I sat down with Khor Reports for a Q&A on my commentary below. Please click here for the Khor Reports article.
Last June saw Singapore battling with its most severe episode of haze yet. During that period Singapore’s Pollutant Standards Index hit the all time record high of 401. This event ignited a diplomatic row between Indonesia and Singapore, with Singapore’s Ministry of the Environment and Water Resources , Dr. Vivian Balakrishnan almost immediately accusing Indonesia of not caring about the welfare of its neighbours. It was also around this time that Dr. Balakrishnan first revealed plans to table a Transboundary Pollution Bill that would provide for criminal and civil liability for any Singaporean or non-Singaporean entity causing or contributing to transboundary haze pollution in Singapore.
The Draft Bill
A draft version of the Bill has now been released, and the Ministry of the Environment and Water Resources is seeking the views of the public on this draft. The consultation period will last until 19 March 2014, before the bill is reviewed and tabled at Parliament. Dr Balakrishnan hopes to have the Bill passed within the first half of this year.
The Bill is unique for its application of extra-territoriality; it covers the operations of all Singapore and non-Singapore entities whose activities outside of Singapore contribute to haze pollution in the city-state. The Bill would be the first of its kind for Singapore, as Singapore usually only punishes action overseas only for severe crimes, such as corrupt acts or illegal sex with minors. It will also be the first of its kind in the region and the world, as there is currently no law in the world that allows a country to prosecute commercial entities in other countries for such offences. Currently, the only way to catch entities based overseas is if somebody in the entity’s management position comes to Singapore.
The Bill makes it a criminal offence when an entity engages in conduct, or authorizes any conduct which causes or contributes to haze in Singapore. A penalty of up to SGD300,000 can be imposed, and this may be increased up to SGD450,000 if the entity has deliberately ignored requests by authorities to take appropriate action to prevent, reduce, or control the pollution. An individual company officer can also be held personally responsible.
Affected parties may also bring civil suits against errant entities. The civil damages recoverable under the Bill will be determined by the courts of Singapore based on personal injury, physical damage, or economic loss. Civil action can also be taken against errant entities by industries (such as aviation, tourism and construction) if they can prove that they have suffered serious economic consequences.
Presumptions allow the court to assume that a fact is correct until prove otherwise. Since proving what happens abroad is difficult, evidential presumptions relating to causation (linking open burning elsewhere and wind direction with the presence of haze in Singapore) and culpability (based on ownership and occupation of land) have been inserted, and help to give teeth to this Bill. Among others, it importantly allows for reliance on satellite imagery, meteorological information, and maps as evidence.
The presumptions put the burden of proof on entities to provide a rebuttal through their own land maps. Hence, a company can defend itself by proving the fires were caused by natural disaster or by parties not under its direction. Showing that the concession maps used by the authorities are wrong can also rebut the presumption.
With companies having to prove that they are not liable for the haze, they should feel more pressure to be transparent and responsible. Hence, this new Bill should incentivize companies to be more forthcoming about their landholding and practices, especially with regards to sharing their internal land maps and concession maps with authorities. This has been a long-standing problem between the firms and authorities, and this shift in the burden of proof could potentially resolve this issue once and for all.
Academicians have also pointed out that the Bill would surpass the diplomatic need of going through government channels when faced with wrongdoing. Professor Simon Tay of the Singapore Institute of International Affairs said that since the proposed law allows individual lawsuits against companies, it will be able to bypass any ‘friction’ that might occur of the matter has to go through governments. As governments have usually resorted to diplomatic consultations with home countries when foreign companies were suspected of burning, most of these cases were resolved diplomatically and not legally. Environmental Law professor Laode M. Syarif from Hasannudin University added that the new law will also be able to address criticisms that Singapore is lenient towards suspected companies that are headquartered in Singapore but operate in Indonesia. It could also stop Indonesians from using the excuse that Singapore-linked companies get away with environmental destruction in Indonesia.
Prof. Tay also foresees potential positive developments among financial lending practices if this Bill is put into place. With the new law, banks would become more careful when approving loans to companies since these financial institutions would not want to expose themselves to more risks of civil or criminal liability. There are already some banks who evaluate loans based on sustainability and reputational risk, but these remain the minority.
