Commercial Law Updates

Risk Allocation

This commercial law update looks at the principles behind efficient risk allocation in a contract and how, a lack of understanding of these principles, might lead to unintended consequences.

Every contract is essentially a sharing or allocation of risk, responsibility, and reward between the parties. It is not sufficient for commercial lawyers to rely on template contracts or checklists because to understand and assist with a commercial transaction requires an understanding of the risks involved. A thorough understanding of risk will assist with the provision of informed legal advice and a contract that may avoid, reduce or fairly allocate risk.

This legal update considers the key questions that arise in terms of the allocation of risk: how should the risks be shared? Is there an efficient way of sharing risk? What considerations should be taken into account when deciding which party should take on which risk in a contract?

After many years and a large volume of legal proceedings over personal injury and wrongful death claims arising from road accidents, Fiji has decided not just to update its legislation but to completely overhaul its system, by mandating a ‘no fault’ system of compensation in place of motor vehicle third party insurance.

The Legislation that came into force on 1 January 2018 is – The Accident Compensation Act 2017 (the “Act”) and related regulations

In this commercial law update we analyse how the new legal framework of 'no fault' compensation is intended to work and highlight some grey areas.

Fiji has various industry specific tax concessions, available under the 2017 to 2018 Budget, designed to encourage economic growth and much needed investment in certain sectors.

In this update we look at the tax incentives available in the tourism sector, particularly in hotel investment, and set out a brief outline of what tax benefits investors in this sector could enjoy.

As at 2018, there are about seventeen (17) regional and international organisations with offices in Fiji. Some of these not only oversee Fiji programs but also programs in the region and in other Pacific Island Countries.

Apart from these regional and international organisations, there are a multitude of other non-profit entities in Fiji working in areas including protecting the natural environment, children's rights and women's rights. Some of these organisations are not registered in Fiji and operate by way of a memorandum of understanding with the Government of Fiji while others are registered as charitable trusts, as branch offices or as companies limited by guarantee.

There are benefits for non-profit entities by establishing a legal entity under Fiji law and the aim of this bulletin is to consider the two most suitable ways to establish (incorporate) a non-profit entity under Fiji law. These are as a:

• Charitable trust; or
• Company limited by guarantee.

As of 16 January 2018, the Fiji Immigration Department will no longer accept the following applications:

• Short term work permit application – a type of permit given to an applicant for a term up to six months where the employer can show that the applicant’s expertise and knowledge is required urgently in Fiji; and
• Extension of 14-day business visa – an extension of up to three (3) months granted by operation of Section 9 (2) (c) of the Immigration Act 2003.

We briefly update on this change in Fiji Immigration policy.

Fiji has 3 types of land title ownership that are regulated in accordance with the Land Transfer Act. This provides a system of title by registration that accords with the Torrens Title System and bestows an indefeasible title on anyone who registers their title in accordance with the Land Transfer Act, in the absence of actual fraud.

Fiji’s system of written titles and different types of land ownership is not only unique in terms of protecting indigenous land ownership but it also provides Fiji with an advantage over most other Pacific Island States. This is because, in accordance with the Torrens Title System, Fiji, has a system of recorded titles that the State guarantees. This system provides certainty of title which reduces disputes over land ownership and benefits commerce and investment.

In this legal update we briefly set out the 3 types of Fiji land ownership, and update on a recent development in relation to the requirements for the lawful assignment of iTaukei leases.

A company is not a natural person and it is created by operation of law. In Fiji the Companies Act 2015 regulates Fiji companies and this includes how a company is created (incorporation) and how it ceases to be (dissolution).

A company may be dissolved either voluntarily or because it cannot meet the demands of its creditors and pay its debts. However, the law attempts to provide an orderly process when this happens, known as winding up.

When a company is wound up a liquidator is appointed who should act with professional efficiency to collect all the assets and settle all claims prior to the formal dissolution of the company. In this update, we highlight the recent changes to the Companies Act that aim to increase the regulation of liquidators by providing stricter requirements on who may be appointed as a liquidator.

Fiji's employment law, like that of other common law jurisdictions, is a mix of statutory rights and common law principles. Fiji's Employment Relations Act, provides every employee with clear minimum standards in relation to conditions like leave, hours of work and minimum contract terms that an employer may exceed but cannot fall below.

However, when it comes to dismissing an employee for misconduct an employer must not only consider the Act but also the employee's contract of employment and what the common law sets out an employer must do to accord the employee with a fair process and decision before the dismissal. In situations of employee misconduct this can be difficult to do as emotions may be running high but the employer must still apply the law and often the best course of conduct is not to rush to a final decision.

In this update we consider a recent judgment from the Employment Relations Tribunal that sets out the tests that the employer must meet when terminating an employee for cause. A good understanding of these legal tests and what the Employment Relations Tribunal wants in terms of a fair disciplinary process will assist the employer to reach the right decision, as well as minimise legal risk and the chances of an employee being unfairly dismissed.

Fiji's Land Transfer Act, Cap 131, confers an indefeasible title to land on any proprietor who registers the title in accordance with the Land Transfer Act. There is only one exception that can defeat a registered title and this arises where it can be shown that the registered proprietor obtained the title by actual fraud.

In this legal bulletin we explain the law in relation to indefeasibility of title which includes consideration of leading case authorities from New Zealand, Australia and Fiji. We also discuss a recent Fiji Court of Appeal case authority that confirms that a registered proprietor of land has indefeasibility of title whether he or she is a purchaser of the title or obtains the title as a volunteer under a will.

In Fiji law the requirement for building permits for new buildings within cities and towns and any other areas “gazetted" by the relevant Minister derives from regulations made pursuant to section 39 of the Public Health Act 1935. A building permit is issued by the local authority and is required prior to the lawful construction of any building. Depending on a building proposed, its location and other factors like environmental impacts, the local authority may not be able to issue the building permit until approvals are issued from other government ministries or departments.

On 14 July 2017, the Fiji Parliament enacted the Regulation of Building Permits Act 2017 (“RBPA”) which aims to streamline the process for obtaining a building permit.

In this bulletin we consider the implications of the RBPA both for developers but also in terms of the potential impacts on good decision making for Fiji’s natural resources and those who may be adversely affected by development decisions.