drivers-strike-ntuc-says-it-supports-governmentsaction

29 Wehner, M. (2023, February 23). Strike dates cancelled. Pi Media. https://uclpimedia.com/online/strike-datescancelled

Overall, a comparison between the labour movement models in both countries clearly highlights the desirability of Singapore’s collaborative model where economically-detrimental industrial strife is avoided through what PM Lee described as ‘an enduring and productive relationship’ which contributes to ‘Singapore’s sustained economic success. Moving forward however, the tripartite members, especially NTUC, can potentially consider ways to exercise more initiative in protecting their stakeholders without overly disrupting the status quo. Ultimately, an ideal labour movement is one which actively promotes and protects workers’ rights while also balancing the national objectives such as economic and social stability.

Doctors do not always know best - The vital triage of mediation as a viable alternative to litigious claims

Nickolaus Ng1

“To err is human.” 2

Medical malpractice covers a diverse range of legal aspects, including who should compensate for medical malpractice and how to effectively deal with such disputes. Nations around the world have been implementing various legal reforms in a bid to enable their healthcare systems to better manage such disputes. While the traditional option would be to opt for litigation in court and the aggrieved party subsequently obtaining compensation or some other legal remedy, there has been a gradual shift in countries like the United Kingdom (“UK”) and Singapore towards using a less adversarial approach - mediation - to try to amicably resolve medical malpractice disputes.

This article will discuss the present standard of care used in Singapore when assessing medical malpractice claims. It then goes on to show how both judicial approaches in England and Singapore have started to shift their perspectives from litigation to mediation as the appropriate starting point for resolving medical malpractice disputes. This article then proceeds to discuss how mediation would be beneficial for both parties involved in medical malpractice claims, and concludes with some suggestions about what could be done to promote and emphasise mediation as the first port of call for the resolution of medical disputes. Ultimately, mediation is a viable alternative to litigation given its expediency and cost-saving elements in resolving disputes.

A. The tort of negligence and its relation to medical malpractice

To successfully receive legal remedies, a party needs to bring a claim in court using the tort of negligence, an age-old common law concept entrenched in a plethora of case law.

As Singapore is a former British colony with a common law system in place, English law underpins the tort of negligence. The seminal case in Singapore on negligence was in 2008 - Spandeck Engineering (S) Pte Ltd v Defence Science & Technology [2007] 4 SLR(R) 100 - where the Singapore Court

1 The author expresses deep gratitude to Alexander Russell Penney, Nicholas Tong Wei Kai, and Ryan Lee Zheng Yuan for their assistance with reviewing, commenting, and providing insights regarding this article. All errors remain the author’s own.

2 Alexander Pope in An Essay on Criticism to the US Institutes of Medicine’s report on patient safety (1711).

of Appeal laid down the framework for establishing negligence. If placed in the context of a medical malpractice dispute, negligence would be established on these three elements:

(a) the practitioner owes the patient a duty of care;

(b) the practitioner has breached that duty by failing to exercise the required standard of care; and

(c) the patient suffered injury as a result of this breach.

In the healthcare sector, a duty of care will only be imposed when it is foreseeable that the patient would suffer a loss due to negligence on the part of the medical practitioner. Moreover, the courts will also assess whether there is proximity between the patient and medical practitioner in terms of the closeness and directness of their relationship. The courts will further determine if there are any policy considerations which negate the imposition of a duty of care.3

After a duty of care is established in (a) above, the courts will assess whether there was a breach of the standard of care of a medical practitioner. The preceding standard of care known universally across common law jurisdictions is that of a reasonable medical practitioner, as laid down in the English case of Bolam v Friern Hospital Management Committee [1957] 1 WLR 582 at 587 (“Bolam”). In Bolam, the court held that the standard of care of doctors is based on whether the practice is “accepted as proper by a responsible body of medical men skilled in that particular art”.4

In 2002, the Singapore Court of Appeal noted that the courts would not ascribe liability for negligence to a doctor if there was a respectable body of medical opinion that would support the doctor’s decision. However, the Singapore Court of Appeal also stated that the medical expert’s view must fulfil a threshold test of logic by showing that the medical expert had directed their minds to the risks and benefits regarding the decision of the accused doctor and subsequently arrived at a defensible conclusion.5 This reflects the reality of the medical profession, wherein there are a multitude of diverse views and different approaches to a medical issue in question. Doctors cannot reasonably be expected to show that all of their colleagues would have agreed with their decision, as it would be natural to have differing opinions. Therefore, it would suffice to show to the court that a group of other competent doctors agreed with them.6 In essence, the

3 Spandeck Engineering (S) Pte Ltd v Defence Science & Technology [2007] 4 SLR(R) 100, at paragraphs 73-85.

4 Bolam v Friern Hospital Management Committee [1957] 1 WLR 582 at 587; [1957] 2 All ER 118 at 122.

5 Khoo James and another v Gunapathy d/o Muniandy and another appeal [2002] 1 SLR(R) 1024.

6 Hii Chii Kok v Ooi Peng Jin London Lucien and another [2017] SGCA 38, at paragraphs 55-56.

Bolam test was a “convenient and efficient means of determining what an ordinary skilled member of the [medical] profession would reasonably have done in the defendant’s shoes”.7

In Hii Chii Kok v Ooi Peng Jin London Lucien [2017] SGCA 38 (“HiiChiiKok”), the Singapore Court of Appeal was once again called upon to decide on a medical issue, bringing the Bolam test to the fore. While the Singapore Court of Appeal was of the position that the Bolam test would apply to diagnosing patients’ conditions and medical treatment, it, however, held that the Bolam test would not extend to the practitioner’s medical advice rendered to patients. The rationale for this was that the court noted the fluid nature of the doctor-patient relationship, which had evolved into one that was not as physician-centred as compared to before.8 Hence, the court was moved to accommodate the position that a patient had to be well-informed to the extent that they would be reasonably required to in order to make an informed decision about their medical treatment.9

This reflects the court’s support for the importance of patient autonomy, and is congruent to the global shift in perspectives regarding the nature of the doctor-patient relationship accounting for a generally more educated and informed population. With the rise of patient autonomy and better understanding by laypersons of various medical topics, the idea of physician paternalism, or the “doctor knows best/doctor is always right” mentality has gradually diminished.

The third element of proving that the injury was caused by a negligent act needs to be proven by the patient, who would in most instances be the claimant/plaintiff. Therefore, while more weight has been given to patient autonomy in recent years, the patient still bears the burden of proving the third element. While the plaintiff may prove the first two elements, if they do not prove the third element, the claim still fails for lack of a causal nexus between the injury caused and the negligent act. Thus, there has been a quandary in terms of the third element being in line with promoting patient autonomy, as the common law will bar claims in negligence if the risks of a patient’s treatment are ultimately unmaterialised.10

In addition, the cost of litigation is icing on the cake as it is a significant deterrent to potential plaintiffs from bringing their medical negligence claims. This appears to be a bar to accessing

7 Hii Chii Kok v Ooi Peng Jin London Lucien and another [2017] SGCA 38, at paragraph 57 [emphasis added].

8 Dorcas Quek Anderson, ‘Medical Negligence Proceedings in Singapore: Instilling a Gentler Touch’ (2018) International Academy of Comparative Law 20th General Congress 2018, July 22-28, at 3.

9 A discussion of the new test is beyond the scope of this article.

10 Leo Zhi Wei, ‘What role should autonomy play in the law of medical negligence’ (July 2017) Singapore Law Watch (pointing out that the court, in ACB v Thomson Medical Pte Ltd and others [2017] 1 SLR 198, disallowed a claim based on reproductive autonomy).

justice, and could be mitigated by bringing medical negligence cases to be decided by alternative dispute resolution methods, particularly mediation.

B. Support for Alternative Dispute Resolution in the UK

In recent decades, the increasing prevalence of alternative dispute resolution (“ADR”) mechanisms in the UK has given rise to a trough of cases and rules. In accordance with the Civil Procedure Rules (“CPR”) rule 26.4, the courts have the power to direct parties to prioritise alternative dispute resolution mechanisms first, and only proceed to litigation if ADR methods do not work. The courts have an inherent discretion under CPR Part 44 to reduce or increase costs based upon whether the parties had tried to alleviate and resolve their dispute through ADR prior to using the court system. Courts will encourage the use of ADR methods at case management conferences and pre-trial conferences. They will also consider whether the parties have unreasonably refused to try ADR methods before going to litigation.

In Cowl v Plymouth County Council [2001] EWCA Civ 1935, Lord Woolf held that there is a duty on the parties to a dispute to consider ADR before considering litigation. He stated that “sufficient should be known about ADR to make the failure to adopt it, in particular when public money was involved, indefensible.”11

Furthermore, in Dunnett v Railtrack [2002] 2 All ER 850 (“Dunnett”), the court held that there is a duty on the parties to a dispute to consider the possibility of trying to resolve the dispute by means of ADR. Lord Justice Brooke noted that “lawyers have a duty to warn clients if they “turn down out of hand the chance of alternative dispute resolutions when suggested by the court…they may have to face uncomfortable costs consequences.”12

Justice Lightman also observed in Hurst v Leeming [2002] EWHC 1051 (Ch) that “Mediation is not in law compulsory, but alternative dispute resolution is at the heart of today’s civil justice system”13 and went further to note that any unjustified failure to give proper attention to the opportunities afforded by mediation may attract cost consequences.14

11 Cowl v Plymouth County Council [2001] EWCA Civ 1935, at [25].

12 Dunnett v Railtrack [2002] 2 All ER 850, at [15].

13 Hurst v Leeming [2002] EWHC 1051 (Ch), at [12].

14 ibid; although cf. Halsey v Milton Keynes [2004] EWCA Civ 576 at [9], where Lord Justice Dyson was of the view that “to oblige truly unwilling parties to refer their disputes to mediation would be to impose an unacceptable obstruction on their right of access to the court”.

In addition, the Woolf report in 1996 pointed out that litigation is costly and ineffective. In particular, the report noted that it was in the area of medical negligence that the civil justice system was not able to meet the needs of litigants. The report observed that costs for litigation were disproportionately high, and many claims pursued by disgruntled patients and/or their families were not meritorious. The Woolf report also observed that the success rate for medical negligence claims in the courts were lower than that of personal injury claims. Doctors tended to prevail in most medical negligence cases especially where the evidence of medical negligence was weak.

Hence, the English courts still seem to back the position that ADR is a recommended avenue that parties utilise at the outset, failing which they then resort to litigation through the court system.

C. Approaches to Mediation in Asia and Support for Mediation in Singapore

The author is of the view that a less adversarial approach should be adopted when approaching medical malpractice situations. Litigation may not always be the most viable option on hand. Mediation could be a strong alternative. In fact, mediation is a common tile in the Asian mosaic. In many Asian cultures and countries, mediation usually involved community leaders since time immemorial. Notably, it was commonplace for community leaders to step in and intervene in community disputes with the aim of settling the disputes in a diplomatic and amicable fashion. It was not uncommon for respected elders to bring parties together to talk things through, and encourage amicable settlement.15

The use of mediation is entrenched in Asian societies. Mediation is particularly suited to many traditional Asian cultures, where despite cultural differences, concepts of social order, harmony and honour are highly regarded. In countries such as China and South Korea, the influence of Confucianism has contributed to the practice of informal or non-institutionalised mediation as a means of resolving disputes.16 In China, a late Ming Dynasty scholar by the name of Zhu Bolu noted that “respective families avoid lawsuits”.17 While this is an ancient text that is uncommonly read in the modern age, this could be better characterised as a distrust of using government institutions and systems (i.e. the court systems) to air one’s private grievances. In Japan, where value is placed on social harmony and personal honour, the settlement of disputes through non-

15 Joel Lee and Teh Hwee Hwee, eds, An Asian Perspective on Mediation, Academy Publishing 2009, at pp 10-11.

16 Lim Lan Yuan, “Mediation Styles and Approaches in Asian Culture” (paper delivered at the 2nd Asia Pacific Mediation Forum) at pp 2-3.

17 https://pages.ucsd.edu/~dkjordan/chin/chtxts/JuBorlu.html

litigious means such as mediation is preferred as it allows parties to preserve relationships and enables the individual to save face and protect one’s personal honour.18

The author observes that in the modern day, pragmatic factors such as cost considerations and expediency will often supplement the traditional viewpoints of harmony that most Asian societies treasure. Asian societies are shifting gradually towards the use of cost-effective, less adversarial measures such as mediation in order to maintain and uphold traditional values of harmony. For example, Singapore has implemented substantive measures to ensure that it takes steps towards promoting mediation as an avenue for dispute resolution in medical malpractice situations. The medical mediation scheme commenced on 1 July 2007 as an initiative spearheaded by the Singapore Ministry of Health and the Singapore Mediation Centre. Aggrieved patients and their families can opt for this scheme, particularly if they are unable to resolve their disputes with their doctors or medical advisors. When going for mediation, the healthcare institution where the doctor is employed will notify the Singapore Mediation Centre through a mediation referral form. As part of the administrative procedure, the Singapore Mediation Centre will then arrange a mediation session for the parties, with a neutral mediator taking up the role as a third party to listen, understand, and facilitate the smooth and amicable resolution of the dispute. The medical mediation scheme allows for the hearing of cases where the quantum does not exceed S$30,000. Where the quantum in dispute exceeds S$30,000, such cases can be mediated under the Singapore Mediation Centre’s normal mediation scheme which also hears cases of other natures.

The global shift towards ADR over litigation is an important one, highlighting how ADR has stood out as a more cost-effective, prudent, and efficient way of handling and resolving disputes. Singapore’s Chief Justice Sundaresh Menon observed in 2016 that “we must avoid a situation where the practice of medicine comes to be adversely affected by the medical practitioner’s consciousness of the risks of malpractice liability.”12

Menon CJ proceeded to provide three overlapping measures that were under evaluation: (a) promoting mediation as a primary step in resolving medical malpractice disputes; (b) shifting from the present adversarial model to a more judge-led process in which the judge will take a proactive stance in directing the proceedings; and (c) the appointment of medical assessors to help the court

with specialised or technical issues of medicine which non-medical professionals would be less than apt to deal with.19

The Singapore Judiciary has provided support for ADR, such as Menon CJ, who observed in 2016 that “an ideal system of justice is one that delivers justice that is customised to each type of case, keeping in mind the subject matter, the parties, and the desired outcomes.”20 Indeed, there is no situation where one size fits all. Flexibility should rise above conventionality. Legal systems need to gravitate away from conventional propositions like litigation and encourage the use of ADR methods to resolve disputes where more suitable.

D. What is mediation?

An alternative dispute resolution option by default, mediation is a voluntary process. It involves a third party who sits as a neutral and impartial middle-man with the aim of helping to facilitate the communication between the parties to the dispute, without taking sides or suggesting solutions that the disputing parties must take. The decisions as to the outcome of the mediation process are ultimately decided jointly by the disputing parties involved. The mediator is solely there to ensure that an amicable settlement can be arrived at, thus saving significant amounts of time, painstaking efforts, and a win-lose situation that are common in litigation. The mediator will list down the disputed issues in order to allow the disputing parties to develop options and alternatives, and reach a consensual settlement that both parties can abide by.21 In essence, mediation aims to ensure a win-win situation for the disputing parties involved.

Mediation is also confidential and non-adversarial in nature, which is particularly useful in the healthcare sector, where patient autonomy is paramount. Moreover, the process and skills relevant to mediation are particularly applicable in clinical practice to facilitate challenging communications following adverse events, to assist bioethical decision making and to resolve disputes.22

It is common for disputes to arise in a medico-legal context. Disputes are sometimes related to patient dissatisfaction with a healthcare practitioner or the treatment outcome.23 In many common

19 Tham Lijing and Colin Liew, “Changes in the law of medical negligence” October 2017, Singapore Law Gazette.

20 Shaping the Future of Dispute resolution & improving access to justice, 17 March 2016, Address of Sundaresh Menon CJ at the Global Pound Conference Series 2016

21 Folberg J, Taylor A., Mediation: a comprehensive guide to resolving conflicts without litigation (San Francisco: Jossey-Bass Publishers, 1984).

22 Danny Lee and Paul Lai, ‘The practice of mediation to resolve clinical, bioethical, and medical malpractice disputes’ (2015) Hong Kong Medical Journal Volume 21 Number 6, 560-564, at 560.

23 ibid.

law jurisdictions, individuals can seek redress through the tort of negligence. However, the journey to a successful negligence claim is usually long, arduous, and does not often result in success. Claimants do not usually get what they want and deserve as the process is expensive and inefficient.24

The use of mediation to settle medical malpractice disputes was pioneered in the US in the mid1980s after a crisis in malpractice claims.25 Aside from preventing lawsuits, bioethics mediation has also been practised in some US states to help patients and their families make difficult clinical decisions, for example, with regard to end-of-life treatment.26 Alexander27 introduced a ‘metamodel’ to describe different mediation practices: settlement mediation, facilitative mediation, transformative mediation, expert advisory mediation (i.e., interventional), wise counsel mediation, and tradition-based mediation (i.e., interactional).

In some common law jurisdictions such as Hong Kong, the facilitative (interest-based) mediation model is commonly employed. In this mode of mediation, the mediator will assist and coach the disputing parties to adopt an interest-based negotiation rather than positional-based bargaining.28

E. Why use mediation for healthcare disputes?

Mediation is preferable for use in the healthcare sector given its confidential and collaborative nature. These are the pillars that support facilitative mediation and allow this mode of mediation to be of useful service in resolving healthcare disputes. In the facilitative mode of mediation, opposing parties can communicate, negotiate, and decide on a settlement among themselves with the assistance of the mediator. The doctor-patient relationship will largely be preserved after health-care mediations.29 There may also be improved communication and a better relationship with their patients thereafter, even in the absence of a dispute.30 In essence, the “confidentiality” principle of mediation ensures that when parties are unable to arrive at a settlement, they are unable to use any information obtained during the mediation process to use in litigation later on.

24 ibid.

25 Hickson GB, Pichert JW, Federspiel CF, Clayton EW, ‘Development of an early identification and response model of malpractice prevention’ (1997) Law Contemp Probl,; 60:7, 29.

26 Dubler NN, Liebman CB, Bioethics mediation: a guide to shaping shared solutions (Nashville, Vanderbilt University Press, 2011).

27 Alexander N., Mediation process and practice in Hong Kong (Hong Kong: LexisNexis Butterworths, 2010).

28 Danny Lee and Paul Lai, ‘The practice of mediation to resolve clinical, bioethical, and medical malpractice disputes’ (2015) Hong Kong Medical Journal Volume 21 Number 6, 560-564, at 561.

29 ibid.

30 Trumble SC, O’Brien ML, O’Brien M, Hartwig B., ‘Communication skills training for doctors increases patient satisfaction’ (2006) Clinical Governance 11, 299- 307.

As observed, most mediation-related skills such as active listening, reframing, acknowledgement of feelings, etc., are relevant to daily clinical practice where different, or sometimes difficult human interaction is inevitable.31 Communication between the patient and the healthcare professional becomes even more challenging when there are adverse or unanticipated outcomes. Healthcare professionals are, more often than not, either not ready or comfortable to communicate with them in the aftermath.32

This is where mediation can play a vital role in difficult communications involved in a medical dispute. Mediation communication skills can be employed by frontline staff to calm the emotions of patients and their relatives. Acknowledgement of feelings, active listening, and expression of empathy are important and useful skills for frontline staff to handle emotionally charged patients and their relatives. It has been proven that effective communication following adverse events can reduce the number of patients who initiate legal proceedings against their doctor.33

F. Why does mediation trump litigation in healthcare disputes?

While the common law allows for patients to assert their legal rights in cases of medical misfeasance, it is highly difficult to establish such a claim successfully due to the inherent high thresholds in Bolam. Establishing a claim requires the claimant to go through the court system to prove the nexus between a doctor breaching his/her duty of care and resulting damage to the claimant. The court process is known worldwide to be complex and long due to the need to conduct discovery of evidence and exchange expert reports.34 Moreover, how fast a claim proceeds in court depends largely upon the cooperation of parties with one another and also court timelines. If parties are uncooperative, the cases can delay on for years before they reach court and the trial stage.35

The outcome of cases may also not be desirable for parties involved, be it doctor or patient. As Beckman et. al. identified, some reasons why patients commenced legal proceedings against their doctors were due to doctors unavailability, discounting patient or familial concerns, poor delivery

31 Danny Lee and Paul Lai, ‘The practice of mediation to resolve clinical, bioethical, and medical malpractice disputes’ (2015) Hong Kong Medical Journal Volume 21 Number 6, 560-564, at 561.

32 Gallagher TH, Waterman AD, Garbutt JM, et al., ‘US and Canadian physicians’ attitudes and experiences regarding disclosing errors to patients’ (2006) Arch Intern Med 166, 1605-11.

33 Duclos CW, Eichler M, Taylor L, et al., ‘Patient perspectives of patient-provider communication after adverse events. Int J Qual Health Care’ (2005) 17, 479-86.

34 Danny Lee and Paul Lai, ‘The practice of mediation to resolve clinical, bioethical, and medical malpractice disputes’ (2015) Hong Kong Medical Journal Volume 21 Number 6, 560-564, at 562.

35 Sohn DH, Bal BS, ‘Medical malpractice reform: the role of alternative dispute resolution’ (2012) Clin Orthop Relat Res 470, 1370-8.

of information, lack of understanding for the patients, and a perceived lack of collaboration when delivering healthcare services.36 Most patients initiated legal proceedings following an adverse medical event because they wanted an honest explanation, and individual and organisational accountability, plus they also looked for strategies to prevent recurrence of mishaps.37 Regrettably, these non-monetary remedies are not available as remedies awarded by a court of law.

Moreover, being involved in legal proceedings can irreversibly impact a doctor’s life, such as dealing with external questioning of his reputation, emotions he/she needs to go through and deal with, despite working in what would globally be known as a noble profession of life-saving. The doctor will need to live with such hurdles regardless of the outcome of the judgment regarding the alleged medical malpractice.

Litigation in no way provides respite or relief for the doctors, but conversely, mediation will enable doctors to better proceed with their daily lives and careers. Mediation is usually flexible and less formal in procedural matters, and hence time and cost-saving.38 Unlike litigation, non-monetary issues such as explanations, apologies, or even future strategies to enhance patient safety can be discussed during mediation. 39 In the UK, the National Health Service Litigation Authority (“NHSLA”) has been asking their representative lawyers to consider and offer mediation in appropriate cases since 2000.40 The NHSLA’s findings suggest that claims may be settled by mediation directly, although settlement may not be achieved on the same day of mediation. In a recent survey conducted by the European Hospital and Healthcare Federation, mediation was also widely used in health-care disputes in 10 European member states.41

As of 2023, over 70% of disputes in Singapore were settled through mediation without the need of proceeding to litigation, and 90% of those mediated disputes were resolved within one day.42 This reflects the speediness and efficiency of using mediation to resolve disputes. The Chief Justice of the Singapore Judiciary suggested that a situation must be prevented whereby “the practice of

36 Beckman HB, Markakis KM, Suchman AL, Frankel RM, ‘The doctor-patient relationship and malpractice. Lessons from plaintiff depositions’ (1994) Arch Intern Med 154, 1365-70.

