Public Consultation on Legislation to Mandate Compliance with the Code of Conduct for Leasing of Retails Premises in Singapore

1. Introduction

1.1. The Ministry of Trade and Industry (“MTI”) is seeking feedback on the proposed legislation to mandate compliance with the Code of Conduct for Leasing of Retail Premises in Singapore. The public consultation period is from 18 Jul to 5 Aug 2022.

2. Background

2.1. On 26 Mar 2021, the Singapore Business Federation (SBF) announced the completion of the Code of Conduct for Leasing of Retail Premises in Singapore (“Code”) by the Fair Tenancy Pro Tem Committee. The Code sets out guidelines and negotiating principles to provide guidance to landlords and tenants of qualifying retail premises to enable fair and balanced lease negotiations. The Code is available at www.ftic.org.sg.

2.2. The industry-developed Code was a positive demonstration of the partnership between landlords and tenants to benefit retail businesses in Singapore and strengthen the industry for the long-term. This was a major step forward for the industry and, ultimately, consumers who would also benefit from a vibrant and competitive retail scene.

2.3. MTI welcomed the pledge by landlord and tenant associations to adopt the Code and announced its intention to support the industry-led effort with legislation to make compliance with the Code mandatory for all retail tenancies in Singapore. Ahead of legislation, the Code has been voluntarily adopted by major private sector landlords¹ and all Government landlords since 1 Jun 2021.

3. Key Provisions of Proposed Legislation

3.1. The aim of the proposed legislation is to mandate compliance with the Code, establish a facilitated dispute resolution process, and specify the roles of the Fair Tenancy Industry Committee (“FTIC”).

Compliance with the Code

3.2. The proposed legislation will follow the scope of the Code in applying to “Qualifying Retail Premises” which are (i) held under a lease agreement with a tenure of one year or more; and (ii) permitted to be used by the Urban Redevelopment Authority (URA) and other authorities for specified categories of Food & Beverage, Retail, and Lifestyle use.² It will be mandatory for landlords and tenants of qualifying retail premises to comply with the leasing principles in force at the time the lease agreement is signed by the landlord and tenant.

3.2.1. To allow for market flexibility, the Code allows landlords and tenants to deviate from four of the 11 leasing principles in the Code by mutual agreement. Should landlords and tenants so agree, a “declaration of permitted deviation” must be submitted to the FTIC within 14 days of signing of the lease, failing which the relevant terms in the lease agreement will be deemed void.

3.3. The Code can be amended by the Fair Tenancy Industry Committee (see below) to keep the leasing principles relevant and up to date. For due process, the Minister for Trade and Industry’s approval will be required to amend the Code.

Facilitated Dispute Resolution Process

3.4. The proposed legislation will also provide for a facilitated dispute resolution process comprising mediation and adjudication. The dispute resolution process will be designed to be low-cost and expedient.

3.5. Where there are disputes over whether a term in a lease agreement complies with the leasing principles of the Code, or whether a party has breached obligations pursuant to the leasing principles, a complaint of non-compliance may be submitted within 14 days to the authorised dispute resolution body.³

3.5.1. Parties will first be required to undergo mediation to resolve the complaint. If mediation does not result in an agreed outcome, the complainant can request the authorised dispute resolution body to appoint an adjudicator to decide the dispute.

3.5.2. The adjudicator will be empowered to decide if lease terms comply with leasing principles in the Code, and if not, direct parties to vary lease terms to comply. The adjudicator can also determine compensation where the Code so provides.

3.5.3. Parties can apply to the Courts to register a mediated settlement agreement or an adjudicator’s determination to be enforced in the same manner as an order of court.

3.5.4. The adjudicator will be empowered to decide the dispute even if the respondent refuses to file a response. The adjudicator’s decision can be set aside in court.

Roles of the Fair Tenancy Industry Committee

3.6. The proposed legislation will empower the Minister for Trade and Industry to appoint the Chairperson and members of the FTIC. The FTIC’s role is to review and, with the approval of the Minister, update the Code. The FTIC will also establish the process to submit declarations of permitted deviations.

3.6.1. Ahead of legislation, the Singapore Business Federation had convened the FTIC soon after the Pro Tem Committee issued its report to lay the groundwork for voluntary adoption of the Code. Mr Max Loh (former Managing Partner for Singapore and Brunei, Ernst & Young) has been serving as the first Chairman of the FTIC.

4. Invitation to Provide Feedback

4.1. MTI invites interested parties to provide their views and comments on this consultation paper by 5 Aug 2022. Electronic submission is encouraged. Please use the template at Annex B for your submission and send it to mti_email@mti.gov.sg.⁴

4.2. Please note that all submissions received may be published and attributed to the respective respondents unless they expressly request MTI not to do so. As such, if respondents would like (i) their whole submission or part of it, or (ii) their identity, or both, to be kept confidential, please expressly state so in the submission to MTI. In addition, MTI reserves the right not to publish any submission received where MTI considers it not in the public interest to do so, such as where the submission appears to be libellous or offensive.

4.3. Please note that this paper is released for the purpose of consultation and does not represent final legislation. All comments received during the consultation exercise will be reviewed thoroughly.

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¹Corporate landlords that have pledged adherence to the Code include APM Property Management, CapitaLand, City Developments, Frasers Property, Keppel Land, Mercatus Co-operative, SPH REIT, and UOL Group.
²Specifically, these are premises permitted for Food & Beverage, Shop, Medical/Dental/Aesthetic Clinic, Pet Shop and Pet Boarding, Commercial School, and Sports & Recreation/Place of Entertainment uses.
³MTI intends to appoint the Singapore Mediation Centre (SMC) as the authorised dispute resolution body.
⁴Please note that feedback on the Code itself can be directed to the Fair Tenancy Industry Committee via their website at www.ftic.org.sg.

Annex A – Frequently Asked Questions
Annex B – Template for Response to Consultation Paper