BILLS OF EXCHANGE (AMENDMENT) BILL

Order for Second Reading read.

The Minister for Finance (Dr Richard Hu Tsu Tau): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

The Bill seeks to amend the Bills of Exchange Act to give legal status to the words "account payee" or "a/c payee" written on the face of a crossed cheque. This proposal arose from a recent Court ruling that an "account payee only" crossing on a cheque does not, in law, prevent transferability of that cheque. The Court also ruled that a "not negotiable" crossing would not preclude such a crossed cheque from being transferred.

As a result, there was a surge in the number of cheques being crossed "non-transferable", as cheque issuers were concerned that their cheques would otherwise not be paid to the named payee.

Under the present law, a "non-transferable" cheque requires that the paying bank to ascertain from the collecting bank that the proceeds of the cheque have been credited to the account of the named payee. To minimise the risk to the paying bank for wrongful payment, the collecting bank is required to manually indicate on each non-transferable cheque that the funds have been credited to the named payee's account before the cheque is presented for clearing with the paying bank. As manual clearing is time-consuming and labour-intensive, the Association of Banks in Singapore decided to impose a handling fee for clearing such cheques. The public, however, misunderstood the rationale and expressed dissatisfaction with the surcharge.

To resolve the issue, amendments are proposed to the Bills of Exchange Act to give legal status to the words "account payee" or "a/c payee" written on the face of a crossed cheque. Such a cheque will be non-transferable and can only be paid into the account of the named payee regardless of any purported endorsement. A collecting bank will be protected from liability for crediting the proceeds of such a cheque to the wrong account, if it can demonstrate that it has acted in good faith and without negligence.

These amendments are contained in clauses 4, 5 and 6 of the Bill. They are similar to amendments in the UK Cheques Act 1992 which were first proposed in a UK White Paper on Banking Services issued in March 1990.

I now move on to the other amendments of the Bill.

Clauses 2 and 3 seek to amend sections 57(b) and 72(d) of the Act to enable the Court to award judgments in foreign currencies in respect of bills of exchange dishonoured abroad. These amendments are of a law reform nature to bring the Bills of Exchange Act, which has not been amended since 1970, up-to-date with developments in the United Kingdom. They are also consistent with our standing as an international financial centre that our courts be allowed to award, where appropriate, judgments in foreign currencies on dishonour of bills.

Clauses 7 and 8 of the Bill seek to make related amendments of a similar nature to the Arbitration (International Investment Disputes) Act and the Reciprocal Enforcement of Foreign Judgments Act to enable various awards and judgments given in a foreign currency, and registrable for enforcement in Singapore, to be registered in the foreign currency instead of Singapore dollars.

Sir, I beg to move.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. - [Dr Richard Hu Tsu Tau].

Bill considered in Committee; reported without amendment; read a Third time and passed.