37 Vincent C, Young M, Philips A., ‘Why do people sue doctors? A study of patients and relatives taking legal action’ (1994) Lancet 343, 1609-13.

38 John DH, Bal BS, ‘Medical malpractice reform: the role of alternative dispute resolution’ (2012) Clin Orthop Relat Res 470, 1370-8.

39 United Kingdom Department of Health, ‘Making amends: a consultation paper setting out proposals for reforming the approach to clinical negligence in the NHS’ (2003).

40 ibid.

41 HOPE European Hospital and Healthcare Federation. Mediation in healthcare. Available from: <http://www. hope.be/05eventsandpublications/docpublications/ 91_mediation/91_HOPE_Publication-Mediation_December_2012.pdf.>

42 Singapore Mediation Centre, <https://www.mediation.com.sg>

medicine comes to be adversely affected by the medical practitioner’s consciousness of the risks of malpractice liability. This can lead to the practice of “defensive medicine” and higher insurance costs. To strike the right balance and ensure that medical practice is not distorted by the fear of litigation, some re-imagination of our medical litigation paradigm is timely”.43

It is recommended that legal practitioners inform their clients of the availability of mediation, and that governments around the world instate regulations that require parties to sign a ‘mediation certificate’ showing that they sought mediation, before they can file a claim in court. It is also observed that the common law courts of Hong Kong may impose adverse costs upon any party who unreasonably fails to engage in mediation even if that party subsequently wins the case.44 This aligns with the English position in Dunnett, where Lord Justice Brooke said that parties may need to face costs consequences in the event that they do not resort to mediation first before going before the courts, and further emphasises that measures should be put in place to enhance and promote the use of mediation to resolve medical malpractice claims, and only after parties have exhausted that option, can they thereafter turn to the courts for dispute resolution.

G. Concluding recommendations

As healthcare disputes often involve complex professional issues, it would be relevant and desirable for mediators to have medical knowledge when dealing with any health-care disputes.45 It should never be overlooked how early access to mediation may save transaction costs (such as time, money, emotional energy, and opportunities lost).46

It is recommended that healthcare professionals should be open to pre-trial mediation. Peeples et. al. observed that the term ‘settlement’ might be viewed negatively as ‘admitting fault’ in the eyes of the medical profession during mediation. 47 This in itself can be discouraging for doctors. However, back to the point on mediation’s more nuanced approach compared to the adversarial litigious approach, it is paramount for mediators to emphasise to doctors before the mediation sessions that mediation’s purpose is to achieve an amicable outcome as far as possible - a “winwin” situation. This would assist with allaying the concerns of doctors and allow them to openly

43 Opening of the Legal Year, 11 January 2016, address of Sundaresh Menon CJ

44 Hong Kong Judiciary. Practice Direction 31. Available from: <http://www.hklii.hk/eng/hk/other/pd/PD31.html.>

45 Chiu JS, ‘Medical and dental negligence mediation in Hong Kong’ (2010) Asian Dispute Review July, 85-8.

46 Hickson GB, Pichert JW, Federspiel CF, Clayton EW, ‘Development of an early identification and response model of malpractice prevention’ (1997) Law Contemp Probl 60, 7- 29.

47 Peeples R, Harris CT, Metzloff TB, ‘Settlement has many faces: physicians, attorneys and medical malpractice’ (2000) J Health Soc Behav 41, 333-46.

express their views and positions to their patients to facilitate effective communication. These go a long way in helping to achieve a favourable outcome and may possibly provide the closure needed by patients involved in disputes of such a sensitive nature.

On the whole, mediation is a different ball game altogether as compared to litigation. It has been recommended that lawyers who take part in mediations should assist their clients on legal matters and be responsive to clients’ interests and goals during the negotiations rather than being focused on purely winning the case.48 Be it whether the parties decide that compensation is ripe for the matter, or that an apology should be made by the doctor, or that a detailed explanation to the medical process be provided by the doctor to justify his/her actions, it is highly important that mediating parties comprehend the fundamentals and purpose of mediation to allow the parties to achieve the best dispute resolution outcome - amicable consensus through communication and understanding. It is thus vital that mechanisms are put in place to assist all parties who participate in the mediation process in understanding the fundamentals and values of mediation in order to achieve maximum benefit.

48 Department of Justice, HKSAR. Mediation and medical practice. Available from: <http://www.doj.gov.hk/eng/ public/pdf/2010/sj20100925e.pdf.>

Unfair Terms and Exemption Clauses in Consumer Contracts: The Need to Regulate Unfair Terms in Singapore?

Zachary Lee

It is well recognised that the average consumer is at a disadvantage when they transact with a seller. The reality of information asymmetries and unequal bargaining positions place the seller, who is often more experienced in his craft, in a better position to manipulate a consumer into entering a deal which he may not otherwise have had he been aware of the terms of the agreement. In various jurisdictions, consumer protection laws rectify this unsatisfactory situation through various approaches, establishing different legal tests in case law and statute to be met before their courts intervene to nullify unfair contract terms and exemption clauses that put consumers at such a disadvantage. Turning to the jurisdictions of Singapore and the UK, both legal systems have responded to the issue of consumer protection through legislation enacted by their respective parliaments. Consequently, the legal tests laid out in their respective legislation are clarified in case law.

This article thus seeks to elucidate the approach that the law in Singapore takes toward unfair terms and exemption clauses in consumer contracts in comparison to that of the UK’s. In doing so, it will briefly explore the legislative history of both jurisdictions’ consumer protection legislation, which will contextualise the extent of protection granted to consumer rights in their respective jurisdictions. An illumination and comparison of the legal approaches in both jurisdictions will then be made, shining light into how their respective courts identify and nullify an unfair term and exemption clause. This article will also refer to unfair terms and exemption clauses as separate classes of contractual terms to avoid confusion, since an exemption clause is often colloquially and generally deemed an “unfair term”. Broadly speaking, an exemption clause is one that excludes or limits a person’s liability for loss arising from a breach of contract1 while an unfair term is any term that, in a broad sense, puts one party at a significant disadvantage to another party.2 It must be stated that it is beyond the scope of this short article to explore the full implications of both jurisdictions’ legislation on the varieties of exemption clauses and unfair terms

1 Includes exclusion clauses, limitation of liability clauses, conclusive evidence clauses, entire agreement clauses etc.

2 Includes penalty clauses, contractual variation clauses, unilateral interpretation clauses etc.

in various types of contracts. Rather, this article seeks to highlight the differences in the extent of power the Singaporean and UK courts possess in finding that a term in a consumer contract is “unfair”, referring to specific examples in different types of consumer contracts, and the extent of protection from exemption clauses that is available to consumers.

Ultimately, this article concludes that the law on consumer protection in Singapore could adopt certain features of the UK’s consumer protection laws, in particular providing greater clarity on the extent of the court’s jurisdiction in nullifying an unfair contract term.

A. Brief Legislative History of Consumer Protection Legislation in Singapore and the UK

It must be noted that the major advances made in the law on consumer protection in both jurisdictions did not originate from the common law. The Consumer Rights Act 2015 (CRA),3 which regulates unfair terms and exemption clauses in consumer contracts in the UK, originally developed from the Unfair Terms in Consumer Contracts Regulations 19944 and 1999,5 which were statutory instruments implemented pursuant to Directive 93/13/EEC.6 Similarly, the Unfair Contract Terms Act 1977 (UCTA)7 and Consumer Protection (Fair Trading) Act 2003 (CPFTA),8 which dominate the law on unfair terms in consumer contracts in Singapore, were products of the Parliament of Singapore.9 Thus, in the absence of statutory authority, the common law of both

3 Consumer Rights Act 2015 (CRA) (UK).

4 Unfair Terms in Consumer Contracts Regulations 1994, SI 1994/3159 (UTCRR 1994).

5 Unfair Terms in Consumer Contracts Regulations 1999, SI 1999/2083 (UTCCR 1999).

6 Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts [1993] OJ L 95/29; in Ewan McKendrick, Contract Law: Text, Cases and Materials (10th edn, OUP 2022), 448-449, it was noted that Directive 93/13/EEC largely influenced the drafting of the Unfair Terms in Consumer Contracts Regulations 1994 and 1999, with the latter closely resembling the provisions of the Directive. Additionally, because of the principles of direct effect (see Case 26/62 Van Gend En Loos [1962] ECLI:EU:C:1963:1) and supremacy (see Case 6/64 Costa v E.N.E.L. [1964] ECLI:EU:C:1964:66) in EU law, this would mean that the UK courts’ interpretation of the CRA ought to be aligned with the CJEU’s interpretation of Directive 93/13/EEC, especially terms such as “good faith”. However, it was also noted that following Brexit, the UK Supreme Court is free to diverge from EU jurisprudence.

7 Unfair Contract Terms Act 1977 (UCTA) (SG); note that UCTA was largely copied from the UK’s Unfair Contract Terms Act 1977 (UCTA) (UK) (see Application of English Law Act 1993, First Schedule, Part 2, Item 9, Fourth Column); currently, UCTA (UK) mainly regulates exemption clauses for business to business contracts (see UCTA (UK), s 2(4)).

8 Consumer Protection (Fair Trading) Act 2003 (CPFTA) (SG).

9 Sandra Booysen, ‘Regulating Unfair Terms and Consumer Protection’ in Mindy-Chen Wishart and Stefan Vogenauer (eds), Contents of Contracts and Unfair Terms (OUP 2020); Booysen notes on p. 366 that the CPFTA, in particular, was the “culmination of years of lobbying for a consumer protection statute in Singapore, a cause that was championed in particular by Singapore’s consumer watchdog, the Consumer Association of Singapore (CASE)” (see also Singapore Parliamentary Debates 10 November 2003, vol 76, cols 3361-2); Booysen also notes on p. 367 that the last major amendment to the CPFTA in 2016 was made “in the wake of a high-profile incident of consumer abuse which went viral and attracted widespread public condemnation” (see Singapore Parliamentary Debates 19 January 2015, ‘Penalties for Dishonest Retailers’, vol 93 where the Minister of State for Trade and Industry, in his response to questions 1523, directly references incidents of “complaints against retailers in Sim Lim Square); see also Kash Cheong, ‘Case turns

jurisdictions provide little protection against unfair contract terms, which traditionally has been predisposed towards upholding the parties’ freedom of contract10 and sanctity of contract.11

However, a key difference is the sources of law that the two jurisdictions can draw upon when determining an unfair term in a consumer contract. For the UK, the origins of the CRA entail that, although non-binding, a faithful interpretative approach towards the CRA would be one that is harmonious with the jurisprudence of the Court of Justice of the European Union (CJEU).12 This would mean that the UK courts will likely be influenced by the decisions of the CJEU when interpreting the CRA.13 In contrast, the Singapore courts are not obliged to follow either the CJEU’s or English jurisprudence,14 although the latter may be drawn upon should it appropriately address any lacuna in Singapore law.15 Given this difference, it is likely that the UK courts will be more willing to find that an unfair term exists in a consumer contract as compared to the Singapore courts, which will be evident when the main provisions of both jurisdictions’ consumer protection legislation are explored below.

to court to bring Mobile Air to heel’ The Straits Times (Singapore, 13 November 2014) <https://www.straitstimes.com/singapore/case-turns-to-court-to-bring-mobile-air-to-heel> accessed 28 February 2023.

10Printing and Numerical Registering Co v Sampson (1875) LR 19 Eq 462, 465 (Sir Jessel MR espouses that the principle of the freedom of contract in English law is one where, “men of full age and competent understanding shall have the utmost liberty of contracting, and that their contracts when entered into freely and voluntarily shall be held sacred and shall be enforced by Courts of justice… that [one is] not lightly to interfere with this freedom of contract”); see also George Mitchell (Chesterhall) Ltd v Finney Lockseeds Ltd [1983] QB 284, 296-297 where Lord Denning MR criticises the doctrine of the freedom to contract, subsequently English common law has attenuated the harsher aspects of the principle (see Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1989] QB 433).

11Tee Soon Kay v Attorney-General [2007] SGCA 27 [109] (Andrew Phang Boon Leong JA notes that, “[the] law of contract is, simply put, premised on parties fulfilling promises made to each other pursuant to a legal agreement entered into between them… If parties were allowed to walk away from contracts simply because they felt that the contract entered into was no longer to their advantage, chaos would ensue. Indeed, this would be an understatement. The very concept of an ordered society depends on parties observing the law in general and the promises validly made under law to each other in particular”).

12 See (n6).

13 Ibid; Additionally, European jurisdictions have been more willing to interfere with contracting parties’ freedom to contract in order to uphold fair and just outcomes in a contractual agreement, which is evident in principles such as the general duty of good faith (Art 1:201, Principles on European Contract Law). See also ParkingEye Ltd v Beavis [2016] AC 1172, [105] where the UK courts referred to the reasoning in Case C-415/11 Aziz v Caixa d'Estalvis de Catalunya, Tarragona i Manresa (Catalunyacaixa) [2013] in its ratio decidendi

14 Application of English Law Act 1993, ss 3-5 (SG).

15 Application of English Law Act 1993, s 3.

B. The UK’s Law on Consumer Protection

The CRA regulates unfair terms16 and exemption clauses17 in consumer contracts.18 The UK courts are guided by section 62(4) of the CRA19 in assessing whether a term is unfair. In Director General of Fair Trading v First National Bank plc, 20 Lord Steyn held that section 62(4) is to be read as requiring a term to have both “[caused] a significant imbalance in the parties’ rights and obligations” and not been brought to the consumer’s attention in “good faith”21 before being considered unfair.22 This approach is, broadly speaking, one that applies to all contracts between a consumer and a trader for goods and services,23 save for contracts of “employment or apprenticeship”.24 Although this approach is excluded for terms that “[specify] the main subject matter of the contract”25 or “[assess]…the appropriateness of the price payable under [a] contract…”,26 those terms are still subject to the requirement that they are “transparent and prominent”27 to the consumer. The effect of an unfair term is that it is “not binding on the consumer”.28

Additionally, terms under Schedule 2 of the CRA are deemed prima facie unfair,29 regardless whether they “[specify] the main subject matter of the contract” or “[assess]…the appropriateness of the

16 CRA, s 61 (1).

17 CRA, chs 2-4; the Misrepresentation Act 1967 (UK), s 3(2) brings non-reliance clauses in consumer contracts under the CRA, s 62.

18 CRA, s 1(1); see (n16).

19 CRA, s 62(4) (“A term is unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer.”) S 62, CRA replaced reg 5(1), UTCCR 1999 (see Ewan McKendrick, Contract Law: Text, Cases and Materials (10th edn, OUP 2022), 448).

20 [2002] 1 AC 481.

21 In ParkingEye Ltd v Beavis [2016] AC 1172 [105]-[107], Lord Neuberger and Lord Sumption confirmed that a term that “causes a significant imbalance in the parties’ rights and obligations” is one that dispossesses a consumer of “an advantage which he would enjoy under national law in the absence of the” unfair term; Ibid [17] (“The requirement of good faith in this context is one of fair and open dealing. Openness requires that the terms should be expressed fully, clearly and legibly, containing no concealed pitfalls or traps. Appropriate prominence should be given to terms which might operate disadvantageously to the customer. Fair dealing requires that a supplier should not, whether deliberately or unconsciously, take advantage of the consumer's necessity, indigence, lack of experience, unfamiliarity with the subject matter of the contract, weak bargaining position or any other factor listed in or analogous to those listed in Schedule 2 to the Regulations”); in ParkingEye Ltd v Beavis [2016] AC 1172 [105] Lord Neuberger and Lord Sumption also affirmed that good faith includes determining “whether the seller or supplier, dealing fairly and equitably with the consumer, could reasonably assume that the consumer would have agreed to such a term in individual contract negotiations”, which may involve a proportionality test.

22 (n20) [36].

23 CRA, s 61(1).

24 CRA, s 61(2).

25 CRA, s 64(1)(a).

26 CRA, s 64(1)(b).

27 CRA, s 64(2)-(5); see also OFT v Foxtons Ltd [2009] EWCA Civ 288.

28 CRA, s 62(2).

29 CRA, s 63(1).

price payable under [a] contract”,30 save for certain exceptions for indefinite, financial and money market contracts.31

Nonetheless, in ParkingEye Ltd v Beavis, 32 it was held that a term in a consumer contract that is prima facie unfair33 may be enforced if the party relying on the term had a “legitimate interest” to protect in imposing that term and that term imposed an obligation no more than was “necessary” to satisfy that interest, as part of the requirement of good faith.34

The case law relating to these provisions suggest that the ambiguities regarding these clauses mainly surround the threshold for terms that both “causes a significant imbalance in the parties’ rights and obligations” and is not brought to the consumer’s attention in “good faith”,35 terms that “[assess]…the appropriateness of the price payable under [a] contract”,36 and determining the presence of a “legitimate interest” to protect in imposing an unfair term and whether the term imposed an obligation no more than was “necessary” to satisfy that interest.37

The CRA also regulates exemption clauses in consumer contracts. It holds that liability for negligently causing personal injury38 or death39and breach of implied terms cannot be excluded or limited.40 Additionally, liability for loss arising from breach of implied terms under contracts involving the sale and hire-purchase of goods, supply of services and supply of digital content cannot be excluded or restricted, save for certain exceptions.41

30 CRA, s 64(6).

31 CRA, s 63(2); CRA, Sch 2, pt 2.

32 [2016] AC 1172.

33 Ibid [105].

34 Ibid [105]-[109].

35 See (n22); see also Paula Giliker, ‘The Consumer Rights Act 2015 – a bastion of European consumer rights?’ (2017)

37 LS 78, 91-92.

36 See (n26); see also First National Bank plc (n20), [34] where Lord Steyn notes that “[after] all, in a broad sense all terms of [a] contract are in some way related to the price or remuneration”; see also OFT v Abbey National plc [2010] 1 AC 696 where overdraft excess charges were surprisingly held not to be subject to the assessment of fairness. However, the latest approach by the UK Courts in approaching unfair terms was demonstrated in ParkingEye Ltd where a putative unfair term was more easily brought under CRA 62(4) and CRA, Sch 2, pt 2 but then subject to a proportionality test as part of the requirement of good faith.

37 See (n34); see also Solene Rowan, ‘The ‘Legitimate Interest in Performance’ in the Law on Penalties’ (2019) 78 CLJ 148.

38 CRA, s 65(1).

39 Ibid.

40 CRA, s 31, s 47 and s 57.

41 CRA, s 9(7), s 10(4), s 34(4) and s 35(4).

C. Singapore’s Law on Consumer Protection

The Singapore courts are guided by the provisions of the CPFTA and UCTA in assessing whether a term in a consumer contract is unfair or whether an exemption clause42 can be enforced.

The CPFTA arguably regulates unfair terms in consumer contracts. Unlike the CRA, the CPFTA does not outline what defines an unfair term. Instead, section 4 of the CPFTA broadly defines what constitutes an “unfair practice” in a consumer transaction,43 referring to the Second Schedule for an exhaustive list of specific examples of “unfair practices”.44 The only clue suggesting a definition of an unfair term is paragraph 13 of the Second Schedule, which holds “… including in an agreement terms or conditions that are harsh, oppressive or excessively one-sided so as to be unconscionable” 45 as an “unfair practice”. 46 While there are no precedents having engaged paragraph 13, the words “harsh, oppressive or excessively one-sided so as to be unconscionable” suggest that the relevant test for finding an unfair term may be similar to that of unconscionability.47 The effect of an “unfair practice” is that it entitles the consumer to a number of remedies in the CPFTA.48

Meanwhile, the UCTA mainly regulates exemption clauses in consumer contracts. It holds that liability for negligently causing personal injury49 or death,50 liability for breach of implied terms51 and other loss arising from certain practices when a consumer deals on another person’s written standard terms of business cannot be excluded or restricted.52 Additionally, liability for loss under

42 The Misrepresentation Act 1967 (SG), s 3 brings non-reliance clauses in consumer contracts under the UCTA (SG).

43 CPFTA, s 4.

44 CPFTA, Second Schedule, Part 1.

45 Ibid, para 13.

46 CPFTA, s 4(d).

47 The leading authority for the doctrine of unconscionability in Singapore is BOM v BOK [2019] 1 SLR 349, [2018] SGCA 83, where Andrew Phang Boon Leong JA held that the doctrine of unconscionability relevant in Singapore was a modified version of the “narrow doctrine of unconscionability” in Fry v Lane (1888) 40 Ch D 312 (see [129], [140]-[142]). The test for an unfair term in section 62 of the CRA (see (n22)) is not the same as the test for the current doctrine on unconscionability in English law, which is, broadly, a person whose pre-existing weakness is exploited to obtain his agreement to a deal that is so “overreaching and oppressive” that it “calls for an explanation” (see Alec Lobb (Garages) Ltd v Total Oil (Great Britain) Ltd [1983] 1 WLR 87, 95 (Peter Millett QC). Arguably, the test for an unfair term in UK law imposes a lower legal threshold to be met compared to unconscionability in UK law. Furthermore, the Singapore Court of Appeal in BOM v BOK held that the current doctrine on unconscionability in English law is “[broader]” than the doctrine held to be relevant in Singapore law (see BOM v BOK [2019] 1 SLR 349, [2018] SGCA 83 [138] (Andrew Phang Boon Leong JA)).

48 CPFTA, ss 7-9, ss 15-18.

49 UCTA, s 2(1).

50 Ibid.

51 UCTA, s 5 and s 6(1)-(2) and s 6(4).

52 UCTA, s 3.

contracts involving the sale and hire-purchase of goods cannot be excluded or restricted, save for certain exceptions.53

D. Comparison of the Two Jurisdictions

Having explored the approaches to unfair terms and exemption clauses in consumer contracts in both jurisdictions, a number of observations can be made.

Regarding unfair terms in consumer contracts, the UK’s laws on consumer protection at the very least attempts to clearly define what an unfair term is. The CRA explicitly states the definition of an unfair term.54 Although there remains some ambiguity regarding the interpretation of the thresholds to be met for the tests in statute and common law, as noted above, such is an inevitability whenever the courts are authorised to exercise their interpretative judgement against the factual matrix before them. Nonetheless, the case law available to the UK courts to rely on in determining if a term is unfair in various factual situations is considerable.55 This is in contrast to the current status of consumer protection legislation in Singapore, which provides no explicit definition of an unfair term in a consumer contract, insofar as “terms or conditions that are harsh, oppressive or excessively one-sided so as to be unconscionable” constitute an “unfair practice”.56

Whether a term in a consumer contract will ever be caught by the CPFTA depends on what constitutes a term that is “harsh, oppressive or excessively one-sided so as to be unconscionable”, which the Singapore courts have yet to define. If, as suggested above, that definition was similar to that of unconscionability, it would result in a substantially high legal threshold to meet,57 which arguably could discourage consumers from enforcing their rights under the CPFTA in respect of an unfair term in a consumer contract. For now, terms that place a consumer at a significant disadvantage to a seller will continue to be regulated by the common law, which arguably provides less protection to consumers against certain classes of unfair terms.58

53 Sale of Goods Act 1979 (SG), s (14)(2C)-(3).

54 See (n19).

55 Ewan McKendrick, Contract Law: Text, Cases and Materials (10th edn, OUP 2022), 453-454.

56 See (n45) and (46).

57 See (n47); perhaps certain incidents may give us a hint into the factual circumstances under which the Singaporean courts may consider a term so unconscionable as to amount to an “unfair practice” (see Kash Cheong, ‘Case turns to court to bring Mobile Air to heel’ The Straits Times (Singapore, 13 November 2014) <https://www.straitstimes.com/singapore/case-turns-to-court-to-bring-mobile-air-to-heel> accessed 28 February 2023).