However, identifying errant companies may be problematic. One Singaporean Member of Parliament pointed out that the National Environment Agency would need to work closely with their counterparts in Indonesia to build a case against these companies, and questioned if the authorities would be able to work well together effectively. Indonesia has thus far shown a weak track record; clearing land through burning is prohibited in Indonesia but authorities have so far only successfully prosecuted a handful of companies for starting such fires. Enforcement of land clearing laws is weak in Indonesia due to lack of skilled ground staff to assess remote areas. Furthermore, corruption is rife in Indonesia, and companies have been able to continue to burning large tracts of forests every year, clearing it for planting trees for palm oil or paper production. Efforts on the Singaporean side must be matched by equally strong measures from the Indonesian government, for errant companies to be brought forward to face the music.
Once these companies are brought to court, building a case against these companies would be an equally challenging proposition. One lawyer explained that with criminal liability, it would be difficult to prove causation or contribution of conduct to haze pollution in Singapore. The prosecution would have to prove beyond reasonable doubt that haze pollution at least partially came from that fire. That would entail considering how thick the smoke was and whether the smoke from that fire actually travelled to Singapore.
With civil cases, a claimant would have to show on a balance of probability that his personal injury, disease, mental or physical incapacity of death is a consequence of the defendant’s conduct. This may prove difficult as firstly, there may be a time lag between the haze and the personal injury. Secondly, haze may be only one among several other contributing factors to the injury. Also, the defendant’s conduct may have only resulted in one or a few fires relative to the total number of hotspots at the time. How would the court attribute the proportion of the defendant’s responsibility?
Of course, culprits may exploit any loophole to demand if the haze is indeed caused by them. For example, associate professor Burton Ong of the national University of Singapore suggests that entities might claim that they had no control over sub-contractors who start the fires. This is a common reason given by companies when confronted by authorities.
Legal experts recommend that a thorough exploration of the nature of the liability arising from the acts of independent contractors used by firms to clear land. They suggest that ‘strict liability’ clause should be applied, wherein the harm caused (the impact on public health and economic liabilities)justifies a non-delegable duty of care. Hence, in such cases companies can no longer claim that they are not responsible for the actions of their contractors.
Other commentators also suggest increasing the severity of the punishments suggested, as the current proposed fines are too low to cause any real damage to the multi-billion dollar companies that operate in Indonesia. Suggestions include a demotion in the status of companies, compulsory reforestation projects, compensations to the victims of haze, seizing any assets the entities may have in Singapore, and even prohibitions from doing business in Singapore. Nanyang Business School professor Ivan Png further suggested that penalties be proportional to the land area a defendant owns.
To address the issue of the difficulty of compiling evidence, professor Ang Peng Hwa at the Nanyang Technological University proposed that NGOs like Greenpeace should be encouraged to work closely with authorities, including providing the authorities with what evidence they have compiled from their own investigations. Professor Png also also suggested that the law include an incentive for whistleblowers to provide evidence.
It is hoped that this Bill will send a strong signal of deterrence to potentially errant companies, especially considering the damage that could be inflicted upon the company of it was publicly exposed that it conducts itself in such an irresponsible behaviour. In relation to the bill, a spokesperson for First-Resources, a Singapore-listed company, said it will support any move to hold those directly responsible for contributing to the haze. Golden Agri Resources reaffirmed their view that businesses must act responsibly, however Asia Pacific Resources International (APRIL) declined to comment on the bill until it has had time to review it. In general, it can be seen that major companies are paying attention to the new developments in relation to the proposed Bill, and can be expected to take the necessary steps should the Bill come into force.
As a whole, the Bill shows that Singapore is willing to take action where it can. Public views so far has been generally supportive, and environmentalists and observers have lauded the proposed legislation as a good step forward in tacking the haze menace. If passed, the Bill will definitely be an interesting test case to explore the effective reach of extra-territoriality in transboundary pollution issues. Furthermore, if passed, the Bill would indirectly put pressure on Indonesia to step up its own efforts to resolve the haze problem.
Newspaper articles, official government websites and commentaries by various stakeholder organizations and think tanks.