A legal analysis of the cross border trade in telemedicine the singapore perspective

Under the GATS, nations must take positive steps to open up their health care sectors to the cross border trade of telemedicine.. Health Facts Singapore 2003 12 Singapore Ministry of He

A LEGAL ANALYSIS OF THE CROSS BORDER TRADE

IN TELEMEDICINE: THE SINGAPORE PERSPECTIVE

Brian K Sugg

(A.B., Harvard; LL.B./M.B.A., Dalhousie)

A THESIS SUBMITTED FOR THE DEGREE OF MASTER OF LAWS

FACULTY OF LAW NATIONAL UNIVERSITY OF SINGAPORE

2003

© Brian Keith Sugg, 2003

ACKNOWLEDGEMENT

First, I wish to express my gratitude to my supervisor, Professor Terry Kaan for his assistance in this thesis His affable nature and straightforward advice made the experience a pleasant one His suggestion to make my thesis useful helped me regain

my focus on many late nights I also would like to thank the staff in the law library at the National University of Singapore Their warmth and friendliness was surpassed only by their helpfulness In the law school administrative offices, a special thanks to Chin Yee and Normah I would also like to express my gratitude to the entire administration at the Faculty of Law for their patience and understanding behind the scenes during the difficulties that I have experienced in my life over the past few years But most of all, I am eternally grateful to my wife, Ruby Despite all the personal sacrifice, she has always been a source of constant support and encouragement as I struggled through the chapters of this thesis The remaining chapters of our life together have yet to be written but I look forward to devoting my constant attention to her from now on

Although I am indebted to many for their assistance, I alone bear the responsibility for any shortcoming of this thesis

ABBREVIATIONS

AELA Application of English Law Act (Singapore)

ASEAN Association of South East Asian Nations

FSMB Federation of State Medical Boards (United States)

MASEAN Medical Associations of South East Asian Nations

TRIPS Trans-Related Aspects of Intellectual Property Rights

TABLE OF CONTENTS

2 Most Favoured Nation (MFN) Treatment and Transparency: General Obligations 23

c) The Specific Commitment Approach of the GATS 31

a) Balancing Domestic Regulation with Free Trade 43

b) Recognition of International Standards and Procedures 45

i) The California Approach to Licensure 69

i) Mutual Recognition in the European Union 74

F International Telemedicine, Licensure, and the Regulation of the

CHAPTER III: CONFLICT OF LAWS I: MEDICAL NEGLIGENCE, JURISDICTION,

a) Establishing Singapore’s Jurisdiction – Can Singapore Courts Decide the Case? 107

i) The Heads of Jurisdiction – Order 11 Rule 1 107

c Rule 1(f), Rule 1(p) and the Common Law: A Partial or Substantial

ii) A Proper Case for Service Outside Singapore – Does the Case Have Merit? 123 b) Should Singapore Courts Decide the Case? The Most Appropriate Forum 125

CHAPTER IV: CONFLICT OF LAWS II: MEDICAL NEGLIGENCE, CHOICE OF LAW,

b) Restatement of Torts (Second) Approach – Closest Connection 143

c) English Choice of Law – The Statute Takes Over 161

b) Canada’s Radical Move to the Traditional Model: The Tolofson Decision 163

a) The Foundation of the Doctor-Patient Relationship 178

d) Drawing on the Lessons from Products Liability 184

i) The Canadian Approach to Choice of Law in International Products Liability 184 ii) Choice of Law under the International Convention on Products Liability 186

SUMMARY

The government of Singapore has recently indicated its intention to build on Singapore’s reputation for medical excellence and transform the city-state into an Asian health care hub This paper proposes that as an integral part of its hub strategy Singapore combine its strengths in health care and telecommunications to create a telemedicine strategy The technology used in modern telemedicine continues to improve over time making telemedicine an increasingly practical and cost-effective form of delivering health care The main impediment to the proliferation of telemedicine is no longer technological Legal obstacles are now the greatest challenge to telemedicine’s global commercial development