58 An example of an unfair term in a consumer contract is a discretion clause; Director General of Fair Trading v First National Bank plc [2002] 1 AC 481 [34] Lord Steyn held that “price escalation clauses”, a form of discretion clause, could be “subject to the fairness provision”, but see also (n36); in Edwards Jason Glenn v Australia and New Zealand Banking Group Ltd [2012] SGHC 61 [93]-[102] where Tay Yong Kwang J held that a discretion clause granting the

Nonetheless, both the UK and Singapore’s consumer protection laws give good effect, in principle, to the requirements of good faith or proscriptions on taking advantage of a consumer through “unfair practices”. The House of Lords defined “good faith” in First National Bank plc59 as “ fair and open dealing”. 60 Similarly, the CPFTA provides for overarching principles empower the Singapore courts to exercise discretion on the facts before them to determine if a trade practice constitutes an “unfair practice”.61 Additionally, the requirements in section 4(c) of the CPFTA62 closely resemble a general duty for a seller to act in good faith in a consumer transaction within the meaning of “fair and open dealing” in First National Bank plc, 63 which is a major achievement given the common law’s traditional non-recognition of a general duty of good faith64 and the predisposition in Singapore jurisprudence to uphold the sanctity of contract.65

Additionally, both jurisdictions have in place provisions to balance the interests of consumers with that of sellers when dealing with a potentially unfair term. In the UK, to allow for the consideration of the interests of sellers, precedent has established that a prima facie unfair term may be enforced if the seller has a “legitimate interest” to protect and that term imposes obligations no more than necessary to fulfil that “legitimate interest”, as part of the requirement of good faith.66 Similarly, the CPFTA grants the Singapore courts the ability to determine the “reasonableness” of a seller in imposing an unfair term in a consumer contract within the meaning of paragraph 13 of the Second Schedule, hence taking into account any interests of the seller as well.67

bank sole discretion to assess the value of security for a loan, in the absence of a clear “method for assessing the value of the security”, was not subject to any assessment as an “unfair practice”. Rather, it was enforced by the court insofar as the discretion was “not arbitrarily, capriciously or irrationally” exercised. “Irrationality” was held to be “in an analogous sense to the Wednesbury unreasonableness”. Compared to ParkingEye Ltd v Beavis [2002] 1 AC 481 which resembled a proportionality test for justifying an unfair term, Wednesbury unreasonableness is a much higher threshold to meet.

59 See (n20)

60 See (n21).

61 CPFTA, s 4. See also Freely Pte Ltd v Ong Kaili and Others [2010] SGHC 60 [21] (Woo Bih Li J, in referring to Hansard, affirms that it was Parliament’s intent for “the court [to] consider” on the facts, beyond the “unfair practices” listed in the Second Schedule, Part 1 of the CPFTA, “whether or not [a] trader has engaged in an unfair practice” and to “balance the interests of the consumers and traders”, noting that on “the one hand, the Act must provide adequate safeguards for consumers and allow them legal recourse to claim against unfair practices. On the other hand, [Parliament does not] want to overregulate and add to business costs”).

62 CPFTA, s 4(c).

63 See (n20) and (n21). This is insofar as the seller should have objectively known that the consumer was “not in a position to protect his or her own interests” or “is not reasonably able to understand the character, nature, language or effect of the transaction or any matter related to the transaction” (see CPFTA, s 4(c)(i)-(ii)).

64 See Ng Giap Hon v Westcomb Securities Pte Ltd [2009] SGCA 19, Andrew Phang Boon Leong JA at [60]; see also Walford v Miles [1992] 2 AC 128.

65 See (n11).

66 See (n33) and (n34).

67 CPFTA, s 5(3)(a).

The discussion above makes evident a few potential suggestions that can be made to enhance the protection of consumers against unfair terms. Firstly, a clearer definition of what constitutes a term that is “harsh, oppressive or excessively one-sided so as to be unconscionable” is due. However, that will require cases engaging paragraph 13 of the Second Schedule to be brought before the ordinary Singapore courts. Additionally, if the meaning of “unconscionable” is indeed similar to that of an unconscionable bargain in law, such a threshold would be extremely high to meet. If such was the case, lowering the statutory threshold to one that is similar to that of the UK’s as embodied in the CRA would allow a greater variety of unfair terms to be caught under the CPFTA, thereby greatly enhancing the protection of consumer rights. This suggestion is made assuming that the Singapore courts are already empowered by the CPFTA and possess the ability to establish legal tests in precedent to “balance the interests of consumers and traders”.68 However, only the Parliament of Singapore can lower the existing statutory threshold.

Regarding exemption clauses, both jurisdictions, as seen above, have similar statutory positions towards excluding exemption clauses in consumer contracts. However, Singapore lacks an implied term in statute for supplying a consumer contract for services with reasonable care and skill, in contrast to the UK.69 Nonetheless, this is unlikely to stop the Singapore courts from finding such an implied term by law70 in a consumer contract, especially given the recognition by Parliament and the courts of the need to protect consumers from “defective products” and “shoddy services”.71

CONCLUSION

Singapore has come far in enhancing the protection of consumer rights with the passing of the CPFTA. While both jurisdictions grant consumers similar levels of protection against exemption clauses in consumer contracts, the UK notably goes further in protecting its consumers against

68 See (n61).

69 Application of English Law Act 1993, First Schedule, Part 2, Item 11, Fourth Column; Part II of the Supply of Goods and Service Act 1982 (UK) that implied terms in statute for contracts for the supply of services was not enacted into Singapore legislation and no substitute has been made for it.

70 St Albans City and District Council v International Computers Ltd [1996] 4 All ER 481, 493-494 (Sir Iain Gladwell notes that even if the subject matter of a contract was not covered by an implied term by statute, where the parties intended that the subject matter of any contract would be “reasonably fit for” or “reasonably capable of achieving [its] intended purpose”, the common law can imply such a term giving effect to that intention. Although said obiter, this reasoning could extend to any contract, including contracts for the supply of services, given that it does not contradict the currently established “officious bystander” test for implying terms by law (see Marks and Spencer Plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2015] UKSC 72; see also Andrew Phang Boon Leong JA in Foo Jong Peng v Phua Kiah Mai [2012] SGCA 55, [36])). The Singapore courts may adopt the dicta in St Albans City and District Council in future cases.

71 Freely Pte Ltd v Ong Kaili and Others [2010] SGHC 60 [15] (Woo Bih Li J).

unfair terms in consumer contracts as compared to Singapore. Nonetheless, more can be done to give full effect to the courts’ powers to intervene in a situation where a term in a consumer transaction puts a consumer at a significant disadvantage in respect of his contractual rights and obligations in relation to a seller. Should the Parliament of Singapore wish to strengthen its consumer protection legislation, it could take some inspiration from the UK. For now, only time will tell if Parliament will take further steps to protect Singaporean consumers against powerful and scrupulous sellers.

The race to rescue: Evaluating the rollout of cross-class cramdowns in the UK and Singapore

Timothy Ang

INTRODUCTION

Within a month of each other, landmark legislative reforms in the United Kingdom’s (UK’s) and Singapore’s corporate restructuring regimes came into force. First came the UK’s Corporate Insolvency and Governance Act 2020 (CIGA 2020), which in late June 2020 commenced within six weeks of introduction into Parliament.1 On 30 July 2020, Singapore’s Insolvency, Restructuring and Dissolution Act 2018 (IRDA 2018) commenced, two years after receiving Presidential assent.2 Both pieces of legislation crystallised, inter alia, changes to the Scheme of Arrangement (SOA) system by which restructuring had been carried out in both countries for decades, if not centuries, making the regimes more debtor-friendly, specifically in adopting the ‘cross-class cramdown’ mechanism from Chapter 11 of the United States’ Bankruptcy Code.3 Noticeably, reform came at a time when financial distress was high due to the Covid-19 pandemic, in which liquidity crises hit fundamentally viable businesses.4 It was hoped that by offering an easier path to restructuring (termed ‘rescue culture’5), businesses would have a better shot at staying afloat than in alternatives such as administration.6

The implementations of the UK and Singapore, although similar, have nuanced differences. Such differences have important implications both for stakeholders involved in a given restructuring, and the wider economy. This author also notes the lack of detailed comparison of these two approaches in the literature to date, which, given the similarity in the UK and Singapore’s aims in this regard, is an apt one to make. This piece will first explore the operation of the cross-class cramdown in both jurisdictions, drawing out their similarities in context and purpose. Second, this

1 Giles Boothman and others, ‘One year on from the Corporate Insolvency and Governance Act 2020’ (Ashurst, 2 August 2021 <https://www.ashurst.com/en/insights/one-year-on-from-the-corporate-insolvency-and-governanceact-2020/> accessed 24 July 2023.

2 Insolvency, Restructuring and Dissolution Act 2018.

3 Note that the cross-class cramdown had already been introduced in Singapore with the Companies (Amendment) Act 2017. The IRDA 2018 consolidated Singapore’s various restructuring and insolvency related legislation into one Act.

4 Jennifer Payne, ‘Debt restructuring in transition’ (2023) 139(Jan) LQR 101, 101-102.

5 Ilya Kokorin, ‘Promotion of group restructuring and cross-entity liability arrangements’ (2021) 21(2) Journal of Corporate Law Studies 557, 568.

6 Payne (n 4) 101-102.

piece will highlight key differences in the conditions necessary for the courts to grant a cross-class cramdown. Finally, the normative dimension to the issue is considered in the race to rescue, is becoming more debtor-friendly necessarily desirable?

A. The cross-class cramdown

The SOA, which was introduced into English law in 1870 and later imported to Singapore (hereby termed ‘old SOA’), is a system allowing a debtor company to propose a scheme to restructure its debts, where the debtor remains in control of the company’s operations (as opposed to the company going under administration, or another form of court management).7 Creditors are then grouped into classes of similar values and interests, and each class votes on the scheme. In the English ‘old SOA’, which is still good law under Part 26 of the Companies Act 2006, and both Singapore’s previous and reformed system (‘new SOA’), a given scheme will be approved (or ‘sanctioned’) by the court if 75% of each class by value, and a majority by number, vote in favour of the scheme.8 According to Payne, this allows the company the flexibility to restructure its debts and minimise hold-up by individual creditors who are assumed to be like-minded and have similar incentives to others in their class who do vote in favour of a scheme.9

The cross-class cramdown, however, allows the court to sanction a scheme even where the threshold for approval is not met by one or more classes of creditors, provided certain additional conditions are met, hence making the scheme binding even on dissenting classes. According to Wan, Watters and McCormack, cramdown provides even more expediency and cost savings to the restructuring process, by preventing minority creditors from ‘“holding out” to demand a disproportionate return’.10

The introduction of the cramdown was driven by two similar factors. First, regulatory competition. Payne notes that after a period of dominance as debt restructuring centre, the rise of rival regimes such as Singapore, Netherlands, and others modelled on the EU Restructuring Directive 2019,

7 James Stonebridge, ‘DeepOcean – The first UK cross-class cram-down case under the Corporate Insolvency and Governance Act 2020’ (Norton Rose Fulbright, Q2 2021) <https://www.nortonrosefulbright.com/en/knowledge/publications/c7f8568a/deepocean> accessed 24 July 2023.

8 Companies Act 2006, s 26; IRDA 2018, s 70(3).

9 Payne (n 4) 110.

10 Wai Yee Wan, Casey Watters and Gerard McCormack, ‘Schemes of Arrangement in Singapore: Empirical and Comparative Analyses’ 94 American Bankruptcy Law Journal 3 2020 463-506; City University of Hong Kong Legal Studies Research Paper No. 2020-019, 18-19.

coupled with the desire for the UK to stay at forefront of restructuring issues, drove reform in the UK.11 In Singapore, multiple practitioners point to increasing competitiveness as a restructuring hub as a reason for Singapore’s reforms. 12 As evidence, Singapore has also adopted the UNCITRAL Model Law on Cross-Border Insolvency, which allows foreign companies to commence proceedings under Singapore law.13 Second, Kokorin notes the rise of a more general rescue culture, in which the aforementioned regimes seek to promote restructuring of viable enterprises that are in financial difficulty, and minimise the negative impact of their failures, especially in avoiding insolvency. 14 The EU Restructuring Directive provides the underlying rationale for rescue culture: an early response not only prevents losses of jobs, skills, and knowhow in the economy, but also maximises value to creditors.15 Rescue culture was all the more pertinent in the Covid-19 pandemic, when many otherwise viable businesses faced financial difficulties and governments sought to prevent an onslaught of insolvencies.16

B. The differences

The UK and Singapore introduced the cross-class cramdown in different ways. In the UK, the ‘old SOA’ was left in operation, with the CIGA 2020 introducing a new Restructuring Plan system containing the cross-class cramdown under the amended Part 26A of the Companies Act 2006.17

In Singapore, the mechanism was simply added as a modification to the SOA, and is now found under Section 70 of the IRDA 2018. Here this author argues that although both regimes have shifted towards debtor-friendliness, Singapore’s system has done so to a greater extent. This is found in three key differences in the requirements for a cramdown.

11 Payne (n 4) 101-102.

12 Ajinderpal Singh and Lynn P. Harrison III, ‘Singapore’s new insolvency law: a status report on the progress of the new regime’ (Dentons Rodyk, 23 June 2021)

<https://dentons.rodyk.com/en/insights/alerts/2021/june/23/singapore-new-insolvency-law-a-status-report-onthe-progress-of-the-new-regime> accessed 24 July 2023; Joo Khin Ng and others, ‘Singapore’s restructuring and insolvency regime is a tool for local and international companies’ (Morgan Lewis, 26 August 2022)

<https://www.morganlewis.com/pubs/2022/08/singapores-restructuring-and-insolvency-regime-is-a-tool-forlocal-and-international-companies> accessed 24 July 2023.

13 Swee Siang Boey and others, ‘Singapore transforms its insolvency framework’ (IFLR, 29 July 2022)

<https://www.iflr.com/article/2af6prhc4lcu3f542o1kw/sponsored/singapore-transforms-its-insolvencyframework> accessed 24 July 2022.

14 Kokorin (n 5) 568.

15 Directive (EU) 2019/1023 of the European Parliament and of the Council of 20 June 2019 on preventive restructuring frameworks, on discharge of debt and disqualifications, and on measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt, and amending Directive (EU) 2017/1132 [2019] OJ L172/18, recital 2.

16 Payne (n 4) 101-102.

17 Such that the ‘old SOA’ and Restructuring Plan would operate in parallel.

First, part 26A requires that a company looking to use the Plan must have encountered or be likely to encounter financial difficulties, with the Plan designed to address those difficulties, whereas there is no such financial difficulty requirement in an SOA.18 Wan, Watters and McCormack argue that the SOA has traditionally been attractive as it does not have any stigma surrounding bankruptcy or insolvency, which could affect the behaviour of stakeholders and the valuation of the company.19 On the other hand, the Restructuring Plan would have such stigma, and hence according to Paterson and Walters only come into play when distress is already spreading and deepening, potentially lessening its effectiveness vis-à-vis the debtor.20

Second, a ‘new SOA’ can only be proposed by the debtor, whereas a Plan does not have to be. Per Section 71(1) of the IRDA 2018, an SOA can only be proposed by the debtor, but under the CIGA 2020 a plan only has to be ‘proposed between’ the debtor and creditor.21 The significance of this is borne out in Re Good Box, in which the first Plan on application by a creditor was sanctioned.22 Although Davis-White J acknowledged that words ‘proposed between’ infers consent from the debtor, the court could, and would direct the administrators to consent on behalf of the company, even though the directors of the company had appeared to prefer an alternative course of action.23 However, the Judge warned that the creditor was in a unique position of being all of creditor, supplier, and shareholder of the debtor, hence the case was not simply one of ‘an outside creditor’ proposing a Plan ‘without reference to the Company’.24 Nonetheless, the case demonstrates that the funnel of entry into a Plan is wider in the UK, in favour of creditors.

Third, and after a Scheme or Plan has been proposed, the UK and Singapore differ in the test for whether a cramdown will be sanctioned by the courts. In the UK, there are essentially three conditions: A) nobody in the dissenting class would be ‘any worse off’ than they would be in the ‘relevant alternative’,25 B) at least one class of creditors ‘who would receive a payment, or have a genuine economic interest in the company’ in the ‘relevant alternative’ approves the Plan,26 and C) the court exercises its discretion to sanction the scheme.27 In Singapore, however, the test is that the Scheme ‘does not discriminate unfairly between 2 or more classes of creditors, and is fair and

18 Companies Act 2006, s 901A(2).

19 Wan, Watters, and McCormack (n 10) 2.

20 Sarah Paterson and Adrian Walters, ‘Selective Corporate Restructuring Strategy’ (2023) 86(2) MLR 436, 445.

21 Companies Act 2006, s 901A(3)(a).

22 [2023] EWHC 274 (Ch)

23 ibid [9], [109].

24 ibid [109].

25 Companies Act 2006, s 901G(3).

26 Companies Act 2006, s 901G(5).

27 Re Amicus Finance plc (in administration) [2021] EWHC 3036 (Ch), [38] (Sir Alastair Norris)

equitable to each dissenting class’, with Section 70(4) setting out specific conditions in which the Scheme would be considered ‘fair and equitable’.28 Notably, the role of judicial discretion is absent from Singaporean law.

Such an absence is problematic in that it precludes the courts from ‘taking account of the individual features’ of a particular scheme and its sensitivities.29 In Re Prezzo, the court crammed down HMRC as a creditor, in contrast to previous similar cases in which the court did not bind HMRC.30 Richard Smith J held that many factors were at play: for example, the percentage owed that HMRC would receive under the Plan, and the length of time over which debt was owed.31 Hence, the English approach of discretion in pursuit of ‘[fairness] as between the different classes’, 32 as opposed to the Singaporean formalistic conception, provides what it claims to, albeit at the expense of debtor friendliness.

C. The why

Thus far, we have evaluated the extent to which the cross-class cramdown has made the UK and Singapore’s laws more debtor-friendly. We must note, however, that on the other side of the same coin of debtor-friendliness is creditor-unfriendliness. This author argues that debtor-friendliness (and the parallel rescue culture) is not necessarily undesirable, but must be managed and carefully balanced.

Wood argues that rescue culture should not blindly seek to rescue troubled companies at all costs; on the basis of Schumpeter’s famed theory of creative destruction, in a capitalist system companies need to be left to die to allow new, more innovative companies to take their place for the greater welfare of society.33 Hence, Wood contends, rescue ‘should not be artificial and merely a process that postpones the inevitable failure of the company’.34 However, therein lies nuance. Wood points to empirical data that productivity growth is driven by innovation within companies, rather than creative destruction,35 concluding that mechanisms such as the Restructuring Plan can encourage

28 IRDA 2018, s 70(3)(c).

29 Amicus (n 27) [38].

30 [2023] EWHC 1679 (Ch)

31 ibid [79], [80].

32 Re Good Box [2023] EWHC 274 (Ch), [100].

33 Joseph A. Schumpeter, Capitalism, Socialism and Democracy (3rd edn, HarperCollins 2008)

34 John M. Wood, ‘Creative destruction and the post COVID-19 economy: a critique of the (un)creative rescue value contained within the permanent CIGA 2020 reforms’ (2023) 3 Journal of Business Law 197, 212.

35 ‘Recent figures suggest that creative destruction accounts for around 25% of productivity growth, compared with 77% from product improvements by existing companies.’ Wood (n 34) 212. See also D. Garcia-Macia et al., ‘How Destruction Is Innovation?’ (2019) 87(5) Econometrica, Econometric Society 1507, 1509, 1523.

companies to focus on wealth creation and offload elements that are not efficient, in essence a ‘controlled creative destruction process’ within the company.

Another issue is creditor-unfriendliness itself. Payne argues that creditors may change their behaviour to the wider detriment of business if they could be crammed down against their will, they may reconsider, ex ante, their willingness to lend and the price of lending, and even take their business to other jurisdictions.36 As a corollary, businesses would find it harder and more expensive to borrow capital. Wan, Watters and McCormack disagree, arguing that the tests in place protect dissenting creditors’ interests even when they are crammed down, and more broadly are an ‘important tool’ that minimises drain on resources that would be used for the actual restructuring, and eventually distribution to creditors.37 As Teo argues, the main ‘victim’ of cramdowns are usually unsecured creditors, who are technically higher in priority than shareholders, but would be at the greatest loss in a cramdown.38 Such creditors include landlords and suppliers who cannot freely deploy capital elsewhere, in contrast to secured creditors, usually institutional lenders, who can. For example, in Re Prezzo, unsecured creditors such as landlords were crammed down in a plan where they would receive nothing, whilst shareholders remained with no variation to their rights.39 Hence, whilst concerns over the negative impact of cramdowns on the lending markets may be overstated, and rescue culture is generally a good thing, the respective legislatures should monitor the impacts of the cramdown on the unsecured creditor.

CONCLUSION

The UK and Singapore have made themselves very attractive jurisdictions for companies looking to restructure, and purely based on the substantive reforms, Singapore more so. Amidst the rise of rescue culture, however, legislatures would be prudent to consider the adverse impacts of debtor-friendliness, some of which this author has outlined. In particular, this author is in favour of the UK’s approach of granting courts discretion in deciding to apply a cramdown this allows the regime to test common law tests’ outcomes, and adjust them with legislation if necessary, whilst maintaining the flexibility that the stakeholders of a company in distress need.

36 Payne (n 4) 110.

37 Wan, Watters and McCormack (n 10) 18-19.

38 As they can be crammed down successfully to receive nothing. Teo, ‘A critical evaluation of the new cram-down tool in Singapore's restructuring regime’ 30(2) International Insolvency Review 267.

39 [2023] EWHC 1679 (Ch). See also Deepocean 1 [2021] EWHC 138 (Ch), the UK’s first successful cramdown.

Digital Market Regulation: Lagging Behind?

Liew Li Ren

The growth in value of digital markets globally has been astonishing, especially in Singapore. A joint report by Google, Temasek and Bain & Company estimated that the digital economy in Singapore would ‘reach approximately $30B in 2025’ from about $18B in 2022.1 Similar growth is anticipated in the United Kingdom, where the Government hopes to add an additional £41.5 billion in annual gross value added in the UK tech sector by 2025.2

However, this growth has been accompanied by growing global concern over how “unprecedented concentration of power amongst a small number of digital firms” could “[hold] back innovation and growth”.3 While Singapore’s Competition and Consumer Commission of Singapore (CCCS) has updated its guidelines in 2022 to keep pace with the concerns, it seems laggard compared to the UK Government’s newly published Digital Markets, Competition and Consumers Bill (DMCC), which if passed, would implement drastic reforms to UK competition law. This paper compares the differences in regulatory approach specific to the digital market space across both countries and suggests reasons for their differences.

