Asia is entering a new era of infrastructure and energy transformation. In 2025, the Asia-Pacific infrastructure market is estimated at USD 1.61 trillion, projected to reach USD 2.22 trillion by 2030 – a robust 6.64% compound annual growth rate. This growth is underpinned by policy and regulatory reforms aimed at improving project delivery, sustainability, and dispute resolution.
This blog is the first in our new series: “Shaping Asia’s Infrastructure”, which explores legal developments shaping infrastructure across Asia, and sits alongside our “Inside Infrastructure” series covering infrastructure trends globally. In this post, we focus on developments in Singapore and Hong Kong; in the next, we’ll cover Japan, South Korea, Indonesia, and Vietnam.
Collaborative contracting in Singapore: NEC4 and the Y(SG) Clauses
In April 2024, the Building and Construction Authority of Singapore (BCA) introduced the NEC4 contract for optional use in construction and engineering projects.
To ensure compliance with local regulations and practice, the BCA also introduced further optional contract clauses, the “Y(SG) Clauses”. These include:
- Clauses incorporating the principles of the Building and Construction Industry Security of Payment Act (SOP Act), which aim to improve cash flow in the construction sector by providing a statutory mechanism for progress payments and a fast-track adjudication process for payment disputes.
- Anti-corruption and bribery clauses, aligning with the Prevention of Corruption Act and the Penal Code in Singapore. These clauses define what constitutes a corrupt act and outline the consequences of engaging in such activities, reflecting Singapore's commitment to maintaining high ethical standards in the sector.
The BCA’s reliance on the NEC4 contract and Y(SG) Clauses marks a shift for Singapore’s construction industry: traditionally, BCA construction contracts (like many others) have had an adversarial posture. The NEC4 contract's collaborative principles are designed (in theory) to improve project outcomes, enhance cost control, and streamline risk management processes. As a result, the industry may see more efficient project delivery and a reduction in conflicts, ultimately benefiting all stakeholders involved.
Yet, simply adopting more collaborative standard forms is unlikely to be enough, on its own, to foster trust between parties and minimise the risk of disputes. Contractors, employers and other project participants will need to ensure the collaborative partnering principles reflected in NEC4 (as amended) are given effect: which will involve each party being properly resourced with experienced staff, taking more proactive steps (such as facilitating regular workshops between the parties) to resolve issues before they turn into disputes, and structuring the parties’ roles in the project through appropriate commercial incentivisation to ensure goals are aligned.
Damages and defect rectification: if it is broke, but you don’t fix it? A recent decision of the Singapore High Court
In the ever-evolving construction industry, defects (regardless of materiality) are an inevitable challenge that can significantly impact project budgets and timelines.
In Terrenus Energy SL2 Pte Ltd v Attika Interior + MEP Pte Ltd [2025] SGHC(A) 4, (accessible here), a dispute arose out of defects in the construction of a solar power generation facility, for which Terrenus engaged Attika as the main contractor. The Singapore High Court addressed the long-standing question: can a party recover the cost of rectifying construction defects even if it does not intend to carry out the repairs?
On appeal, the High Court held that in principle, a party can claim the cost of rectification works even if it does not intend to perform them, so long as these costs are reasonable and proportionate. The Court’s ruling aligns Singapore with other common law jurisdictions, including Australia. In Terrenus, the Court referred specifically to the High Court of Australia’s decision of Bellgrove v Eldridge [1954] HCA 36, which contains the well-established principle that the ordinary measure of damage for defects is the cost of the work required to achieve conformity with the building contract. In Bellgrove, the question of whether the work will in fact be undertaken was held to be “quite immaterial”.
This decision provides clarity to employers in Singapore, affirming that contractual conformity, reasonableness and proportionality of the rectification costs, not actual repair, is the benchmark for damages in a defects case. It also emphasises the importance of documenting defects and their impact, even where remedial works are deferred or deemed unnecessary.
Hong Kong clarifies subcontractor rights
Hong Kong’s construction disputes landscape continues to evolve. The Hong Kong International Arbitration Centre’s (HKIAC) case load statistics show that HKIAC recorded 352 new arbitration cases in 2024, marking a 25% increase from 2023 with the total amount in dispute HK$106 billion. 10% of cases were in the construction sector, demonstrating that HKIAC is increasingly a preferred institution for construction arbitration. Over 65% of HKIAC arbitrations arose from contracts signed in 2020 or later, indicating HKIAC's growing role in recent years. There has also been an uptick in construction related disputes being heard by the Hong Kong courts.
Two recent Hong Kong decisions highlight challenges subcontractors face in recovering costs. In Sze Fung Engineering Ltd v Trevi Construction Co Ltd [2025] HKCA 278, the Court of Appeal clarified that a bald statement that payment was to be “back-to-back” with the main contract was inherently ambiguous, and absent clear and express language, it could not be interpreted as a “pay-when-paid” clause. In any event, a pay-when-paid clause would affect timing, not entitlement to payment. On the facts, the Court of Appeal considered that an interpretation of the clause as a “pay-when-paid” provision would lead to commercially unreasonable outcomes.
In Hsin Chong Construction (Asia) Ltd v Wong Po Lee Ltd [2025] HKCFI 1020, the Court of First Instance ruled that direct payments from an employer to a subcontractor were void post-liquidation. These payments were made to bypass a financially troubled main contractor, who was unable to meet its subcontractor payment obligations. The employer intended for these direct payments to commensurately reduce the amount owed to the main contractor. The ruling applied section 182 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance, which prohibits the disposition of a company’s property after the commencement of winding-up proceedings without court approval. The direct payment had to be reversed (which would not have been the case had the contractor not entered liquidation).
These cases offer important guidance on subcontractor cost recovery, payment mechanisms, and the legal risks associated with insolvency. They highlight the importance of precise drafting of payment terms, procedural diligence, due diligence on contractual counterparties and legal foresight in managing subcontractor relationships.
Conclusion
Singapore and Hong Kong are taking meaningful steps to modernise their infrastructure sectors through legal reform. From collaborative contracting to clearer rules on damages and payment mechanisms, these developments reflect a broader regional trend toward transparency, efficiency, and resilience.
