Can Singaporeans sue for haze compensation?

A man kayaks past the skyline of Singapore shrouded by haze October 5, 2015. The 3-hour haze Pollutant Standards Index (PSI) reached a high of 186 at 4pm on Monday, according to the National Environment Agency. Slash-and-burn agriculture in neighboring Indonesia has blanketed Singapore in a choking haze for weeks. REUTERS/Edgar Su (REUTERS)

Whenever the wind blows in heavy smog from raging Indonesian forest fires, Singapore suffers a heavy economic and social toll.

Just over the weekend, the Singapore Swimming Association was forced to cancel the first day of the Swimming World Cup because the haze reached "very unhealthy" levels. SSA vice president Jose Raymond has estimated the cancellation cost them almost S$200,000 in revenue.

This prompted SSA to seek legal advice and "consider joining other parties and individuals in any class-action suit against any Singapore-listed company which is linked to the burning of forests in Indonesia".

But realistically, do Singapore organisations or individuals affected by the haze have any legal recourse to claim compensation?

Possible legal recourse
Under Singapore's Transboundary Haze Pollution Act (THPA), those found guilty of contributing to the fires can be fined up to $100,000 a day, capped at $2 million, for causing unhealthy haze.

Raymond said the SSA can only take civil action after successful prosecution by the Singapore government based on the THPA.

Eugene Tan, associate professor of law at the Singapore Management University School of Law, said section 6 of the law "provides for a civil law recourse for situations such as where an individual or a company is forced to cancel an event due to the haze conditions and where they sustain economic loss, including a loss of profits”.

However, Tan added that this is easier said than done. "THPA covers errant companies, regardless of whether or not they are based or incorporated in Singapore. But if a company is not based or incorporated or has no assets in Singapore, the enforcement of a penalty would hinge upon Indonesia’s consent and assistance in enforcing it there. Unless there is a bilateral agreement to that effect, a foreign country is not obliged to enforce judgement handed down by a Singapore court,” he explained.

Lawyers that Yahoo Singapore spoke to said that legal costs are likely to outweigh the amount of compensation that can be claimed from companies. Legal costs could run into the tens of thousands and even to a million dollars, depending on the complexity of the case, a few of the lawyers estimated.

In addition, companies whose subsidiaries may be involved in burning Indonesian forests may say there are other culprits such as third parties or farmers in Indonesia legally allowed to burn forests, and such companies may say they are only contributorily negligent, putting further distance between them directly causing the haze.

Alternatives to legal action
Given the challenges in obtaining compensation through legal avenues, Tan offers a suggestion for companies to show that they do not endorse Indonesia’ practices: “[Companies] can ensure that they procure their goods and services from companies which are not directly or indirectly engaged in conduct or [participating] in the management of a company that is causing or contributing to the haze pollution.

One example of how this has been carried out is NTUC FairPrice’s decision to remove Asia Pulp & Paper Group (APP)’s paper products from all its stores on Wednesday (7 Oct).

APP was ordered by the National Environment Agency under the THPA to provide information on its Singapore and Indonesian subsidiaries because it was named as one of the companies possibly behind the forest fires.

Tan said another alternative is to evaluate whether banks have ethical lending practices: “[A company] may also consider whether the banks that it uses have a proper process of evaluating loan applications and the other banking and financial services to ensure that they are not doing business with an entity that is directly or indirectly causing or contributing to the haze pollution."

The Association of Banks in Singapore on Thursday issued guidelines for the inclusion, among others, of the issues of deforestation and forest degradation in the criteria for approving commercial loans.