A. DMCC

1. Designation of Strategic Market Status

The DMCC Bill gives the Competition and Markets Authority (CMA) the power to designate undertakings as having ‘strategic market status’ (SMS). 4 The CMA’s remit extends to only undertakings of digital activities, which is broadly defined5 as the provision of ‘a service by means of the internet’ or ‘digital content’, whether for consideration or otherwise, including any activity

1 Temasek. (2022, October 27). e-Conomy sea 2022 report: Southeast Asia’s Digital Economy is on course towards $200B GMV in 2022, three years earlier than projected. Temasek. https://www.temasek.com.sg/en/news-and-resources/newsroom/news/2022/e-Conomy-SEA-2022-report

2 UK’s Digital Strategy. GOV.UK. (2022, October 4). https://www.gov.uk/government/publications/uks-digitalstrategy/uk-digital-strategy#where-we-are-today

3 UK Command Paper CP 657

4 s 2 DMCC

being carried out for the above purposes. This clearly mirrors the EU’s Digital Markets Act (DMA), though it instead designates large online platforms as ‘gatekeepers’.

The criteria employed under the DMCC to determine SMS also takes inspiration from Article 3 of the EU’s DMA; both require the undertaking’s digital activity to have (1) a link to the relevant market6 and in respect of the digital activity, that the undertaking itself enjoys (2) sustained and entrenched market power7 and (3) has a position of strategic significance (described in the DMA as provision of a ‘core platform service’).8

One key difference between the two regards the legal analysis of the existence of an undertaking’s entrenched and durable position. While both include an element of foreseeability9 in evaluating present or future market position, the DMA is backwards-looking (e.g., it examines whether the relevant thresholds of active business users were met in each of the last three financial years10) while the DMCC is forwards-looking (e.g., the CMA is required to carry out a ‘forward-looking assessment of a period of at least 5 years’). Necessarily, this exercise requires a degree of speculation, including a counterfactual assessment on ‘expected or foreseeable’ developments due to absent designation of SMS and other developments that ‘may’ affect the undertaking’s conduct in carrying out the digital activity.

Indeed, the DMCC confers onto the CMA a significant margin of discretion.11 Unlike the DMA which, prescribes a minimum user number for an undertaking to qualify as a ‘core platform service’, the DMCC deliberately leaves many terms vague, including inter alia

(1) Link to UK: a ‘significant’ number of UK users or digital activity that is ‘likely’ to have an ‘immediate, substantial and foreseeable effect on trade’ in the UK;

(2) Position of Strategic Significance: the undertaking has achieved a position of ‘significant size or scale’ in respect of the digital activity; a ‘significant’ number of other undertakings using the digital activity, and the undertaking’s position to ‘substantially’ influence the way in which other undertakings conduct themselves

6 s 4 DMCC, Art 3 paragraph 1 point (a) DMA

7 s 5 DMCC, Art 3 paragraph 1 point (c) DMA

8 s 6 DMCC, Art 3 paragraph 1 point (b) DMA

9 s 5(a) DMCC, paragraph 1 point (c) DMA

10 Paragraph 2 point (c) DMA

11 Charitopoulos, S., Coulter, A., Hutton, C., & Azizi, M. (2023, June 2). The UK’s new digital markets regime

DMCC bill deep dive part 1. Hogan Lovells Engage. https://www.engage.hoganlovells.com/knowledgeservices/news/theuks-new-digital-markets-regime-dmcc-bill-deep-dive-part-1

Thankfully, s 7 DMCC requires that par the meeting of the aforementioned requirements, the CMA may not designate the undertaking SMS unless it exceeds the prescribed statutory requirements in s 7(2) DMCC i.e., that the relevant undertaking has a global turnover above £25 billion or UK turnover above £1 billion.

Nonetheless, the Secretary of State is empowered to vary these statutory sums.12 Consequently, the CMA, working in tandem with the Secretary of State, has incredible discretion by which it may designate firms with SMS and thereby impose additional conduct requirements on the undertaking.

One area of comfort for firms in the digital space is the clear transparency of the SMS designation process. The designation of SMS under the DMCC requires the CMA to first carry out an investigation; the initial investigation itself requires ‘reasonable grounds’.13 ss 9-14 DMCC lay out the detailed statutory procedure imposed on the CMA for carrying out investigations, which requires the CMA to disclose inter alia the reasonable grounds of notice (for initial investigation) and the purpose and scope of the investigation. The CMA is further obliged under s 13(1)(a) DMCC to carry out a public consultation regarding any decision consequent to the investigation and set out the reasons for its decision.14

Set out in s 15 are the requirements of the decision notice, including the CMA’s reasons, the duration of the designation period, and circumstances in which the designation may be revoked prior to the designation period end-date. Thus, we can observe that firms can be active participants during both the investigation period and designation period; the former by participating in the public consultation and the latter by working towards the revocation circumstances laid out by the CMA in its designation notice.

2. Imposition of Conduct Requirements

Once designated, the SMS designation lasts for five years. Following designation, the CMA has the power to impose conduct requirements on undertakings to pursue, in relation to the digital activity, the objectives of fair dealing, open choices, and trust and transparency.15

12s 7(3) DMCC

13 s 9(1) DMCC

14 s 12(3) DMCC regarding closure of an initial SMS investigation; s 14(2) DMCC regarding decisions of any other SMS investigations

15 s 19(5) DMCC

The DMCC Bill sets out an exhaustive list of permitted types of conduct requirements. They may be classified as either obligations16 or preventative restrictions.17 The obligations generally seem designed to protect users and potential users. Examples include, inter alia, the obligation to ‘trade on fair and reasonable terms’ and the obligation to provide ‘clear, relevant, accurate and accessible information’ about the digital activity to users and potential users.

In contrast, preventive restrictions seem chiefly designed to restrain consolidatory practices that would stifle market competition. These include restrictions against carrying on other activities that is ‘likely’ to increase the undertaking’s market power materially or bolster the strategic significance of its position and restrictions from ‘treating its own product or services more favourably’ than other businesses. Nonetheless, there are some restrictions that have an element of user protection, like the prevention of application of ‘discriminatory terms, conditions or policies’ and the restriction against ‘using data unfairly’.

The list of conduct requirements is a closed list. Although the Secretary of State may modify the list of conduct requirements, that power is subject to an affirmative procedure i.e., the statutory instrument must be approved by a resolution of both Houses of Parliament.18 Thus, any change is subject to political oversight and affected firms will almost certainly be able to voice their opinions regarding proposed changes by the Secretary of State. Still, the terms used to define the list of conduct requirements provided for already by the DMCC are generally quite broad which gives the CMA a wide discretion in interpretating these conduct requirements.19

Notably, before giving notice of the conduct requirements, the CMA is required to carry out a public consultation on the proposed conduct requirements, 20 although that may be done simultaneously with the public consultation on the proposed designation of SMS. Similarly, the revocation of the conduct requirements requires the CMA to also carry out a public consultation.

3. Enforcement of Conduct Requirements

Naturally, the CMA is also empowered to investigate breach of the conduct requirements on reasonable grounds of suspicion, following which it may issue an enforcement order. It may even

16 s 20(2) DMCC

17 s 20(3) DMCC

18 s 314(3) DMCC

19 Bret, A., & Davis, A. (2023, May 30). Digital Markets, Competition and Consumers Bill: UK Tech Sector Competition Rules Pinsent Masons. https://www.pinsentmasons.com/out-law/analysis/uk-tech-sector-competition-rules

20 s 24(1) DMCC

issue an interim enforcement order during the investigation when the CMA considers that it is necessary to prevent significant damage to a person or category of persons, prevent conduct that reduce the effectiveness of any other steps the CMA may take in relation to suspected breach of the conduct requirement, or the protection of the public interest.21 However, the DMCC provides that the undertaking must be able to make representations to the CMA about the proposed interim enforcement order.22

Should however the undertaking be able to make representations that the conduct falls within the countervailing benefits exemption in s 29 DMCC, the CMA must close its conduct investigation. Alternatively, the undertaking may make appropriate commitments that satisfy the CMA that compliance to the undertaking would render the conduct investigation unnecessary, although the undertaking must always comply with its commitment so long as the commitment is in force.23

If the investigation shows that the SMS undertaking has without reasonable excuse, either failed to comply with a conduct requirement or requirements imposed under an enforcement order, the CMA may impose a penalty24 on the undertaking as the CMA deems appropriate. However, the upper limits of the penalty are remarkably harsh. Potentially, firms may be fined a fixed amount equal to 10% of the total value of their turnover, an amount equal to 5% of the total value of daily turnover, or any combination of the two.25

Furthermore, appeals against the CMA decisions before the Competition Appeal Tribunal (CAT) will not be on full merits basis but on judicial review principles. Thus, only narrow grounds of appeal like Wednesbury unreasonableness will be available and pose a challenge to firms that dispute the decisions of the CMA.

4. Summary of the DMCC

It is clear that the DMCC has been designed to give a wide discretion in designating firms of interest and obligating firms on threat of severe sanction to take up pro-competition and proconsumer behaviour. Importantly, the DMCC is in many aspects mapped onto the EU’s DMA; the maximum penalty levels are indeed identical and the DMCC’s concept of SMS is quite like the

21 s 32(1)(b) DMCC

22 s 32(3) DMCC

23 s 36(3) DMCC

24 s 83(2)(a) DMCC; s 83(3) DMCC

25 s 84(4) DMCC

DMA’s designation of ‘gatekeeper’. This kind of harmonisation would likely aid firms in navigating both EU and UK law.

However, since Brexit, the DMCC also provides a way by which the United Kingdom can attract firms from the EU. Unlike the DMA which prescribes a ‘uniform list of dos and don’ts’,26 the CMA will provide bespoke conduct requirements for each firm, with the consequence that compliance may be easier, especially since the CMA will undergo public consultation in tailoring the conduct requirements. Furthermore, the provision of the countervailing benefits exemption offers firm a good amount of breathing space which is absent in the DMA. Holistically, the DMCC provides a way for the UK Government to distinguish its approach to digital market competition from the EU’s and lead the way towards a more autochthonous corporate law structure.

B. CCCS Guidelines

In contrast, there is no legislation specific to regulation of competition in digital markets for Singapore. Instead, the Competition Act 2004 applies uniformly across all sectors. Nonetheless, the Singaporean equivalent to the CMA, the Competition and Consumer Commission of Singapore (CCCS), has increasingly taken note of the special market conditions in the digital space. In 2020, the CCCS commissioned a market study on e-commerce platforms to identify potential competition issues arising from digitalisation. 27 While the CCCS did not identify major competition concerns, the study did help shape its revision of nine guidelines which came into force in February 2022. Despite not being legally binding, these guidelines advise firms on how the CCCS will interpret and implement the competition law regime and were amended to reflect the types of abusive conduct that can arise in the digital era.

One key update was the consideration of ‘multi-sided platforms’ in the CCCS Guidelines on Market Definition, which the CCCS defines as an undertaking which acts as ‘a platform that facilitates interactions between two or more groups of users and creates value for sellers or buyers on one side of the platform by matching or connecting them with buyers or sellers on the other side of the platform’. The CCCS noted that market definition of such platforms would encounter ‘practical difficulties’28 and so clarified what additional considerations the CCCS would include in

26 Bret, A., & Davis, A. (2023, May 30). Digital Markets, Competition and Consumers Bill: UK Tech Sector Competition Rules Pinsent Masons. https://www.pinsentmasons.com/out-law/analysis/uk-tech-sector-competition-rules

27 CCCS market study on e-commerce platforms recommends update to competition guidelines. CCCS. (2023, July 3).

https://www.cccs.gov.sg/media-and-consultation/newsroom/media-releases/cccs-market-study-on-e-commerceplatforms-recommends-update-to-competition-guidelines

28 5.14, CCCS Guidelines on Market Definition

the market definition exercise. Importantly, the CCCS clarified that their competition analysis would consider the ‘interdependencies or lack thereof between the different sides of the platform’.29

Curiously, there is no mention of ‘digital’ or ‘online’ within this definition, although contextualised to the 21st century any commercial platform that connects sellers and buyers in the manner described would almost certainly be online.

The absence of specific terms relating to the digital space can also seen in the CCCS Guideline on the Section 47 Prohibition (i.e., abuse of a dominant market position as defined in the relevant section of the Competition Act 2004).

As context, before the s 47 prohibition can apply, the undertaking must first be dominant in the relevant market, which itself requires the undertaking to have substantial market power. One relevant factor raised in assessing market power was the strength of network effects was the strength of network effects i.e., the number of users in an undertaking’s network, where users’ valuation of the network is intimately linked to the size of the network.

Regarding specifically multi-sided platforms, the CCCS further identified ‘indirect’ network effects e.g., when user valuation of the entire platform increases because other side(s) of the platform experiences user uptake. Quality of users, intensity of user usage, and cost of using more than one platform simultaneously to buy or sell (‘multi-homing’) were factors cited in the CCCS’s determination of the strength of network effects.

The CCCS also specified that regarding multi-sided platforms that the CCCS would endeavour to include number of monthly active users on each side of the platform, number of transactions, and gross merchandise value when evaluating market share.

Finally, in Annex C, the CCCS raised an interesting example of preferential leveraging of market power – a dominant e-commerce platform which connects sellers and buyers upstream and offers its own products downstream on the platform would be abusing its power by giving preferential treatment to its products through better placement of its product vis other competing sellers and thereby harming competition in the downstream market.30

C. Comparing the UK’s and Singapore’s Approach

The key difference identified in this paper thus far has been the degree of specificity regarding the digital market. Under the DMCC, the UK’s CMA would employ a uniquely proactive (almost aggressive) policing to specifically digital markets by designating the largest firms with SMS status and devising conduct requirements to ensure a competitive and consumer-friendly digital markets. In contrast, the CCCS does not single out digital activities as a cause of concern; when they are mentioned in the guidelines, it is done so for the purpose of clarity. Thus, from a competition perspective, there is no legal difference distinguishing the digital market from other markets.

Nonetheless, in the ultimacy of legal consequences, the DMCC regime and the Singaporean competition regime may have little difference. The largest tech firms will always be those at greatest risk of abusing their dominant positions as naturally their smaller competitors do not have any ‘dominance’ to speak of. Similarly, a merger between small firms do not set off the same alarms as those between occurring between Meta and GIPHY or Microsoft and Activision; the effect of the respective mergers on the market are obviously of a significantly different scale. What the DMCC instead does is allow the CMA to intervene in a much earlier stage than the CCCS i.e., the CMA may intervene notwithstanding the absence of any potential anti-competitive actions, so long as the undertaking meets the SMS statutory thresholds.

While Singapore currently declines to implement ex ante regulation to manage the increasing market power of digital platforms in the 21st century, it is unsurprising that Chief Executive of the CCCS, Ms. Sia Aik Kor, has openly stated that the CCCS is ‘definitely monitoring’ key issues in tech, especially developments in the e-commerce space. 31 Indeed, the preference for CCCS to rely on market studies for ‘problematic digital markets’32 and gain a better understanding of developments before acting is understandable. A cautious approach makes sense given the city-state’s focus on attracting digital companies to boost its digital economy and its transformation to a Smart Nation.

In contrast, the UK while distinct from the EU, suffers comparison to the EU’s competition regime. While Brexit allows it to adopt a distinct national approach, in practice there probably exists commercial realities that compels the UK to have an at least comparable digital competition regime to harmonise the commercial dealings between the UK and EU.

31 Damazo-Santos, J. (2020, November 19). Singapore’s Antitrust Original

32 Chia, K., & Pillay, H. S. (2023, June 1). Asia Pacific Competition Highlights - Singapore. Lexology. https://www.lexology.com/library/detail.aspx?g=a2561e7a-dde5-4e2e-ae3c-87f5987652c6

On that note, the UK and EU both represent incredibly large and attractive markets to firms in the digital space. For reference, the UK and Singapore have similar social media users to total population ratios (84.4% and 84.7% respectively33), but by the sheer difference in population size between the UK and Singapore, UK social media users outnumber Singaporean users by more than 10 times (57.1 million and 5.08 million34) respectively. It is plausible then that another reason for the difference in legislative stance is that the UK can be less forgiving to the largest tech firms and nonetheless retain its attractiveness to MNCs in a way that Singapore cannot afford to.

Even then, it is not to suggest that the current legal framework is unfit for purpose. The CCCS has bared its teeth when it thought appropriate to, most notably in the issuance of an Infringement Direction regarding substantial lessening of competition following sale of Uber’s Southeast Asian business to Grab. This decision saw an outstanding fine of about S$6 million imposed onto Uber as well as the CCCS’s legal costs. 35 Thus, one of the most compelling explanations for why Singaporean legislators have yet to legislate an equivalent to the DMCC is not reticence, but that Parliament and the CCCS has simply seen no need to make such drastic changes yet.

Finally, it pays to remember that the DMCC is itself an incredibly recent development. The Bill itself was announced only at the Queen’s Speech earlier this year and was introduced on 25th April 2023. At time of writing, the Bill is still at the Committee Stage before the House of Commons; it has yet to be reviewed by the House of Lords. Consequently, we may expect further changes to the DMCC before it finally obtains Royal Assent (if it does). Singapore may well follow in the UK’s footsteps in the foreseeable future after observing the finished UK’s DMCC in operation and concluding that it may benefit from a differentiated competition regime.

CONCLUSION

Nonetheless, it is the opinion of this author that the swift pace of growth and development in the digital space deserves its dedicated competition legislation. Already in the interpretation and application of the generic Competition Act 2004 within the Guidelines does the CCCS have to make specific additions regarding multi-sided platforms. Surely, these exceptions will increase over time as more novel technologies mature and become fit for retail use. Some technologies that 33 Meltwater & We Are Social, Digital 2023 Global Overview Report.

come to mind include the use of Blockchain in crypto-currency, the use of generative Artificial Intelligence in chatbots, and the use of automated systems in self-driving cars.

The importance of digital market regulation is further underscored by the preponderance of digital utility in the 21st century and the depth of digital penetration in both the UK and Singaporean consumer bases. Consequently, to retain competition in a field that has reaped bountiful progress to our modern standard of living while protecting customers, it is no far assertion that competition agencies be empowered to make decisive yet well-reasoned action to steer digital market growth.

Indeed, I submit the use of broader statutory language in a bill specific to digital market regulation would allow competition authorities to have a broad ambit to intervene in the fast-evolving digital space while retaining the ‘old’ rules of competition law for other industries. Control measures like the countervailing benefits exception in the DMCC or the judicious employment of public and expert consultation before action would temper agency appetite and assuage industry concerns.

Ultimately, the time ahead will be an exciting time for regulators and industry players alike and will prove whether the UK and EU were prescient to pass their respective digital market regulations. Their experiences will surely be closely followed by not just Singapore, but many other national jurisdictions, which all need to consider how to manage the emergence of tech giants in the age of digitalisation.

AI Regulation for the AI revolution

Dorian Chang

This article endeavours to answer whether current AI law as a legal framework is adequate, and has the necessary tools to effectively deal with the most pertinent legal issues Artificial Intelligence ("AI") development brings, including: human rights infringements of AI bias and (lack of) AI fairness, (intellectual) property right infringements of AI-generated content, inter alia. These two broad legal issues would be contextualised within recent developments in AI, including the advancements within the field of generative AI.

Part 1 will introduce what AI and generative AI is, their recent developments, and future direction. Part 2 will outline the critical legal issues arising from such technological developments and discuss the incumbent fields of law employed to address these issues across multiple pertinent jurisdictions. Part 3 would articulate why and how AI governance could be regulated by national and international mechanisms and legal instruments, through a jurisprudential and practical lens. Part 4 would then discuss potential amelioration of the present (imperfect) legal rules towards future-proofed regulation and reform (or lack thereof).

Part 1. Background: The AI Revolution

The term “Artificial Intelligence” has been thrown around as a buzzword, with the industry being touted as potentially contributing trillions to the global economy in the coming years,1 evidenced by its ballooning adoption across industries.2 Billions have been poured into the AI industry3 as the race towards the application of algorithm-based technologies, such as AI to enhance economic

1 $15.7 trillion projected contribution to the global economy from 2030: PricewaterhouseCoopers, ‘PWC’s Global Artificial Intelligence Study: Sizing the Prize’ (PwC) <https://www.pwc.com/gx/en/issues/data-and-analytics/publications/artificial-intelligence-study.html> accessed 01 May 2023

2 Chui M and others, ‘The State of AI in 2022-and a Half Decade in Review’ (McKinsey & Company, 6 December 2022) <https://www.mckinsey.com/capabilities/quantumblack/our-insights/the-state-of-ai-in-2022-and-a-halfdecade-in-review> accessed 01 May 2023

3 McKendrick J, ‘PACE of Artificial Intelligence Investments Slows, but AI Is Still Hotter than Ever’ (Forbes, 17 October 2022) <https://www.forbes.com/sites/joemckendrick/2022/10/15/pace-of-artificial-intelligenceinvestments-slows-but-ai-is-still-hotter-than-ever/?sh=61bc22404c76> accessed 01 May 2023

and societal welfare, continues to capture the attention of governments worldwide, as it evolves into a strategic priority. 4

1. Overview of Artificial Intelligence (“AI”)

Although a commonly accepted definition of AI eludes us, John McCarthy, a pioneer of the industry, posits that “it is the science and engineering of making intelligent machines, especially intelligent computer programs. It is related to the similar task of using computers to understand human intelligence, but AI does not have to confine itself to methods that are biologically observable”.5 This has evolved into the recent traction surrounding generative AI with the launch of ChatGPT, 6 Google’s Bard, 7 and Bing,8 inter alia. These are a subset of AI algorithms that generate new outputs based on the data they have been trained on, including text, imagery, audio, and synthetic data.

2. Utilization of Artificial Intelligence

AI is presently dominated by machine learning computer programs9 that are capable of learning from big data. AI, in this form, is being used in a variety of industries: from search engines such as Google10 and Bing,11 to intelligent traffic-control systems,12 automated administrative tasks such as hiring13 or document preparation,14 and judicial decision-making.15 It has permeated our homes in automated vehicle-assistance systems16 and smart homes systems,17 and has also taken over

4 Murgia M and Shrikanth S, ‘How Governments Are Beginning to Regulate AI’ (Subscribe to read | Financial Times, 30 May 2019) <https://www.ft.com/content/025315e8-7e4d-11e9-81d2-f785092ab560> accessed 01 May 2023

5 McCarthy J, “What Is Artificial Intelligence?” [2007] Journal of Mathematics and Computer Science

6 (ChatGPT) <https://openai.com/blog/chatgpt> accessed 01 May 2023

7 (Google) <https://bard.google.com/> accessed 01 May 2023

8 (Bing) <https://www.bing.com/?%2Fai> accessed 01 May 2023

9Surden H, ‘Machine Learning and Law’ (UW Law Digital Commons, 2019) <https://digitalcommons.law.uw.edu/wlr/vol89/iss1/5/> accessed 01 May 2023

10 ‘WSJ News Exclusive | Google CEO Sundar Pichai Says Search to Include Chat Ai’ (The Wall Street Journal, 8 April 2023) <https://www.wsj.com/articles/google-ceo-sundar-pichai-says-search-to-feature-chat-ai-2fa0f54c> accessed 01 May 2023

11 (Bing) <https://www.bing.com/new> accessed 01 May 2023

12 Team E, ‘AI In Traffic Management’ (Artificial Intelligence +, 8 February 2023)

<https://www.aiplusinfo.com/blog/ai-in-traffic-management/> accessed 01 May 2023

13 O’Connor S, ‘Ai Is Making Applying for Jobs Even More Miserable’ (Subscribe to read | Financial Times, 30 November 2021) <https://www.ft.com/content/a81245ee-9916-47e2-81b9-846e9403be00> accessed 01 May 2023

14 Fyler T, ‘Ai Assistants for Every Worker?’ (TechHQ, 4 July 2022) <https://techhq.com/2022/07/ai-digitaltransformation-software-assistant/> accessed 01 May 2023

15 ‘AI and the Rule of Law: Capacity Building for Judicial Systems’ (UNESCO.org)

<https://www.unesco.org/en/artificial-intelligence/rule-law/mooc-judges> accessed 01 May 2023

16 Martin A, ‘Your next Car Could Make Your Knight Rider Dreams Come True’ (Evening Standard, 13 March 2023)

<https://www.standard.co.uk/tech/gm-chatgpt-ai-cars-b1066810.html> accessed 01 May 2023

17 Amos Z, ‘Artificial Intelligence Is the next Step for Smart Homes’ (Unite.AI, 12 April 2022)

<https://www.unite.ai/artificial-intelligence-is-the-next-step-for-smart-homes/> accessed 01 May 2023

critical national needs in the military field18 and cyber-physical production systems (Industry 4.0).19

It has now even proven capable of revolutionizing a field that proved resistant to AI intrusions20 - healthcare. A recent Stanford study found that AI medically diagnoses lung cancer using microscope images more accurately than human pathologists,21 while a Dutch study showed that AI could similarly diagnose prostate cancer using MRI as well as human radiologists.22 The Google DeepMind study even found that AI was able to diagnose 50 retinal diseases23 independently.

The world is currently undergoing the Fourth Industrial Revolution, amidst a techno-economic paradigm shift from an information technology regime to an AI regime. As the vanguard of technological development, advances in AI (and technology at large) perennially outpace developments in legislation and common law, 24 resulting in (gaping) legal holes requiring regulatory focus to materialize.

3. Classification of Artificial Intelligence

Therefore, with the vast current and future applications of AI, tackling AI regulation in its entirety is a Sisyphean task even for many governments.25 It is thus critical to classify and delineate between generations of AI development and then regulate them according to their inherent characteristics, capabilities (the theoretical maximum potential), and competencies (how well the theoretical maximum potential is achieved).

18 Sterling T, ‘U.S., China, Other Nations Urge “responsible” Use of Military AI’ (Reuters, 16 February 2023)

<https://www.reuters.com/business/aerospace-defense/us-china-other-nations-urge-responsible-use-military-ai2023-02-16/> accessed 01 May 2023

19 Ribeiro J, ‘A (Very) Brief Introduction to AI in the Industry 4.0’ (Medium, 13 July 2022)

<https://medium.com/tech-cult-heartbeat/a-very-brief-introduction-to-ai-in-the-industry-4-0-14e6f4b46cd1> accessed 01 May 2023

20 Litjens GJS and others, ‘Clinical Evaluation of a Computer-Aided Diagnosis System for Determining Cancer Aggressiveness in Prostate MRI’ (European radiology, November 2015)

<https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4595541/> accessed 01 May 2023

21 Snyder, ‘Computers Trounce Pathologists in Predicting Lung Cancer Type, Severity’ (News Center, 16 August 2016) <https://med.stanford.edu/news/all-news/2016/08/computers-trounce-pathologists-in-predicting-lungcancer-severity.html> accessed 01 May 2023

22 Litjens GJS and others, ‘Clinical Evaluation of a Computer-Aided Diagnosis System for Determining Cancer Aggressiveness in Prostate MRI’ (European radiology, November 2015)

<https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4595541/> accessed 01 May 2023

23 De Fauw et al [2018], Nature Medicine, 24, 1342-1350.

24 Andrew Christie, 'Reconceptualising copyright in the digital age' [1995] EIPR 522

25 ‘The Guardian View on Regulating AI: It Won’t Wait, so Governments Can’t | Editorial’ (The Guardian, 7 April 2023) <https://www.theguardian.com/commentisfree/2023/apr/07/the-guardian-view-on-regulating-ai-it-wontwait-so-governments-cant> accessed 01 May 2023

There are four broad generations of AI development. At present, the first generation of AI has been achieved and we are close to achieving the second generation of AI26. First generation AI is reactive: reacting to input data based on a predetermined program or computer model. Second generation AI27 builds upon past experiences to new situations and reacts to the input data. It actively evaluates past scenarios and sets of stimuli similar to the algorithmic determination it is tasked with, before weighing its options in this novel situation and providing an output. Third generation AI28 reacts to input data through subjective evaluation under its “theory of mind”, determining the reason behind some inputs materialising. Fourth generation AI29 would be “selfaware” of its machine-based form and its “unprogrammed individual agency”, generating the programming necessary to achieve objectives rather than being provided with the programming required.

Of the four potential AI generations,30 the legal issues (and their potential solutions) analysed in this article are based on First-Generation AI – reactive artificial intelligence. And specifically, the form of First-Generation AI being focussed on is Machine Learning. Machine Learning is one of the main instantiations of AI at present, and one of the most prominent subsets of Machine Learning is the large Generative AI Models (“LGAIMs”). LGAIMs usually work through probability distribution that tries to represent how language (or music, images inter alia) is generated. They aim to determine a mathematical representation of a large model of data that can skew the probabilities to create an output.31 LGAIMs have an extremely large amount of training data parameters (e.g. ChatGPT has 175 billion parameters) with deep neural networks consisting of several layers of neurons that perform calculations with specific weights attached to them. More specifically, large language models (a further subset of LGAIMs) utilise Transformer Models like the generative pretrained transformer (GPT), which process sequential data, such as language, more efficiently by

26 ‘What Is Ai?’ (What is AI｜NTT DATA Indonesia)

<https://www.nttdata.com/id/en/digital/ai/2018/september/what-isai#:~:text=AI%20went%20through%20the%20%E2%80%9Csecond,improves%20recognition%20performance% 20based%20on> accessed 01 May 2023

27 Buchanan BG, ‘A (Very) Brief History of Artificial Intelligence’ (AI Magazine no. 4, 2005)

<https://ojs.aaai.org/index.php/aimagazine/article/view/1848> accessed 01 May 2023

28 Cuzzolin F and others, ‘Knowing Me, Knowing You: Theory of Mind in AI: Psychological Medicine’ (Cambridge Core, 7 May 2020) <https://www.cambridge.org/core/journals/psychological-medicine/article/knowing-meknowing-you-theory-of-mind-in-ai/C935A66A018117BA5B1991071393655F> accessed 01 May 2023

29 Cox MT (Perpetual self-aware cognitive agents, 2007) <https://ojs.aaai.org/index.php/aimagazine/article/view/2027> accessed 01 May 2023

30 Michael P and Lanksy AL (Reactive Reasoning and Planning, 1987) <https://aaai.org/Papers/AAAI/1987/AAAI87121.pdf> accessed 01 May 2023

31 CPI Blogs and Blogs C, ‘Regulating CHATGPT and Other Large Generative AI Models’ (Competition Policy International, 6 March 2023) <https://www.competitionpolicyinternational.com/regulating-chatgpt-and-other-largegenerative-ai-models/> accessed 01 May 2023

being able to simultaneously consider different parts of the sentence after previously analysing large data parameters.

4. What is AI regulation – available regulatory apparatus?

General regulation is perceived to be the management of complex systems according to a set of rules, mechanisms and trends. Introduced by Lessig32 law33 (in the form of legislation) is merely one of the four regulatory modalities. The market (economic forces), norms (social conventions that one often feels compelled to follow), technological and physical architecture (physical or technical constraints on activities such as firewalls on the internet or locks on doors) are similarly tools that governments can wield to enhance societal welfare.

Accordingly, regulation can take many forms but can otherwise be grouped into two overarching categories: First, bulwark legislation which minimises adverse impacts – including mandatory compliance with statutory AI ethics guidelines, increased corporate or source-code transparency legislation, inter alia. Second, empowering legislation which stimulates productive innovation

including tax rebates, subsidies, less restrictive AI-talent immigration visas, fast-track approval for AI products, or even simple deregulation inter alia. Although this is not to say that all regulation falls neatly into either category; specific pieces of policy have elements of both. This categorisation serves to match the types of regulation with the main objectives of AI regulation.

5. (Brief) Purpose of AI regulation

The overarching consideration for AI regulation is striking the appropriate balance between stimulating productive innovation and minimising adverse impacts such as breaches of individual rights. Regulation would also either be principle-based – focusing on desired outcomes or guiding rationale that a nation prioritises, or rule-based – emphasising the process to be complied with regardless of the goals and outcomes, or a combination of both. Given that AI “is of paramount

32 Lessig L, ‘Code and Other Laws of Cyberspace’ (Lessig, Lawrence, 1999) <http://pne.people.si.umich.edu/kellogg/045.html> accessed 01 May 2023

33 If one might, at this point, avoid the age-old question of what is law.

importance for [the] future,” achieving “a delicate balance which will boost innovation and uptake of artificial intelligence technology across Europe”34 is critical.35

Furthermore, since “on AI, trust is a must, not a nice to have”,36 one can define the purpose of AI as ensuring good digital governance, particularly in the development and use of AI algorithms. This involves ensuring accountability, responsibility, transparency, the prevention of hidden discrimination, enabling dynamic updates and changes to keep pace with the evolving technology.

6. Current AI regulation in the European Union

While there are no direct AI legislation in force in the EU, the proposed Artificial Intelligence Act (“AI Act” or “AIA”), which has been dubbed the “mother of all AI laws”,37 has not yet been passed nor has its final form even been confirmed at the time of writing. It was initially proposed in April 2021 with its skeleton, but in 2022, the Amendment to the AI Act: General-Purpose AI Systems (GPAIS) was introduced by the French Council Presidency,38 which defined such systems as systems that are “intended by the provider to perform generally applicable functions such as image and speech recognition, audio and video generation”. 39 This effectively categorises a substantial proportion of AI systems as falling under the AIA.

As the “main pillar of the EU digital single market strategy”, the AI Act aims to “set out horizontal rules for the development, modification and use of AI-driven products, services and systems within the territory of the EU, applicable to all industries.” It also aims to “ensure the proper functioning of the internal market and the free movement of AI-based goods and services crossborder and to codify the high standards of the EU trustworthy AI paradigm, which requires AI to be legally, ethically and technically robust, while respecting democratic values and fundamental

34 (Artificial Intelligence Act: Council calls for promoting safe ai that ...) <https://www.consilium.europa.eu/en/press/pressreleases/2022/12/06/artificial-intelligence-act-council-calls-for-promoting-safe-ai-that-respects-fundamentalrights/> accessed 01 May 2023

35 Ivan Bartoš, the Czech Deputy Prime Minister for Digitalisation, said in statement following the Council's adoption, (Artificial Intelligence Act: Council calls for promoting safe ai that ...)

<https://www.consilium.europa.eu/en/press/press-releases/2022/12/06/artificial-intelligence-act-council-callsfor-promoting-safe-ai-that-respects-fundamental-rights/> accessed 01 May 2023

36 Margrethe Vestager, Executive Vice-President for a Europe fit for the Digital Age ‘The European Union AI Act Explained’ (World Economic Forum), <https://www.weforum.org/agenda/2023/03/the-european-union-s-ai-actexplained/> accessed 01 May 2023

37 Heikkil M, ‘A Quick Guide to the Most Important AI Law You’ve Never Heard Of’ (MIT Technology Review, 16 May 2022) <https://www.technologyreview.com/2022/05/13/1052223/guide-ai-act-europe/> accessed 01 May 2023

38 (Artificial Intelligence Act: Council calls for promoting safe AI that respects fundamental rights)

<https://www.consilium.europa.eu/en/press/press-releases/2022/12/06/artificial-intelligence-act-council-callsfor-promoting-safe-ai-that-respects-fundamental-rights/> accessed 01 May 2023

39 Article 3(1b) AI Act (Council, General Approach, December 6, 2002) ‘Draft AI Act’ (EUR, 2023) <https://eurlex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX%3A52021PC0206> accessed 01 May 2023

rights”.40 The fundamental rights in question to be protected, according to Mullner, are Human Dignity (right to life, safety, integrity, privacy, liberty, liberty, and fair trial), Freedom (expression, information, assembly), Fairness (right to non-discrimination, equal treatment), and Social (education, healthy workplace, social benefits).

a. Breaking down the proposed AI Act:

The proposed AIA delineates AI applications into three risk categories: unacceptable risk (e.g. government-run social scoring), high-risk (e.g. CV-scanning tools for ranking job applicants, autonomous vehicles, medical devices and critical infrastructure machinery, inter alia), and low-risk applications. 41 Unacceptable AI applications are banned, high-risk applications are subject to specific legal requirements, and low-risk applications are generally left legally unregulated (although, as previously shown, regulation can take various forms, including market forces and social norms, which still “regulate” such applications).

Accordingly, it appears that the most salient and prevalent rules would apply to high-risk AI applications. And in terms of the actual proposed rules being applied to the high-risk AI systems, although unconfirmed, these systems would essentially require developers and users to adhere to requirements for rigorous testing of current and novel products, thorough documentation of data quality, and a structured accountability framework within the companies involving human oversight. Rules would also be tailored for general-purpose AI, which refers to AI systems that can be utilised for different purposes with varying degrees of risk. An example of such systems includes large language model generative AI systems like ChatGPT.42

b. Sanctions and enforcement:

Furthermore, a proposed “European Artificial Intelligence Board” “should reflect the various interests of the AI eco-system and be composed of representatives of the Member States”.43 Its role would be to oversee the implementation of the AI Act and associated regulations to ensure consistent

40 ‘The Artificial Intelligence Act: Hearings: Events: Libe: Committees: European Parliament’ (The Artificial Intelligence Act | Hearings | Events | LIBE | Committees | European Parliament, 2022)

<https://www.europarl.europa.eu/committees/en/the-artificial-intelligence-act-/productdetails/20220311CHE10007> accessed 01 May 2023

41 ‘Home’ (The Artificial Intelligence Act, 3 April 2023) <https://artificialintelligenceact.eu/> accessed 01 May 2023

42 Although some view ChatGPT as narrow AI and not general purpose AI.

43 ‘Proposal for a regulation of the european parliament and of the council laying down harmonised rules on artificial intelligence (artificial intelligence act) and amending certain union legislative acts’ (EUR) <https://eurlex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX%3A52021PC0206> accessed 01 May 2023

application across the EU. Additionally, the Board would continually provide recommendations and guidance to national authorities regarding the continual reforms required within the law.

Significant penalties for non-compliance are also outlined. Parties that breach the AIA can be subject to administrative fines of up to 30,000,000 EUR or, if the breaching party is a company, up to 6% of its “total worldwide annual turnover” or “whichever is higher”. 44 Meanwhile, submitting “incorrect, incomplete, or misleading information” can lead to substantial fines of up to 10,000,000 EUR or 2% of the company’s total worldwide annual turnover.45

7. Current AI regulation in the United Kingdom

At present, the UK has a National AI Strategy46 to “invest and plan for the long-term needs” of the AI ecosystem, supporting the “transition to an AI-enabled economy” to leverage the economic benefits of the AI revolution, and ensuring “adequate national and international governance” of AI technologies. The UK’s approach to regulating AI involves the creation of a regulatory framework that is “proportionate, light-touch, and forward-looking” to “offer the businesses the clarity and confidence they need to grow while […] boosting public trust”.47 The UK Government aims to propose core principles that AI-utilising companies would need to adhere to, while maintaining their “Pro-Innovation Approach” which at the time of writing has not been outlined.48 Leading the globe, AI-specific commissions including the Centre for Data Ethics and Innovation,49 and the Office for AI,50 were the first advisory-type governmental organisations dealing specifically

44 Article 71(3): ‘Draft AI Act’ (EUR, 2023) <https://eur-lex.europa.eu/legalcontent/EN/TXT/HTML/?uri=CELEX%3A52021PC0206> accessed 01 May 2023

45 Article 71(5): ‘Draft AI Act’ (EUR, 2023) <https://eur-lex.europa.eu/legalcontent/EN/TXT/HTML/?uri=CELEX%3A52021PC0206> accessed 01 May 2023

46 Department for Science I and T, ‘National AI Strategy’ (GOV.UK, 18 December 2022)

<https://www.gov.uk/government/publications/national-ai-strategy> accessed 01 May 2023

47 UK Government, ‘Establishing a Pro-Innovation Approach to Regulating AI’ (GOV.UK, 2023)

<https://www.gov.uk/government/publications/establishing-a-pro-innovation-approach-to-regulatingai/establishing-a-pro-innovation-approach-to-regulating-ai-policy-statement> accessed 01 May 2023

48 A white paper is set to be released later in 2023 setting out the UK Government’s pro-innovation approach to AI Governance.

Edit: released:

UK Government, ‘Establishing a Pro-Innovation Approach to Regulating AI’ (GOV.UK, 2023)

<https://www.gov.uk/government/publications/establishing-a-pro-innovation-approach-to-regulatingai/establishing-a-pro-innovation-approach-to-regulating-ai-policy-statement> accessed 01 May 2023

49 ‘Centre for Data Ethics and Innovation’ (GOV.UK) <https://www.gov.uk/government/organisations/centrefor-data-ethics-and-innovation> accessed 01 May 2023

50 ‘Office for Artificial Intelligence’ (GOV.UK) <https://www.gov.uk/government/organisations/office-forartificial-intelligence> accessed 01 May 2023

with issues of governance and issuing guidance. Accordingly, it seems the UK has “pioneered an ethical approach”51 while presently not moving to adopt any concrete AI-specific legislation.

8. Current AI regulation in Singapore

Similarly, Singapore does not currently have any plans to introduce AI-specific regulation.52 The Singapore Government’s proposed AI governance framework purports to take a “human-centric” approach. 53 The framework emphasises “explainability, transparency and fairness” as guiding principles to build public trust in AI. Additionally, Singapore has established “AI Singapore” to “foster research and innovation”54 in the field.” However, in key sectors where AI is prevalent, there are moves by governmental agencies and authorities to legally regulate AI. For instance, the Monetary Authority of Singapore (MAS) Guidelines on Individual Accountability and Conduct (“IAC”) apply to financial institutions and their implementation of AI systems in their practices. These guidelines incorporate the FEAT principles – fairness, ethics, accountability, and transparency – in the use of AI in finance data analytics. On the personal data protection front, the Singapore Personal Data Protection Act 2012 (“PDPA”) does not specifically identify AI, but rather provides a data protection framework for the collection, use and disclosure of personal data by organizations in Singapore including AI developers.55 In order to utilise personal data, the PDPA requires organisations to have a valid “processing ground” – in other words, a compelling reason to do so. This would include individual consent for data processing or in exceptional situations including for the national interest, or the utilisation of publicly available information. This is congruent with the EU’s General Data Protection Regulation (“GDPR”) which requires transparency within organisations insofar as the collection and intended use of personal data must be justified Individuals must be empowered to control their data, and the organization must ensure data security by undertaking data protection impact assessments where the data processing is likely to result in high risks to individuals. Furthermore, the Personal Data Protection Commission of

51 Harry Armstrong, Nesta, UK innovation non-profit in: Murgia M and Shrikanth S, ‘How Governments Are Beginning to Regulate AI’ (Subscribe to read | Financial Times, 30 May 2019) <https://www.ft.com/content/025315e8-7e4d-11e9-81d2-f785092ab560> accessed 01 May 2023

52 ‘AI, Machine Learning & Big Data Laws and Regulations: Singapore: GLI’ (GLI - Global Legal Insights - International legal business solutions) <https://www.globallegalinsights.com/practice-areas/ai-machine-learning-and-big-data-lawsand-regulations/singapore> accessed 01 May 2023

53 Murgia M and Shrikanth S, ‘How Governments Are Beginning to Regulate AI’ (Subscribe to read | Financial Times, 30 May 2019) <https://www.ft.com/content/025315e8-7e4d-11e9-81d2-f785092ab560> accessed 01 May 2023

54 (AI Singapore, 6 July 2023) <https://aisingapore.org/> accessed 01 May 2023

55 Chua P, ‘Evolving AI Risks and Regulations in Singapore and the EU - Regulation Asia’ (Asia, 31 January 2022) <https://www.regulationasia.com/evolving-ai-risks-and-regulations-in-singapore-and-theeu/#:~:text=At%20present%2C%20Singapore%20does%20not,players%20to%20adopt%20as%20appropriate> accessed 01 May 2023

Singapore has similarly outlined a Model AI Governance Framework,56 offering “detailed and readily-implementable guidance to private sector organisations to address key ethical and governance issues when deploying AI solutions”.

9. Current AI regulation in the United States of America

By the same token, the US has not yet enacted AI-specific legislation, although the Biden administration’s “Blueprint for an AI Bill of Rights”57 has proposed a rights-based regulatory approach that could pave the way to specific pieces of legal AI regulation. In line with Singapore, the National Institute of Standards and Technology (“NIST”) has released its long-awaited AI Risk Management Framework 1.058 to better manage risks to organizations associated with AI. The NIST AI Risk Management Framework (“AI RMF”) is voluntary but endeavours to promote the incorporation of “trustworthiness considerations into the design, development, use, and evaluation of AI products, services, and systems”. Individual regulators, such as the Federal Trade Commission (“FTC”), have also introduced initiatives in the AI regulation domain. For example, the FTC has launched the Advance Notice of Proposed Rulemaking (“ANPRM”) seeking public comments on data privacy and security practices that may harm consumers,59 and “whether [the agency] should implement new trade regulation rules or other regulatory alternatives concerning the ways in which companies collect, aggregate, protect, use, analyze, and retain consumer data, as well as transfer, share, sell, or otherwise

monetize that data in ways that are unfair or deceptive.”

There are a myriad of other proposed initiatives and individual state regulation60 but one that stands out is the Algorithmic Accountability Act of 2022 (H.R. 6580), which mandates large technology companies to conduct a “bias impact assessment of any automated decision-making system that makes critical decisions in a variety of sectors”, such as healthcare, housing, employment and legal services. These assessments must then be documented and submitted to the FTC, and the Act imposes significant penalties for breaches.

56 ‘PDPC: Singapore’s Approach to AI Governance’ (Personal Data Protection Commission)

<https://www.pdpc.gov.sg/help-and-resources/2020/01/model-ai-governance-framework> accessed 01 May 2023

57 ‘Blueprint for an AI Bill of Rights’ (The White House, 16 March 2023) <https://www.whitehouse.gov/ostp/ai-billof-rights/> accessed 01 May 2023

58 ‘AI Risk Management Framework’ (NIST, 30 March 2023) <https://www.nist.gov/itl/ai-risk-managementframework> accessed 01 May 2023

59 US Federal Register, ‘Trade Regulation Rule on Commercial Surveillance and Data Security’ (Federal Register )

<https://www.federalregister.gov/documents/2022/08/22/2022-17752/trade-regulation-rule-on-commercialsurveillance-and-data-security.> accessed 01 May 2023

60 Manfredi R, ‘Artificial Intelligence and Automated Systems 2022 Legal Review’ (Gibson Dunn, 3 May 2023)

<https://www.gibsondunn.com/artificial-intelligence-and-automated-systems-2022-legal-review/> accessed 01 May 2023

10. Country regulation precis

Accordingly, a lack of legislation can also be considered as a form of regulation since it could be an active decision not to legislate certain behaviours and instead rely on other modalities such as market forces and social pressures to shape these areas. While there are international efforts such as the OECD accord signed by 42 countries in 2019,61 the prima facie consensus seems to be that it is risky to create rules specific to the technology of 2023. As Harry Armstrong, the head of technology futures at Nesta, a UK-based innovation non-profit, has articulated, no country currently “has a coherent strategic approach to governance and regulation of AI yet […] there tend to be one or two organisations within a country doing interesting things, but most of what is happening is broad AI strategies that are more about investment than governance. Discussions are moving slowly.”62

Despite the lack of legal regulations, social regulations in the form of AI norms have been articulated by jurisdictions worldwide, including prominent intergovernmental or nongovernmental organizations. As mentioned, examples of these include Singapore’s Model AI Governance Framework [2019], the EU’s Ethics Guidelines for Trustworthy AI [2019], UNESCO’s Recommendation on the Ethics of Artificial Intelligence [2021], and even the Popeendorsed Rome Call for AI Ethics [2020]. How instructive or influential these guidelines are, however, remains to be seen.

Part 2. Current Law and challenges in respective realms of law

The notion of AI regulation has a very broad scope. It involves addressing the various impacts, both desirable or undesirable, on social, ethical, and economic priorities which often pull in opposite directions. In the areas where AI – and in effect, where most digital technologies – are utilised, all relevant norms in national, criminal, civil, and public law inter alia remain applicable without requiring any express nexus to digitalisation.63 However, the critical question is whether these laws, originally curated for the analogue world, can maintain their relevance and veracity

61 Murgia M and Shrikanth S, ‘How Governments Are Beginning to Regulate AI’ (Subscribe to read | Financial Times, 30 May 2019) <https://www.ft.com/content/025315e8-7e4d-11e9-81d2-f785092ab560> accessed 01 May 2023

62 Murgia M and Shrikanth S, ‘How Governments Are Beginning to Regulate AI’ (Subscribe to read | Financial Times, 30 May 2019) <https://www.ft.com/content/025315e8-7e4d-11e9-81d2-f785092ab560> accessed 01 May 2023

63 Hoffman-Riem W (Artificial Intelligence as a challenge for law and regulation, 2020)

<https://www.researchgate.net/publication/337653460_Artificial_Intelligence_as_a_Challenge_for_Law_and_Reg ulation> accessed 01 May 2023

when applied to digital technologies, particularly AI. In the following analysis, we will focus on two perennial and exigent issues to contextualise the discussion.

1. Human Rights/Tort/Criminal: Biased AI decisions

a. What is AI Bias and instances of AI Bias:

First, we examine bias in the context of AI decisions. AI bias occurs when “the machine gives consistently different outputs for one group of people compared to another”64 typically following “classical societal biases like race, gender, biological sex, nationality, or age.” To illustrate AI bias, take for example Optum’s 65 healthcare algorithm Impact Pro. 66 This algorithm is utilised by population health management programs to “identify populations and individuals at risk so that clinicians and care teams can intervene early”,67 based on data originating from more than 200 million individuals in the United States annually.68 However, the algorithm has been found to predict lower medical costs and less severe illnesses for African-American patients 69 and accordingly, prioritising health care for healthier white patients.70 As a result of such bias, there could be potential tortious or criminal claims against the company, especially if Optum has violated state anti-discrimination laws, “each violation can trigger a fine of up to $1,000”.71

Bias in healthcare AI is but the tip of the iceberg. Other industries including education, employment, housing and criminal justice are also not spared. For instance, Facebook’s prevention of certain

64 World Economic Forum, ‘Open Source Data Science: How to Reduce Bias in AI’ (World Economic Forum)

<https://www.weforum.org/agenda/2022/10/open-source-data-science-bias-more-ethical-ai-technology/> accessed 01 May 2023

65 OPTUM, "OPTUM-IMPACT Pro for Analyzing Future Health Risk: Solution Overview", Optum, ‘Impact pro for Analyzing Future Health Risk’ (Optum, 2021) <https://www.optum.com/business/health-plans/dataanalytics/predict-health-risk.html> accessed 01 May 2023

66 Akhtar A, ‘New York Is Investigating UnitedHealth’s Use of a Medical Algorithm That Steered Black Patients Away from Getting Higher-Quality Care’ (Business Insider, 28 October 2019) <https://www.businessinsider.com/analgorithm-treatment-to-white-patients-over-sicker-black-ones-2019-10> accessed 01 May 2023

67 OPTUM, "OPTUM-IMPACT Pro for Analyzing Future Health Risk: Solution Overview", Optum, ‘Impact pro for Analyzing Future Health Risk’ (Optum, 2021) <https://www.optum.com/business/health-plans/dataanalytics/predict-health-risk.html> accessed 01 May 2023

68 NBC news, ‘Racial Bias Found in Widely Used Health Care Algorithm’ (NBCNews.com, 7 November 2019) <https://www.nbcnews.com/news/nbcblk/racial-bias-found-widely-used-health-care-algorithm-n1076436> accessed 01 May 2023

69 Allana Akhtar, "New York is Investigating UnitedHealth's Use of a Medical Algorithm That Steered Black Patients Away from Getting Higher-quality Care," Business Insider, last modified October 28, 2019, https://www.businessinsider.com/analgorithm-treatment-to-white-patients-over-sicker-black-ones-2019-10

70 Evans M and Mathews AW, ‘New York Regulator Probes UnitedHealth Algorithm for Racial Bias’ (The Wall Street Journal, 26 October 2019) <https://www.wsj.com/articles/new-york-regulator-probes-unitedhealth-algorithm-forracial-bias-11572087601> accessed 01 May 2023

71 Evans M and Mathews AW, ‘New York Regulator Probes UnitedHealth Algorithm for Racial Bias’ (The Wall Street Journal, 26 October 2019) <https://www.wsj.com/articles/new-york-regulator-probes-unitedhealth-algorithm-forracial-bias-11572087601> accessed 01 May 2023

job ads from being shown to women,72 United Kingdom 2020 predicted A-level exams73 results of Black, Asian and Minority Ethnic (BAME) and low-income students being systematically disproportionately lowered compared to their peers,74 Google’s depiction of CEOs as exclusively male,75 Amazon’s recruiting tool that systematically disadvantaged women applicants,76 and school admissions decisions77 are reflective of the far-reaching potential for AI bias in the 21st Century.

Governments have also embraced the use of AI,78 from predictive healthcare and optimised crisis response used by the National Health Service in the United Kingdom (“NHS”) which deployed a National COVID-19 Chest Imaging Database79 or Singapore’s “Ask Jamie,” a virtual assistant that helps citizens and businesses navigate government services across roughly 70 government agencies through AI-powered chat and voice. 80 Such use cases continue to grow and more “transformative, national-level AI programs” are in the pipeline81 across the globalised world.82

72 Hao K, ‘Facebook’s Ad Algorithms Are Still Excluding Women from Seeing Jobs’ (MIT Technology Review, 17 June 2021) <https://www.technologyreview.com/2021/04/09/1022217/facebook-ad-algorithm-sex-discrimination/> accessed 01 May 2023

73 As a result of the COVID-19 pandemic restrictions, A-Levels examinations could not proceed, and a prediction algorithm was designed by Ofqual (UK’s regulator of exams) to combat grade inflation by teachers: The Guardian, ‘Ofqual’s A-Level Algorithm: Why Did It Fail to Make the Grade?’ (The Guardian, 21 August 2020) <https://www.theguardian.com/education/2020/aug/21/ofqual-exams-algorithm-why-did-it-fail-make-grade-alevels> accessed 01 May 2023

74 Harkness T, ‘How Ofqual Failed the Algorithm Test’ (UnHerd, 21 August 2020) <https://unherd.com/2020/08/how-ofqual-failed-the-algorithm-test/> accessed 01 May 2023

75 Cossins D, ‘Discriminating Algorithms: 5 Times AI Showed Prejudice’ (New Scientist, 27 April 2018) <https://www.newscientist.com/article/2166207-discriminating-algorithms-5-times-ai-showed-prejudice/> accessed 01 May 2023

76 Dastin J, ‘Amazon Scraps Secret AI Recruiting Tool That Showed Bias against Women’ (Reuters, 10 October 2018) <https://www.reuters.com/article/us-amazon-com-jobs-automation-insight-idUSKCN1MK08G> accessed 01 May 2023

77 EdTech’s relevance:

Elana Zeide, The Structural Consequences of Big Data-Driven Education, 5 BIG DATA 164–172 (2017); Elana Zeide, The Limits of Education Purpose Limitations, 71 U. MIAMI L. REV. 494 (2016); Priscilla M. Regan & Jolene Jesse, Ethical challenges of edtech, big data and personalized learning: twenty-first century student sorting and tracking, 21 Ethics Inf Technol 167–179 (2019)

78 Berglind N, Fadia A and Isherwood T, ‘The Potential Value of AI-and How Governments Could Look to Capture It’ (McKinsey & Company, 25 July 2022) <https://www.mckinsey.com/industries/public-and-socialsector/our-insights/the-potential-value-of-ai-and-how-governments-could-look-to-capture-it> accessed 01 May 2023

79 “SMART Box boosts regional data to the NCCID”, NHS England, April 1, 2021

80 “Ask Jamie’ virtual assistant,” GovTech Singapore, accessed 7 April 2023

81 Berglind N, Fadia A and Isherwood T, ‘The Potential Value of AI-and How Governments Could Look to Capture It’ (McKinsey & Company, 25 July 2022) <https://www.mckinsey.com/industries/public-and-socialsector/our-insights/the-potential-value-of-ai-and-how-governments-could-look-to-capture-it> accessed 01 May 2023

with reference to “Our strategic national projects,” Smart Nation Singapore, accessed 7 April 2023; National artificial intelligence strategy: Advancing our smart nation journey, Smart Nation Singapore, November 2019

82 Berryhill J and others, ‘Hello, World! Artificial Intelligence and its Use in the Public Sector - OECD Working Paper’ (Home Page, 21 November 2019) <https://doi.org/10.1787/726fd39d-en> accessed 01 May 2023

b. General Approach to addressing AI bias

To address AI algorithmic bias and its corresponding causation of social inequity, there are three possible responses. 83 First, do nothing. Allowing the status quo to continue; exacerbating or ameliorating current inequities depend on purely social pressures. Although, doing nothing understandably usually amplifies (rather than ameliorates) existing inequities since first-generation AI models are trained on data reflecting existing biases and inequities. Second, rectify technical biases and attempt to maintain the status quo and not let inequities get worse (formalistic equity). Third, accept the status quo is usually not neutral and use AI to elucidate existing inequities which serve as a starting point for other social remedies and policy interventions (substantive equity).

c. Methods to deal with AI Bias – formalistic equity

At present, most rules focus on option two: fixing technical bias and achieving formalistic equity84 especially vis-à-vis the (mostly voluntary) compliance recommendations by regulators around the globe as previously set out above.

d. Potential solution by mandating the use of more data – formalistic equity

As such, one potential solution must be legislating the requirement for AI companies to utilise more (sensitive) data, and closing gaps in representation could be prima facie deemed as an easy solution for AI bias and fairness. However, awareness of inequalities is not the same as rectifying them and the persistence of inequities in the additional data suggests that significant social, political, and legal effort is required to defeat such entrenched inequities. Take the median gender pay gap of approximately 9.71%85 in 2022, no amount of additional data alone would counteract a potential AI software predicting what the ideal salary offer a company should make to an incoming female employee would be 9.71% lower than her male counterpart. Thus, to fundamentally address such inequities and biases, it is necessary for the decision-making process and final product to actively counteract any remnant systemic bias.

83 Sandra Wachter, Brent Mittelstadt, and Chris Russell, “Bias Preservation in Machine Learning: The Legality of Fairness Metrics Under EU Non-Discrimination Law”, Oxford Internet Institute/ West Virginia Law Review, Vol. 123, No. 3, 2021.

84 Anna Lauren Hoffmann, “Where fairness fails: data, algorithms, and the limits of antidiscrimination discourse”, 22 Information, Communication & Society 900–915, 907 (2019)

85 UK Government, ‘DIT Gender Pay Gap Report 2021 to 2022’ (GOV.UK, 2022)

<https://www.gov.uk/government/publications/dit-gender-pay-gap-report-and-data-2021-to-2022/dit-gender-paygap-report-2021-to-2022> accessed 01 May 2023

e. Potential solution by mandating more transparency and human oversight – formalistic equity

This leads well into the need for transparency, including mandating black-box algorithms be identifiable and attributable. The AI systems should allow biases to be manually identifiable and removed. Together, it becomes possible to achieve a form of formalistic equity, ensuring procedural fairness.

f. Objectives of Regulation – substantive equity

Raz opines that this formalistic equity is sufficient. He suggests that the rule of law and legal system are like the sharpness of a knife: A “good” knife is a sharp one, regardless of its potential for good or evil. But there are other qualities of a legal system that are important, such as democracy, justice, equity, and protection of fundamental rights. Most non-discrimination scholars – with nondiscrimination being the ameliorated consequence of addressing AI bias – agree on the need to move away from a formalistic view of equity (option two) and instead pursue proactive strategies that recognise differences between groups and strive for substantive equality through structural changes86 (option three). Not least because formalistic equity alone is insufficient to promote societal progress due to the presence of systemic and institutional biases.

Furthermore, “if the moral basis on which the law forbids discrimination is that there is a fundamental human right to be treated in the same way as other human beings, the aim must logically be to produce substantive equality…. [including] the dismantling [of] obstacles that stand in the way of equality”.87 This view is echoed by the European Court of Justice which affirms substantive equality as the intended aim of non-discrimination law.88 The Charter of Fundamental Rights of the European Union, particularly Article 21 (non-discrimination), considers substantive equality a fundamental principle of the European Union, 89 as indicated by evolving case law

86 Fredman explains that “a four dimensional principle is proposed: to redress disadvantage; to address stigma, stereotyping, prejudice and violence; to enhance voice and participation; and to accommodate difference and achieve structural change.”

Fredman S, ‘Substantive Equality Revisited’ (SSRN, 16 October 2014), 14 International Journal Of Constitutional Law 712–738, 723–724 and 735 <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2510287> accessed 01 May 2023

87 Ellis E and Watson P, ‘EU Anti-Discrimination Law’ (Evelyn Ellis; Philippa Watson - Oxford University Press, 18 February 2015) <https://global.oup.com/academic/product/eu-anti-discrimination-law-9780198737032?cc=us> accessed 01 May 2023

88 Marc De Vos, “The European Court of Justice and the march towards substantive equality in European Union anti-discrimination law”, (2020) 20 International Journal Of Discrimination And The Law 62–87, 72

89 European Union, Charter of Fundamental Rights of the European Union, C 364/1 (2000) Article 21 states that “any discrimination based on any ground such as sex, race, colour, ethnic or social origin, genetic features, language, religion or belief, political or any other opinion, membership of a national minority, property, birth, disability, age or sexual orientation shall be prohibited.”

compiled by Wachter.90 However, substantive equity at present only provides protection against the most egregious AI biases through anti-discrimination legislation.

Anti-discrimination legislation, such as the UK’s Equality Act 2010, has been expanded through specific tools such as the Employment Statutory Code of Practice inter alia.91 To establish a claim of direct discrimination, a claimant (referred to as A) must demonstrate that they have been treated “less favourably” than a real or hypothetical comparator. Less favourable treatment could include actions that put A in a clear disadvantage compared to others or being deprived of choices or opportunities, as stated in paragraph 3.4 of the EHRC Employment Code. This would presumably encompass instances previously elucidated, such as the bias AI CV filters. Additionally, in cases where companies provide goods and services, presumably like that of an AI provider, if the quality or manner in which goods and services are offered is comparatively worse, it could be considered less favourable treatment under section 31(7) of the Equality Act 2010.

This may appear to set an artificially high standard and burden of proof for addressing less overt bias. Fortuitously, A does not need to be impacted by actual disadvantage for a “less favourable treatment” to be found. It suffices for A to reasonably state that they would have “preferred not to be treated differently from the way the service provider treated – or would have treated a comparator” (paragraph 3.5 EHRC Employment Code & paragraph 4.6 EHRC Services Code).

The House of Lords held in Chief Constable of West Yorkshire Police v Khan [2001] ICR 1065, that an employer refusing to grant a former employee (Mr Khan) a reference which Mr Khan alleged was due to race discrimination, constitutes discrimination even if the reference given would have been

90 Sandra Wachter, Brent Mittelstadt, and Chris Russell, “Bias Preservation in Machine Learning: The Legality of Fairness Metrics Under EU Non-Discrimination Law”, Oxford Internet Institute/ West Virginia Law Review, Vol. 123, No. 3, 2021 Pg 18 compilation:

Case C-144/04, Werner Mangold v Rüdiger Helm, 2005 E.C.R. I-9981, http://curia.europa.eu/juris/document/document.jsf?text=&docid=185565&pageIndex=0&doclang=EN&mode= lst&dir=&occ=first&part=1&cid=7600685;

Case C-555/07, Seda Kücükdeveci v Swedex GmbH & Co. KG., 2010 E.C.R. I–21, https://eur-lex.europa.eu/legalcontent/EN/TXT/?uri=CELEX%3A62007CJ0555 (last visited Aug 7, 2019);

Case 109/88, Handels- og Kontorfunktionærernes Forbund I Danmark v Dansk Arbejdsgiverforening, acting on behalf of Danfoss, 1989 E.C.R. I-03199, https://eur-lex.europa.eu/legalcontent/EN/TXT/?uri=CELEX%3A61988CJ0109;

Case C-414/16, Vera Egenberger v Evangelisches Werk für Diakonie und Entwicklung eV, 2018

ECLI:EU:C:2018:257,

http://curia.europa.eu/juris/document/document.jsf?text=&docid=201148&pageIndex=0&doclang=en&mode=r eq&dir=&occ=first&part=1&cid=6616732;

Joined Cases C-569/16 and C-570/16, Stadt Wuppertal v Maria Elisabeth Bauer and Volker Willmeroth v Martina Broßonn, 2018 E.C.R. I–871, http://curia.europa.eu/juris/liste.jsf?num=C-569/16&language=en (last visited Jan 13, 2021

91 Equality and Human Rights Commission (Employment Statutory Code of Practice, 2010)

<https://www.equalityhumanrights.com/sites/default/files/employercode.pdf> accessed 01 May 2023

unfavourable, provided Mr Khan "could reasonably say that he would have preferred not to have been treated differently". However, it is important to note that this lowered bar is tempered by the requirement for actual less favourable treatment to occur for liability to arise (Baldwin v Brighton and Hove City Council [2007] IRLR 232). Moreover, “offsetting” is not allowed insofar as under Ministry of Defence v Jeremiah [1980] ICR 13, it was held that an overtime scheme requiring males to do less congenial overtime work than females was discriminatory against males， even though they received a higher overtime rate as compensation. Thus, less favourable treatment cannot be cancelled out by alternative more favourable treatment – the Court does not need to weigh the overall treatment to find discrimination; it only requires evidence of an instance of less favourable treatment. Accordingly, it is not surprising that there have been no direct litigation specifically addressing AI bias, despite its vast application.92

Similarly, there is no direct legislation against AI bias in Singapore. However, there is also no direct general anti-discrimination legislation in Singapore apart from the provisions in the Constitution of Singapore. A bill is set to be tabled in 202493 following the Ministry of Manpower’s interim report, which aims to establish protection for workers against discrimination based on age, nationality, sex, marital status, pregnancy status, caregiving responsibilities, race, religion, language, disability and mental health conditions. These protections would apply to all stages of employment, including hiring, promotion, training and dismissal; and would also prohibit retaliation against workers who report cases of workplace discrimination.94 Singapore’s focus on substantive equity is well-founded – considering these factors.

g. The parallel between AI Bias and Judicial Bias

Additionally, AI systems, even if deemed procedurally sound and achieves formalistic equity, may still exhibit the appearance of bias. As AI becomes more prevalent and takes on more significant roles (as illustrated above), such as determining prioritised medical treatment or assisting judges in sentencing, it becomes crucial to address the appearance of bias.

92 ‘AI Blog: Human Bias and Discrimination in AI Systems’ (ICO) <https://ico.org.uk/about-the-ico/mediacentre/ai-blog-human-bias-and-discrimination-in-ai-systems/> accessed 01 May 2023

93 (Tripartite Committee on workplace fairness - ministry of manpower, 2023) <https://www.mom.gov.sg//media/mom/documents/press-releases/2023/tripartite-committee-on-workplace-fairness-interim-report.pdf> accessed 01 May 2023

94 Soh M, ‘Workplace Discrimination Laws Proposed in Singapore’ (Pinsent Masons, 29 June 2023) <https://www.pinsentmasons.com/out-law/news/workplace-discrimination-laws-proposed-in-singapore> accessed 01 May 2023

Drawing a parallel to judicial bias and its existing solutions, AI bias could potentially be addressed in a similar manner. A red line could be established, restricting AI utilisation in certain circumstances. Now, we set out the laws against judicial bias for further analysis to determine if they can be applied in the context of restricting AI bias.

The Court of Appeal of the United Kingdom in Re Medicaments No. 2[2001] 1 WLR 700 [37] defined bias as “an attitude of mind which prevents the Judge from making an objective determination of the issues that he has to resolve”, and cases draw a distinction between “actual bias” and “apparent bias”. Actual bias has been defined as “a judge [being] influenced by partiality or prejudice in reaching his decision and where it has been demonstrated that a Judge is actually prejudiced in favour of or against a party”. Apparent bias “describes the situation where circumstances exist which give rise to a reasonable apprehension that the Judge may have been, or may be, biased”.95

Initially, the test applied found its genesis in the House of Lords in R v Gough [1993] UKHL 1 [14], which held that “the Court should ask itself whether, having regard to those circumstances, there was a real danger of bias on the part of the relevant member of the tribunal in question, in the sense that he might unfairly regard (or have unfairly regarded) with favour, or disfavour, the case of a party to the issue under consideration by him”. In determining whether there was “real danger of bias”, it should be viewed through the Courts’ eyes instead of “requiring the Court…. look at the matter through the eyes of a reasonable man, because the court in cases such as these personifies the reasonable man.”

Since then, the law has evolved, and the recent case of R (PD) v West Midlands and North West Mental Health Review Tribunal sets out the relevant principles: -

To determine whether there was bias in cases where actual bias is not alleged, "the question is whether the fair-minded and informed observer, having considered the facts would conclude that there was a real possibility that the Tribunal was biased”.96 It follows that this exercise involves consideration of all relevant facts as "the court must first ascertain all the circumstances which have a bearing on the suggestion that the judge was biased”.97

Next, "public perception of a possibility of unconscious bias is the key. It is unnecessary to delve into the characteristics to be attributed to the fair-minded and informed observer. What can

95 Re Medicaments No. 2 [2001] 1 WLR 700 [38]

96 Porter v Magill [2002] 2 AC 357 at 494 [103] (Lord Hope of Craighead)

97 Porter v Magill [2002] 2 AC 357 at 494 [104] (Lord Hope of Craighead)

confidently be said is that one is entitled to conclude that such an observer will adopt a balanced approach." A reasonable member of the public is neither complacent nor unduly sensitive or suspicious.”98 And to ascertain unconscious bias, the courts should examine similar analogous situations since "one does not come to the issue with a clean slate; on the contrary, the issue of unconscious bias has cropped up in various contexts which may arguably throw light on the problem.”99

The court’s approach should start “by identifying the circumstances which are said to give rise to bias … [and a court] must concentrate on a systematic challenge and apply a principled approach to the facts on which it is called to rule”.100 The need for a Tribunal to be impartial and independent means that "it must also be impartial for an objective viewpoint, that is it must offer sufficient guarantees to exclude any legitimate doubt in this respect”.101

Applying this test to a transparent AI system could potentially prevent the utilisation of AI systems where there is purported “AI bias”, thus achieving substantive equity.

However, opponents of this might delineate judicial bias from general bias and AI bias by opining the innate need for the judiciary to be impartial in order to uphold the rule of law alluded to by themselves. And by corollary, the higher standards articulated above under the Porter test should be distinguished from the expectations society expects from AI companies. However, these proponents must concede that even though most cases on apparent bias concern complaints about the judiciary, it is evident that the Porter v Magill doctrine extends to apparent bias of other decision makers, especially those in the Executive branch. The decision maker in Porter v Magill itself was an auditor, and the applicant opined that the method in which the auditor announced their preliminary findings raised an appearance of bias when they issued their final decision. Accordingly, “the doctrine of apparent bias is best understood as applying to executive officials and agencies, but in a contextual fashion, so that what counts as bias depends on the type of decision and the role of the decision maker”.102 Since this proposed doctrine would draw red lines around AI technology in certain contexts and uses, it does not matter even if it is limited to public bodies

98 Johnson v Johnson [2000] 200 CLR 488, 509 [53] (Kirby J) per Lawal v Northern Spirit Limited [2003] ICR 856, 862 [14] (Lord Steyn)

99 Lawal v Northern Spirit Limited [2003] ICR 862 [15] (Lord Steyn)

100 Lawal v Northern Spirit Limited [2003] ICR 864-5 [20] (Lord Steyn)

101 (Findlay v United Kingdom (1997) 24 EHRR 221 at 224-245 and quoted with approval by Lord Bingham of Cornhill in R v Spear [2003] 1 AC 734 [8]).

102 Endicott T and Bell J (Determining bias: A survey of the law in the United Kingdom, January 2020) <https://www.law.ox.ac.uk/sites/default/files/migrated/opbp_death_penalty_and_bias_final.pdf> accessed 01 May 2023 Page 15, [17]

utilising AI where higher standards are expected. After all, AI regulation must still pay heed to its other objective – to avoid excessive control and stifle innovation within the industry.

However, taking a more protectionist view, if AI technology is not used in the public sphere, and is instead utilised by Multinational Corporations (“MNCs”) in areas such as their hiring processes that appear to be biased, public sentiment could shift against AI adoption. This would directly contradict the key policy objectives outlined in most jurisdictions’ AI masterplans. Accordingly, such resistance may hinder innovation by stifling the development of the AI industry. Instead, an approach that endeavours towards oversight and substantive equity should be encouraged to gradually expand the use of AI tools.

2. Infringement of Property Rights in AI-Generated content:

In another realm, generative AI has the potential to provide outputs of artistic, literary, dramatic, musical works, sound recordings, published works inter alia through replicating copyrighted texts, images inter alia that were used to train the AI systems.103 Take the example of image-generating AI models like DALL-E 2 and Stable Diffusion that recreate elements from images in their training data which may include copyrighted works of art still protected under copyright laws. However, pursuing copyright claims against such AI systems, as seen in class action suits filed in the US against Stability AI, Midjourney, and DeviantArt, can be challenging due to the difficulty in identifying the specific inputs that the AI systems relied on or replicated.104 The AI-generated output may not be identical to the copyrighted inputs, especially in “diffusion models” like Stable Diffusion, which transform “noise” into images resembling but not identical to the copyrighted content learned by the AI system.

Each jurisdiction has its own copyright regulations, and whether such AI-generated work can be protected by copyright depends on the specific legal framework of each jurisdiction. In the UK, the Copyright, Designs and Patents Act 1998 (“CDPA”) is applicable, while Singapore has the

103 World Intellectual Property Office, ‘Artificial Intelligence and Copyright’ (WIPO Magazine) <https://www.wipo.int/wipo_magazine/en/2017/05/article_0003.html> accessed 01 May 2023

104 LLP JSLF, ‘Class Action Filed against Stability AI, Midjourney, and DeviantArt for DMCA Violations, Right of Publicity Violations, Unlawful Competition, Breach of Tos’ (PR Newswire: press release distribution, targeting, monitoring and marketing, 14 January 2023) <https://www.prnewswire.com/news-releases/class-action-filed-against-stability-aimidjourney-and-deviantart-for-dmca-violations-right-of-publicity-violations-unlawful-competition-breach-of-tos301721869.html> accessed 01 May 2023

Copyright Act 2021,105 which recently replaced the Copyright Act (Chapter 63 of the 2006 Revised Edition).

a. Singapore’s property rights protection of AI-Generated content (human authorship)

Under Asia Pacific Publishing Pte Ltd v Pioneers & Leaders (Publishers) Pte Ltd,106 the definition of “qualified person” includes only human author(s) – living persons with a “natural lifespan”. And while unnecessary to name every qualified person, there requires at least one identifiable human author for copyright protection.

b. Singapore’s property right protection of AI-Generated content (originality)

The second condition for copyright protection is that the work must be deemed “original”. In the Asia Pacific case, it was held that originality is based on “the independent intellectual effort and/or the exercise of sufficient effort of a literary nature” by a qualified person. In the Global Yellow Pages Ltd v Promedia Directories Pte Ltd107 case, it was held that the work must be an “authorial creation that is causally connected with the engagement of the human intellect”, and in the context of a compiler – like that of certain AI systems, “a compiler must exercise sufficient creativity in selecting or arranging the material within the compilation; and if the compiler does so, the resulting copyright will only protect the original expression in the form of the selection or arrangement of the material”. Accordingly, it seems that the gathering and inputting of data into AI systems would not qualify as the creation of an original work. Thus, copyright protection for true AI-generated works would likely not be feasible.

Although an alternative ground could be explored based on the persuasive English case of Express Newspapers Plc v Liverpool Daily Post & Echo Plc,108 which held that the author of the computer program (or AI system) could be deemed the author of the computer-generated (and now, AIgenerated) work insofar as the computer (or AI system) was a mere tool for the creation of the work, akin to a pen in the hand of a writer. Nevertheless, this approach would likely be limited to situations where a human programmer (author) did exercise the necessary creativity and skill in assisting with the creation of the work, rather than a programmer that merely coded the system

105 Copyright Act 2021 (Singapore Statutes Online) <https://sso.agc.gov.sg/Acts-Supp/22-2021/Published/> accessed 01 May 2023

and took a backseat thereinafter. In any case, it is improbable that AI-generated works would be protected by copyright in Singapore.

c. United Kingdom’s property right protection of AI-Generated content (human authorship)

In the UK, under section 178 of the Copyright, Designs and Patents Act109 expanding on section 9(3) of the CDPA,110 a “computer-generated” work created in “circumstances such that there is no human author of the work” would have its authorship “taken to be the person by whom the arrangements necessary for the creation of the work are undertaken”. Therefore, such a work may still benefit from 50 years of copyright protection, beginning from the date the work is curated.

d. United Kingdom’s property right protection of AI-Generated content (originality)

Temple Island Collections Ltd v New English Teas Ltd111 established that the work must be “the author’s own intellectual creation,” and the process of selecting data inputs could allow it to be deemed as a form of originality. However, the determination of originality is typically made on a case-by-case basis, as demonstrated in Nova Productions v Mazooma Games,112 in which the Court of Appeal held that a player’s input is “not artistic in nature and he has contributed no skill or labour of an artistic kind,” and thus need not be protected by copyright. Although vague, the CDPA regime allows for more AI-generated works, either fully or substantially generated by AI, to potentially be eligible for copyright protection.

e. Ideal approach to copyright protection of AI-Generated content

Again, there is no straightforward approach or universally accepted approach to this issue. It depends on the national and strategic priorities of each jurisdiction, and the balance between protecting innovation and intellectual property rights.

Copyright protection may be scaffolded on recognising the “fruits of intellectual labour” and “the creative powers of the human mind”.113 The UK model of granting copyright to the programmer

109 ‘Copyright, Designs and Patents Act 1988’ (Legislation.gov.uk, 15 November 1988)

<https://www.legislation.gov.uk/ukpga/1988/48/section/178> accessed 01 May 2023

110 ‘Copyright, Designs and Patents Act 1988’ (Legislation.gov.uk, 15 November 1988)

<https://www.legislation.gov.uk/ukpga/1988/48/section/9> accessed 01 May 2023

111 Temple Island Collections Ltd v New English Teas Ltd [2012] EWPCC 1

112 Nova Productions v Mazooma Games [2007] EWCA Civ 219

113 Feist Publications v Rural Telephone Service Company, Inc. 499 U.S. 340 (1991); and in Compendium Of U.S.

Copyright Office Practices § 602.4(C) (3d ed. 2021)

or author responsible for enabling the operation of an AI system may be seen as protecting their rights. However, if one takes a literal approach to AI-generated content, where there is simply no human creator to be protected, and thus no copyright should be granted. But, if future intelligent AI systems do manage to create works with little to no human intervention, or create new art styles based on past developments of art, might we not also need to protect the fruits of sophisticated artificial intelligence? We might need to decide whether such sophisticated AI should be granted the status and rights currently only attributed to humans. This is, however, a question for the distant future, for such technology is still decades away.

On the other hand, recognising copyright protection for AI-generated content could both benefit and hinder AI development and innovation. Protecting AI-generated content incentivises companies to create models capable of producing such content, instead of merely creating tools to assist human authors, and thereby stifle productivity by requiring human intervention in the creation of new intellectual property where an AI system (in the future) may do so much more efficiently. However, at the same time, recognising such rights may unintentionally stifle innovation, as articulated in the Asia Pacific case, where concerns were raised about indefinite protection periods for AI-generated property rights. Although I submit this concern is easily addressed through legislation stipulating a maximum duration (e.g. 50 years as adopted by the UK).

Part 3. How should AI be regulated?

1. Should there be regulation?

While we have discussed some of the potential issues resulting from a lack of regulation, increasing regulation in these areas is not necessarily the obvious response. I have set out some suggestions specific to addressing the above issues and their potential drawbacks. We now take a broader approach to regulation in the AI industry

Historically, governments have been slow to regulate dynamic markets. 114 Poorly executed regulation can stifle innovation and lead to market failures,115 particularly in critical infrastructure, technology, and research sectors, where deficient legislation may lead to significant economic

114 ‘Technology Is Changing Faster than Regulators Can Keep up - Here’s How to Close the Gap’ (World Economic Forum) <https://www.weforum.org/agenda/2018/06/law-too-slow-for-new-tech-how-keep-up/> accessed 01 May 2023

115 Bourne R, ‘How “Market Failure” Arguments Lead to Misguided Policy’ (Cato.org, 2019) <https://www.cato.org/policy-analysis/how-market-failure-arguments-lead-misguided-policy> accessed 01 May 2023

consequences. An example of this is the regulation imposed on stem cell therapy research – a sector, like AI, which received high levels of attention and was heralded as a promising solution to a wide variety of diseases in the 2000s. After the US imposed unilateral regulation limiting stem cell research in 2001,116 stifling the growth of their domestic industry while the rest of the world took a more liberal approach, the US fell significantly behind in its research and development within the industry.117 Although the US adjusted its position in 2009and backpedalled,118 the initial impediment had weighed heavily on its present competitiveness.119 This situation is emblematic of dynamic fields such as AI and medical technologies (as above), and perfectly illustrates the first limb of the Collingridge dilemma.120

The Collingridge dilemma posits a double-bind methodological quandary for regulators attempting to influence or control technological development: First, they face an information problem - impacts of technological development cannot easily be predicted before the technology has already been extensively developed and used. Second, a power problem arises

influence or control over technology is difficult once it has been entrenched.

On balance, especially with recent challenging economic conditions,121 and countries heralding AI as crucial to their international competitiveness in the coming century,122 retrospective regulation does seem more desirable. The second limb seems less insurmountable. Once a country or region becomes a frontrunner in AI, it can always attempt to implement more stringent AI regulation. This approach has been adopted by various jurisdictions through what is termed “light touch (sectoral) regulation”. Minimal universal regulation is applied initially, but reactive policies and legislation are enacted after social issues become entrenched. The US, for example, lacks federal legislation for

116 Baumann J, ‘State “personhood” Laws Threaten Embryonic Stem Cell Research’ (Bloomberg Law, 4 August 2022) <https://news.bloomberglaw.com/health-law-and-business/state-personhood-laws-threaten-embryonic-stem-cellresearch> accessed 01 May 2023

117 Murugan, V. (2009). Embryonic Stem Cell Research: A Decade of Debate from Bush to Obama. Yale Journal of Biology and Medicine, 82, 101

118 Under the Obama administration: ‘Obama’s Remarks on Stem Cell Research’ (The New York Times, 9 March 2009) <https://www.nytimes.com/2009/03/09/us/politics/09text-obama.html> accessed 01 May 2023

119 Wolinsky H, ‘The Pendulum Swung. President Barack Obama Removes Restrictions on Stem-Cell Research, but Are Expectations Now Too High?’ (EMBO reports, May 2009)

<https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2680887/> accessed 01 May 2023

120 Collingridge, D., ‘The Social Control of Technology’, (1980) Frances Pinter.

121 Condon J and others, ‘Economic Conditions Outlook during Turbulent Times, December 2022’ (McKinsey & Company, 21 December 2022) <https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/ourinsights/economic-conditions-outlook-2022> accessed 01 May 2023

122 Youssef Travaly KM and others, ‘Whoever Leads in Artificial Intelligence in 2030 Will Rule the World until 2100’ (Brookings, 9 March 2022) <https://www.brookings.edu/blog/future-development/2020/01/17/whoeverleads-in-artificial-intelligence-in-2030-will-rule-the-world-until-2100/> accessed 01 May 2023

data protection123 but subsequently introduced data protection legislation for certain sectors such as children,124 health,125 and education.126 This default position now seems to be adopted by the US vis-à-vis AI regulation, where the US National Science and Technology Council has affirmed its position against general regulation of AI 127 and advocates for subsequent legislation to avoid increasing compliance requirements or stifling innovation.

However, this may be injudicious as a global policy, especially in the AI sphere where there is rapid and significant market consolidation towards an oligopoly made up of the traditional technology behemoths.128 Retrospective regulation would be especially challenging in this context.129 In addition to economic benefits of promoting market competition and preventing generative AI from irreversibly cementing the Big Tech advantage,130 economists argue that factors such as compliance, lack of information, and market and political pressures would make the enforcement and creation of subsequent regulation exponentially harder.

Additionally, while fostering productive innovation and maintaining economic competitiveness is important, it is crucial not to overlook the protection of individual rights and ensure that citizens are not adversely impacted by AI in the medium to long term. Since the World Wars, this has been a global focus with institutions like the United Nations and the Universal Declaration of Human Rights.131 Civil and human rights once lost – especially to institutions are especially challenging to

123 Staff O, ‘Data Privacy Laws: What You Need to Know in 2023’ (The Intuitive Data Privacy Platform for Simplifying Compliance, 6 July 2023) <https://www.osano.com/articles/data-privacy-laws> accessed 01 May 2023

124 Children’s Online Privacy Protections Rule (“COPPA”) Ritchie JN& A and Staff in the Bureau of Competition & Office of Technology, ‘Children’s Online Privacy Protection Rule (“coppa”)’ (Federal Trade Commission, 3 February 2023) <https://www.ftc.gov/legal-library/browse/rules/childrens-online-privacy-protection-rule-coppa> accessed 01 May 2023

125 Health Insurance Portability and Accountability Act of 1996 (GovInfo) <https://www.govinfo.gov/app/details/PLAW-104publ191/summary> accessed 01 May 2023

126 ‘Family Educational Rights and Privacy Act (FERPA)’ (Home, 25 August 2021) <https://www2.ed.gov/policy/gen/guid/fpco/ferpa/index.html> accessed 01 May 2023

127 (Preparing for the future of Artificial Intelligence - the white house, 2016) <https://obamawhitehouse.archives.gov/sites/default/files/whitehouse_files/microsites/ostp/NSTC/preparing_f or_the_future_of_ai.pdf> accessed 01 May 2023

128 West SM, ‘Competition Authorities Need to Move Fast and Break up Ai’ (Subscribe to read | Financial Times, 17 April 2023) <https://www.ft.com/content/638b5be7-fab7-4fe6-a0cf-7dabefcdd722> accessed 01 May 2023

129 Renholding, ‘The Case for Preemptive Oligopoly Regulation’ (CLS Blue Sky Blog, 3 December 2020)

<https://clsbluesky.law.columbia.edu/2020/12/03/the-case-for-preemptive-oligopoly-regulation/> accessed 01 May 2023

130 Iyengar V, ‘Why Ai Consolidation Will Create the Worst Monopoly in US History’ (TechCrunch, 25 August 2016) <https://techcrunch.com/2016/08/24/why-ai-consolidation-will-create-the-worst-monopoly-in-ushistory/?guccounter=1> accessed 01 May 2023

131 ‘History of the Declaration’ (United Nations) <https://www.un.org/en/about-us/udhr/history-of-thedeclaration> accessed 01 May 2023

regain.132 Europe, with its introduction of landmark legislation such as the GDPR, had these priorities in mind – and its implementation and application was heralded an overall success.133 Most pertinently, privileging rights over economic interests may not have as detrimental an impact on economic competitiveness as initially feared.134 Academics have weighed options from China, the EU, and the US and concluded the necessity of regulation 135 - albeit from a conceptual standpoint, but the true veracity of this argument comes from a global shift towards regulation. If two of three of the world’s current economic powerhouses are moving towards stricter AI regulation,136 and considering the increasing focus on environmental, social and governance (ESG) issues by consumers, economic considerations would be significantly mitigated.

Furthermore, a lack of regulation may lead to unsatisfactory laws and a weakening of the beneficial effects of efficiency resulting from the Separation of Powers. A lack of AI regulation would lead to litigation based on Common Law and (inaccurate) inter-jurisdictional regulation referencing. As Barber’s exposition of the Separation of Power’s efficiency rationale137 states, courts are less suited to managing broad-based technological and AI policies, and this may lead to unsound rules that then apply across the industry. A substantial body of scholars138 has found that judicial isolationism is impossible in the modern world. Courts cannot evade technology policy in a globalised and digitized world. Take for example, the Courts may have concluded that geo-blocking technology used by firms to determine user location is “insufficiently accurate to capture territorial interests […] and decide against a location-based remedy”. However, this interpretation has been proven erroneous,139 leading to unsound de facto technology policy.140 Even the Courts themselves have

132 Equality C of R and others, ‘The Civil Rights Act of 1964: A Long Struggle for Freedom World War II and Post War (1940–1949)’ (Library of Congress, 10 October 2014) <https://www.loc.gov/exhibits/civil-rights-act/world-warii-and-post-war.html> accessed 01 May 2023

133 Despite defects in some areas, but it is to be expected of legislation of such scale. European Commission Report after two years of the GDPR: Questions and answers, ‘Press Corner’ (European Commission - European Commission) <https://ec.europa.eu/commission/presscorner/detail/en/qanda_20_1166> accessed 01 May 2023

134 Swabey P, ‘GDPR Cost Businesses 8% of Their Profits, According to a New Estimate’ (Tech Monitor, 15 March 2022) <https://techmonitor.ai/policy/privacy-and-data-protection/gdpr-cost-businesses-8-of-their-profitsaccording-to-a-new-estimate> accessed 01 May 2023

135 Chesterman S (From ethics to law: Why, when, and how to regulate AI - NUS Faculty of Law) <https://law.nus.edu.sg/wp-content/uploads/2023/05/014_SimonChesterman.pdf> accessed 01 May 2023

136 China: ‘the initial establishment of AI laws and regulations’ (国

知 [State Council Issued Notice of the New Generation Artificial Intelligence Development Plan], 2017), EU: proposed AI Act previously elaborated on.

137 N.W. Barber, An Introduction: The United Kingdom Constitution, 2021.

138 Zachary D. Clopton, Judging Foreign States, 94 WASH. U. L. REV. 1 (2016) (debunking the myth that courts avoid judging foreign sovereigns’ actions); Ganesh Sitaraman & Ingrid Wuerth, The Normalization of Foreign Relations Law, 128 HARV. L. REV. 1897 (2015) (showing that courts no longer treat foreign relations cases so differently from domestic cases).

139 Google: Mark Scott (@markscott82), TWITTER (Sept. 11, 2018, 1:53 AM), https://twitter.com /markscott82/status/1039436684562231296 [https://perma.cc/XG3N-P88F] in the European Court of Justice

140 AK Woods, Litigating Data Sovereignty, Yale Law Journal, Page 395

conceded their lack of expertise141 in these matters. Ultimately, the fact that Courts are not the optimal body to address technology policy conflicts, yet still find themselves as the primary and default body to do so, should compel legislative branches to step in and take action.

2. Overview of potential AI regulation improvements

It will now first be argued that harm resulting from AI defects may be uncompensated under existing doctrines, and legislatures must decide and clarify which parties such liability should fall on to prevent uncompensated injuries. Next, it will be argued where the approximate range for the ideal balance between innovation and protection of rights should fall at. And under which, the type and content of regulation AI regulation should possess would be introduced before a final analysis regarding the mode of regulation - between whether blanket or sector-specific legal and social regulation should be adopted.

3. Who should be the ones regulated?

As AI technology advances, the underlying basis of legal obligation according to present concepts within private law (contractual or tortious) and even public (criminal and human rights) needs to be elucidated. The bulk of the proposed AIA regulation’s safeguards falls on “providers” of highrisk AI technology142 rather than the organizations that use them.143 However, the question arises: what happens when a genuine AI algorithm makes a decision that results in harm - be it a decision on whether to grant a mortgage, diagnosing illnesses, or decisions made by an automated selfdriving vehicle on the road? The IEEE’s European Public Policy Initiative Working Group has suggested that in areas like the “liability of industry for accidents involving autonomous machines

141 AK Wood’s compilation at note 29 ibid, of Supreme Court Justices’ perspectives in the US including: Orin S. Kerr, The Fourth Amendment and New Technologies: Constitutional Myths and the Case for Caution, 102 MICH. L. REV. 801, 806 (2004) (arguing that courts are ill-equipped to make criminal law in areas where technology is fast evolving). For responses to Kerr’s institutional- competence argument, see Erin Murphy, The Politics of Privacy in the Criminal Justice System: Information Disclosure, the Fourth Amendment, and Statutory Law Enforcement Exemptions, 111 MICH. L. REV. 485, 498 (2013), which argues that courts and legislatures are not an either/or proposition, but rather can work together to achieve optimal policy; David Alan Sklansky, Two More Ways Not to Think about Privacy and the Fourth Amendment, 82 U. CHI. L. REV. 223, 224-33 (2015), which disputes Kerr’s view that privacy protections are best left to the political branches and questions whether the institutional comparison is fruitful; and Daniel J. Solove, Fourth Amendment Codification and Professor Kerr’s Misguided Call for Judicial Deference, 74 FORDHAM L. REV. 747, 761-74 (2005), which argues that the legislative record in addressing new technologies is insufficient, filled with gaps, and suggests that legislatures are neither as nimble nor as informed as Kerr suggests.

142 Proposed AI regulation, Arts. 3(2), 28(1)

143 ‘How the EU’s Flawed Artificial Intelligence Regulation Endangers the Social Safety Net: Questions and Answers’ (Human Rights Watch, 10 November 2021) <https://www.hrw.org/news/2021/11/10/how-eus-flawedartificial-intelligence-regulation-endangers-social-safety-net> accessed 01 May 2023

[…] poses a challenge to existing liability rules where a legal entity (person or company) is ultimately responsible when something goes wrong”.144 This is critical.

a. Contractual Liability

What if we imposed regulation on both the provider and user of high-risk AI technology based on mutual and third-party contractual obligations? Contractual obligations have the concept of a bargain at its core – a promise supported by valuable consideration which creates an interest (either a performance interest or an expectation interest). The “performance interest” allows the Claimant (A) to receive the Defendant’s (B) actual performance, and the law protects performance interest by recognizing a rightin A for B to fulfil their part of the bargain, imposing a correlative dutyon the part of B to perform.145 This is the performance interest.146 Separately, “expectation interest” is defined as A being compensated the monetary value of B’s (lack of) performance, and the law protects this interest by providing a right for A to be compensated for losses as a result of B’s breach of contract. 147 In either case, the promisor (B) has a duty to make good on their promise and failure to do so puts the promisee (A) in a position they would have been in had the contract been performed - a strict liability148 situation.

In quintessential applications of AI technology, such as an open-source black-box algorithm like ChatGPT (or a known algorithm fed with a data set with unknown credentials and sources) the transparency deficit in either the algorithm or input creates confusion as to where liability should lie. Each party’s obligations become unclear. The presence of AI technology makes it difficult to set out the promise and bargain, since only the input is certain, and any promise confined to the inputs is limited in scope. While any output (upside) under contract theory would be determined by the promisor (A), they would also be free to indemnify themselves. Accordingly, contractual liability offers no direct solution to determine which party should be regulated as this varies from case to case.

144 (AIC0194 - evidence on Artificial Intelligence)

<https://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/artificial-intelligencecommittee/artificial-intelligence/written/69715.html> accessed 01 May 2023

145 Chen-Wishart M, ‘Contract Law’ (Law Trove)

<https://www.oxfordlawtrove.com/display/10.1093/he/9780192848635.001.0001/he9780192848635;jsessionid=0F34857CAD4DE557CC86CBB86DE25760> accessed 01 May 2023

146 D. Friedmann, ‘The Performance Interest in Contract Damages’ (1995) 111 LQR 628

147 D. Friedmann, ‘The Performance Interest in Contract Damages’ (1995) 111 LQR 629 and 632

148 Assessing the actual performance against the purported promise.

b. Tortious Liability

Tortious obligations, however, involve the imposition or assumption of a duty between proximate parties A and B. It requires A to discharge the relevant duty without causing B any harm, and if harm is caused to B, A is obligated to compensate B. A fault-based liability.149

Using the same example of AI technology application, this approach would lead to either an inadvertent imposition of tortious duties on parties that are in a proximate relationship or the more likely case of the significant difficulties in establishing a proximate duty to establish liability. In this reading, both the developer and user could potentially be seen to be the necessarily regulated party. And if both parties “need” to be regulated, or if the proximate relationships with the victims again changes from case to case, this approach similarly offers no direct solution to determine which party should be regulated.

Accordingly, private law liability seems ill-equipped to support AI utilisation. Instead, individuals utilising such technologies should be encouraged or incentivized to define the nature and extent of their involvement and liability. And failing which, there is an urgent need for a default legal basis for liability, perhaps within the realm of fiduciary law150 or through a novel approach to liability attribution.

One such novel solution proposed by Raymond [2021]151 suggests a duty of care scaffolded upon the Hand Formula introduced in United States v. Carroll Towing Co., 159 F. 2d 169 (2d. Cir. 1947), which states that liability depends on whether the burden of care (B) is less than P (the probability of the loss or injury) multiplied by L (the magnitude of the loss or injury). Hence, where the burden was less than the harm multiplied by the probability of the harm, there would be a duty of care imposed ( ). The proposed duty of care for algorithms would be , where B represents the burden of care in having the automated task completed manually by a human, k is a constant determining the influence of A (the minimum cost of an alternative algorithmic solution), P represents the probability of loss or injury on a protected class identified through auditing the algorithm, and L represents the magnitude of loss or injury from algorithmic bias experienced by a protected class. Accordingly, there would be liability for algorithmic harm if

149 Which indemnifies the loss when the harm occurs.

150 Cooley’s submission to the UKHL: (AIC0217 - evidence on Artificial Intelligence) <https://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/artificial-intelligencecommittee/artificial-intelligence/written/70513.html> accessed 01 May 2023

151 Nathaniel Raymond, Alina Glaubitz, ‘How should liability be attributed for harms caused by biases in Artificlal Intelligence?’, 29 April 2021

the combined burden of care (a human completing the automated task) minus the cost of using an alternative algorithm solution is lower than the probability of the party suffering the loss multiplied by the algorithmic harm caused. And judges have the discretion to decide how influential the analysis of alternative algorithmic solutions by assigning a value to the constant k –otherwise the default for k would be 1.

But in any case, “existing conceptions of the liability and responsibility have yet adapted” and if litigation finds its way to the Courts, the “Court will have to find a solution.”, but by that point “somebody will have been harmed already”. It is “in the interests of industry and the general public to clarify and provide assurance that individuals will not suffer harm and not be uncompensated”.152 Whether accountability should lie with the data provider, the AI algorithm developer, the algorithm validator, or even the company/party that operates (and/or uses) the algorithm, in any case, clarity through regulation is required153 to protect affected individuals from harm and ensure they have appropriate avenues for redress in private law, as this will “remove the barrier to widespread adoption” especially vis-à-vis insurance applications. It is for Legislature(s) to decide who should be best positioned to take the blame – perhaps even on non-legal pragmatic grounds of who has the deepest pockets to provide sufficient redress for the potential victims. However, what is clear is that who should be regulated or should receive liability must be clarified by the legislative branches expeditiously.

4. What rules and principles should be set out in AI legislation?

a. What is the best balance between the need for regulation and the need for innovation?

As set out by Hohfeld’s “fundamental legal conceptions”,154 a systematic analysis of normative positions can be split between “jural opposites” of: rights (cf. no rights), privilege (cf. duty), power (cf. disability), and immunity (cf. liability), and “jural correlatives” of: right (cf. duty), privilege (cf. no right), power (cf. liability), and immunity (cf. disability). Jural opposites are antithetical positions (e.g. a person (A) having a right means that A does not have no rights), and jural correlatives the

152 Professor Karen Yeung, Professor of Law and Director of the Centre for Technology, Ethics, Law and Society, Dickson Poon School of Law, King’s College London, House of Lords, Select Committee on Artificial Intelligence, Oral Evidence, Report of Session 2017-2019, AI in the UK: ready, willing, and able? Published 16 April 2018, [318], http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/artificial-intelligencecommittee/artificial-intelligence/oral/71898.html

153 House of Lords, Select Committee on Artificial Intelligence, Report of Session 2017-2019, AI in the UK: ready, willing, and able? Published 16 April 2018, [318], https://publications.parliament.uk/pa/ld201719/ldselect/ldai/100/100.pdf, accessed 01 May 2023

154 Fundamental Legal Conceptions as Applied in Judicial Reasoning and Other Legal Essays (1919), The Yale Law Journal. Vol. 28, No. 2, Dec. 1918, page 167: "Wesley Newcomb Hohfeld"

relational positions created by a position (e.g. a person (A) having a right, would entail someone else (B) owing a duty to A). The purpose of this section is not to suggest the benefits (or disbenefits) of focussing on each position and legislating accordingly. It is to elucidate that both deontic (i.e. rights, privilege, duty) and potestative concepts (i.e. power, liability, immunity, disability) are interdependent and must be balanced according to the needs of the society in which they are applied. The ideal normative position selected by legislatures must take into account both potestative and deontic needs.

To give an example in the context of AI, the rights of the recipients/users of AI systems (e.g. the job applicant in the Amazon case) create a correlative duty for the creators of the AI systems (e.g. the creator of the AI hiring tool), which must both be balanced with the powers of internal (e.g. Amazon itself) and external surveillance (e.g. national competent authorities), to develop legislation that both upholds the deontic needs of society and maintains its potency. As Araszkiewicz suggests,155 provisions in such AI legislation often “have a meta-level character in the sense that they require conformity with standards that have yet to be developed and adopted”. However, since these standards “stem from the balancing of values in the context of specific administrative or judicial proceedings”, one could define them as the legal norms that society aims to uphold.

To elucidate these legal norms, we adopt a legal positivist approach. The writings of legal positivists explore the nature of law – the general conditions rendering any putative norm legally valid (what is law). The normative aspect of law – an explanation of the moral legitimacy of law and justification for compliance with the law, as Hart suggests, are tasks for political philosophers and not legal philosophers interested in elucidating the law. Accordingly, our analysis will focus only on the nature of law (in AI). The Dworkinian156 approach157 proposes that there exist two spheres of legal norms: legal rules, which are applied on an “all or nothing” basis, and legal principles, which assist judges in deciding what the law is in cases where legal rules conflict or are absent. Whether a legal norm is a legal rule or a legal principle lies in their inherent quality158 or source.

159 Where conflict arises between legal rules, a hypothetical perfect judge (Hercules) 160 would

155 Araszkiewicz M, Nalepa GJ and Pałosz R (The Artificial Intelligence Act: A jurisprudential perspective, 2022) <https://ceur-ws.org/Vol-3221/IAIL_paper8.pdf> accessed 01 May 2023

156 R. Dworkin, The model of rules, University of Chicago Law Review 1 (1967), 14–46.

157 Setting aside Hart’s view of the nature of law, for now.

158 i.e. whether something is a legal principle depends on the standard to be observed because it is a requirement of justice or fairness or some other dimension of morality.

159 Whether they were properly created by the rule of recognition or any other model one subscribes to.

160 Dworkin utilises a super-human judge, Hercules, for this purpose. But the principle still holds practically.

construct a “working conception of law” that takes into account all legal rules 161 and legal principles derived from substantive morality that best justifies the entire body of law, before determining which legal rule should prevail.

Alexy,162 scaffolding on Dworkin in his theory of principles, thus suggests that Hercules’ working theory of law allows the identification of the optimised balance between legal principles and the identification of said legal principles. The most pertinent of such principles would be the conflict between the need to protect rights and the promotion of innovation. And if were to analyse the cases decided thus far ex post facto, as previously argued, rights should be prioritised over pure economic gains.

And in an alternate analysis, Hart suggests that duties (what the legislation should articulate) exist when social rules provide for such duties (e.g. freedom from bias treatment), and such social rules exists when the practice conditions for such rules are met. And these practice conditions are met when members of a community behave in a certain way, aligned with the social rules. 163 Accordingly, with the recent social shift towards prioritising rights and justice over profit,164 these practice-conditions are created which result in the social rules creating a correlative duty for prioritising rights, and accordingly, should swing legislatures towards prioritising rights (even by a little) over fostering innovation.

Part 4. Reform and suggestions for the future

1. What is AI regulation – available regulatory apparatus?

Thus, now that we have established that the ideal range of regulation should prioritise the protection of rights (even by a slight extent), we can now set out the regulatory tools available to articulate the content of such regulation. Broadly speaking, there are four regulatory apparatus available165

161 Say from the Constitution, statutes, case law inter alia

162 R. Alexy, A Theory of Constitutional Rights, Oxford University Press, Oxford, 2002.

163 The example of the hat-wearing churchgoer by Hart helpfully elucidates this concept.

164 Such as a consumer focus on ESG prioritisng issues like social equity over the higher prices they might have to pay - McKinsey report:

Am JB and others, ‘Consumers Care about Sustainability-and Back It up with Their Wallets’ (McKinsey & Company, 6 February 2023) <https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/consumers-careabout-sustainability-and-back-it-up-with-their-wallets> accessed 01 May 2023

And monies do not necessarily lead to higher life satisfaction, and thus prioritisation of rights over money: ‘Does More Money Really Make Us More Happy?’ (Harvard Business Review, 11 October 2021)

<https://hbr.org/2020/09/does-more-money-really-makes-us-more-happy> accessed 01 May 2023

165 Expanded above in the section “Classification of AI Regulation”. The four are Law, market, social norms, and technological architecture,

which provide synergies when applied in parallel, 166 and can be divided into the two main objectives of AI regulation - bulwark and empowering regulation, each serving different objectives (protecting rights and preventing stifling of innovation respectively) within AI regulation.

2. What content should AI regulation have?

a. Bulwark Regulation: Regulation protecting rights

The specific balance between the different objectives should be left to regulators, but we first begin with bulwark regulation. Self-regulation by AI developers and users could be possible by requiring developers or users to manage risks. Informal standards and guidelines could be issued by public standard-setting bodies for companies to adopt as a baseline – which is the current approach in the majority of worldwide AI-related policies. However, self-regulation cannot and should not be the sole policy.

Countries currently do not trust companies to self-regulate in various contexts, ranging from environmental pollution167 to workplace compensation. , as companies have proven time and again that self-regulation cannot be the only regulation168 for a public good objective to be achieved –such as addressing bias and protecting property rights. There seems no disparate feature of AI technologies that support the notion that self-regulation is preferable for protecting fundamental rights.

But even if one were to argue for self-regulation, and leave the companies bona fide to adopt the standards and protections suggested by governments, this approach may lead to the noncompliance with current regulations. Take an example of the AI hiring tool; even if Country A allows self-regulation and allows company X to prima facie be fully compliant with the legal rules, it is possible that existing laws on discrimination could still be violated. Due to the black box algorithm, most cases of discrimination would simply be overlooked because they cannot be adequately proven.

166 Guihot, M., Matthew, A. F., & Suzor, N. P. (2017). Nudging Robots: Innovative Solutions to Regulate Artificial Intelligence. Vanderbilt Journal of Entertainment & Technology Law, 20, 385.

167 (Environmental regulation and business ‘self-regulation’ - JSTOR) <https://www.jstor.org/stable/4532431> accessed 01 May 2023

168 Gamper-Rabindran S and Finger SR, ‘Does Industry Self-Regulation Reduce Pollution? Responsible Care in the Chemical Industry - Journal of Regulatory Economics’ (SpringerLink, 3 July 2012) <https://link.springer.com/article/10.1007/s11149-012-9197-0> accessed 01 May 2023

Accordingly, a combination of other regulation beyond merely strengthening self-regulation of companies should be introduced, setting out the minimum standards for all AI systems.

First, there must be compliance with existing regulations (e.g. GDPR, non-discrimination laws, product liability, data governance duties, and cybersecurity measures inter alia). Second, there must be transparency to ensure that AI models are well-designed and free from issues like inherent bias in the training data fed as input for AI systems. In the context of developers or deployers, there could be reports on performance metrics and harmful content issues.169 Additionally, information about the models’ greenhouse gas footprint, training data, including for enforcement purposes personal data and copyrighted material utilised by the model, should be disclosed. For professional users, disclosure of AI-generated content in cases such as exams, newspapers, social media inter alia, is essential.

b. Bulwark and Empowering Regulation: Regulation balancing rights and innovation

Mandatory yet limited risk management (rather than self-regulated, since it is enforced) could also be explored. Risk management could be limited in certain contexts like AI generated birthday cards that do not need universal risk management, but it should be mandated for more impactful uses like hiring or healthcare modelling tools, or for potential contravention of fundamental rights.170 High-risk obligations (Article 9 of the proposed AI Act)171 for risk management and mitigation should only be applied if and when deployed in high-risk use cases. An example, as explained by Professor Philip Hacker,172 would be risk management in the context of screws. If a screw is to be used in a space shuttle, regulation and risk management would definitely be required.173 However, if the screw is simply meant for assembling an Ikea table or a DIY shelf, the same level of risk management would neither be expected nor required.

This distinction is important because mandatory risk management and testing for all possible highrisk purposes,174 like that proposed in the AI Act (Article 4(4b)(6), 15 AI Act) may represent an

169 Cf. (Article 11, Annex IV AI Act)

170 such as health, safety, fundamental rights, environment, democracy, and the rule of law inter alia

171 ‘Proposal for a regulation of the european parliament and of the council laying down harmonised rules on artificial intelligence (artificial intelligence act) and amending certain union legislative acts’ (EUR) <https://eurlex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX%3A52021PC0206> accessed 01 May 2023

172 ‘Regulating CHATGPT and Other Large Generative AI Models’ (Regulating ChatGPT and Other Large Generative AI Models | Faculty of Law) <https://www.law.ox.ac.uk/content/event/regulating-chatgpt-and-other-large-generativeai-models> accessed 01 May 2023

173 ‘Threaded fasteners, requirements for securing of flight hardware used on shuttle payloads and experiments (no date) NASA’ (NASA) <https://standards.nasa.gov/standard/msfc/msfc-std-561> accessed 01 May 2023

174 With respect to fundamental rights, health, and safety including aspects like employment, medicine, credit scoring, insurance, administration, law enforcement, justice system inter alia

immense barrier to entry. It is possible that only the world’s largest and most powerful companies175 would have resources to comply with such requirements, due to the large compliance teams required for any AI product development, and not to mention address the potential litigation claims. This would massively distort the already very centralized generative AI market. And as the Roman maxim176 that has stood the test of time articulates, “ultra posse nemo obligatur”, no one is obliged beyond what they are able to do. Thus, a more granular and layered approach to risk management is necessary. Where risk management requirements are deemed necessary, they should be applied throughout the entire life cycle of the AI system177 to ensure issues such as bias do not emerge at later stages.

c. Empowering Regulation: Regulation encouraging innovation

Outside of risk management, civil liability could also be legislated to be apportioned based on calculations like the modified Hand formula,178 which allows for business-centric decisions while still respecting the rights of those who are harmed. Insurance could be mandated for the fledgling industry to ensure that start-ups have the financial capacity for compliance with regulations. The balance between rights protection and innovation may also be carefully sculpted by legislatures through taxes, grants, or the creation of sandboxes with less regulation to foster safe development of AI.179Finally, it is important to incorporate flexibility in regulations, as industries like AI in particular are dynamic, to ensure that regulations stay up to date with industry movements. This approach prevents what is described as the “barn door problem” of attempting to shut a barn door after the horse has already escaped.

3. What form should AI regulation take?

One final problem remains, and that is whether AI regulation should be in the form of blanket AI-specific regulation (like the proposed AI Act) or decentralized sector-specific regulation (like the US’s incumbent approach).

175 With resources to the tune of companies like OpenAI – having just raised USD$13 Billion in funding.

176 Found in Justinian’s Digest.

177 with respect to its performance, transparency, cybersecurity

178 Expanded above in the section “Who should be the ones regulated?, Tortious Liability”

179 Such as the fintech sandbox introduced in Britain: Allen, H. J. (2019). Regulatory Sandboxes. George Washington Law Review, 87, 579.

a. Decentralized sector-specific regulation

The UK House of Lords views sector-specific regulation as more appropriate in the UK180 due to its dynamism. The possibility for flexible and tailored regulation for each industry, taking into account the varying levels of regulation and protection enables a targeted approach addressing only the most exigent issues, preventing overregulation and fostering innovation. However, decentralized regulation may lead to a lack of clarity in the law. First, there may be significant overlaps between different regulators in respective industries, leading to slightly contradictory regulations and compliance requirements for the same AI used for the same purpose. Second, fundamental inconsistency may also lead to a confusing set of regulations for compliance teams to navigate, contributing to the law’s opacity and slowing down AI innovation, which may be counterproductive to the sector-specific regulation’s main advantage.

b. Blanket AI-specific regulation

And if supporting innovation were the primary factor for sector-specific regulation, this does not preclude the creation of baseline blanket AI legislation that incorporates inputs from various legislators and itself take a risk-based, sector-specific approach to the protection against AI systems.

And if confederations like the EU adopt blanket AI-specific regulation, while individual jurisdictions may continue supporting AI innovation through their tailored decentralized sectorspecific regulation, the multi-jurisdictional nature of AI and technology necessitates AI developers to adopt the big picture view of the regulatory landscape. Accordingly, AI developers who want to enter the lucrative markets of the EU, for example, would have to comply with EU legislation in their product offering regardless of the more “pro-innovation” or laissez faire approach of other jurisdictions like the UK. Profit-maximising practicalities matter.

Therefore, a middle ground is preferred. A baseline blanket regulation covering only the most fundamental issues, coupled with sector-specific mandatory or voluntary guidelines, could be the ideal fix. Concerns about overlaps and unclear guidelines would be mitigated if companies need only to refer to the clear baseline blanket legislation and industry-specific guidelines.

180 House of Lords, Select Committee on Artificial Intelligence, Report of Session 2017-2019, AI in the UK: ready, willing, and able? Published 16 April 2018, https://publications.parliament.uk/pa/ld201719/ldselect/ldai/100/100.pdf, accessed 01 May 2023

AI development and adoption are likely here to stay, and as systems become more sophisticated and their applications more diverse, it is crucial not to ignore the potential harms arising from an unregulated industry for the true economic and productivity gains from such technology to be harnessed.

This piece first introduced the economic, moral, and legal impacts of AI development and provided an overview of the present regulatory approaches across pertinent jurisdictions. It then highlighted examples of areas such as AI bias where current regulation is insufficient before further arguing for why there is a pressing need for increased regulation in the sector. The piece later discussed not only who the regulation could focus on, but also where the approximate balance between principles and the content of the regulation could fall. Lastly, the article summarised how regulation could be curated using multiple regulatory modalities and called for both sector-specific and decentralized regulation. The exact approach each jurisdiction adopts depends on the respective sovereign legislatures, which have differing national priorities and social contracts. However, what remains clear is the need for clear and thoughtful regulation. AI regulation is a critical form of regulation, and while legislatures have taken an important first step, it is hoped that more will follow.

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