This thesis focuses on the three major legal obstructions to the international trade

in telemedicine, all of which must be resolved in advance in order to gain the confidence

of telemedicine providers as well as their insurers and investors The first impediment lies with the international services agreement itself Chapter 1 presents the mechanism of the GATS, the global instrument designed to liberalise the international trade in services Under the GATS, nations must take positive steps to open up their health care sectors to the cross border trade of telemedicine Before allowing foreign professionals to practice telemedicine within its borders, a country will want to ensure that the health and welfare

of its citizens is adequately protected In the field of health care, a country protects its people by regulating the individuals who are entitled to provide health care and by ensuring there is an available legal avenue for injured patients to receive compensation in the event that something goes wrong during treatment The handling of these issues is equally important to telephysicians who face the prospect of civil liability and criminal punishment if they do not comply with a country’s licensure requirements or find

themselves in the midst of a medical negligence lawsuit The cross border trade in telemedicine has the added dimension of double locality in which the physician and patient are located in different countries Naturally, the separation raises important questions concerning which laws will apply to the issues of licensure and tort liability

Clarity and certainty in the law is of paramount importance to all parties involved

It enables countries to make calculated decisions as to whether they will open up their health care sector to foreign telemedicine providers It also allows telemedicine providers to weigh the risks of practising across international borders Chapter 2 looks at the issues surrounding national licensure and considers several possible approaches to the cross border regulation of telemedicine Chapters 3 and 4 consider the problems relating

to the choice of forum and the choice of appropriate law for international tort cases, respectively

This paper addresses the issues telemedicine raises with respect to the GATS, national licensure and the conflict of laws Bearing in mind Singapore’s plan to develop itself as a medical hub, this paper assesses the clarity and certainty of Singapore’s law in furtherance of this goal and the legal changes needed for telemedicine to form a key part

of its strategy

INTRODUCTION

The advent of telemedicine technologies has created immense new opportunities for the delivery of quality health care over far-reaching distances that will alter the very structure of health care Telemedicine has been part of the health care profession since doctors began using radios and the telephone to consult with patients and other practitioners The proliferation of information and telecommunication technologies in the 1990s transformed the nature of telemedicine in the same way that these technologies transformed other industries – allowing greater global reach, improving speed and quality

of service, and lowering costs Recent applications of telemedicine include monitoring a Japanese stroke patient’s blood pressure and electrocardiograms by a doctor in another part of the country,1 a Canadian surgeon conducting a complex anti-reflux stomach operation using robotic arms on a patient located 400 kilometres away,2 and American physicians diagnosing illnesses and providing healthcare advice to inhabitants of remote Alaskan villages without the need to be physically present.3

Essentially, telemedicine is the application of information and telecommunication technologies to the health care field The innovation of telemedicine does not improve health care in the same way as the development of a new drug or medical procedure but, rather, it adds an important new dimension to the way in which health care is delivered

By using the new technologies, health care providers are able to consult, diagnose, and educate over vast distances Current uses of telemedicine include diagnosing to and from remote locations, gaining access to medical information and expertise on a global scale,

Joseph Brean, “Robot operates for doctor 400 km away: Hamilton hospital touts procedure as a world first, in

The National Post, 5 March 2003, p A3;

Bruce Gillespie, “Cost-cutting operation,” in The National Post, 12 May 2003, p BE 1

3

Tina Kelley, “Internet Showing Its Value In Remote Alaskan Villages,” in The New York Times, 5 August 1999, p G9

providing expert assistance in emergency situations, and delivering home health care A World Health Organization (WHO) report provides a comprehensive definition for telemedicine as “the practice of medical care using audio, visual and data communications; this includes medical care delivery, consultation, diagnosis, treatment, education and the transfer of medical data.”4

Telemedicine has become an important issue in health care policy because it holds the potential of solving two of the key problems confronting modern health care, namely, cost and access.5 The enormous costs associated with health care have become an increasing burden on economies over the past few decades The development of expensive life saving technologies coupled with populations that are living longer has caused national health care expenditures to soar The fourteen OECD nations∗ that reported health care statistics in 1960 showed an expansion of their total expenditures on health as a percentage of GDP from an average of less than 4.0% in 1960 to more than

unprecedented growth in their economies In 1960, the total GDP for the OECD nations was slightly over US$ 1 trillion.7 Forty years later, the GDP for these nations has grown

to over US$ 27 trillion.8 As a result, health care expenditures are now receiving a bigger slice of a larger pie Expenditure in the United States, for instance, jumped from 5.1% of GDP in 1960 to 13% today During the same time, the GDP of the United States swelled

4

Salah H Mandil, “Telehealth: What is it? Will it propel cross-border trade in health services?” in

International Trade in Health Services: A Development Perspective (Geneva: UNCTAD-WHO Joint Publication, 1998), at 86

from US$ 527.4 billion in 1960 to over US$ 10.2 trillion in 2001.9 In particular, the last decade has shown enormous growth in health care expenditures in many countries The per capita expenditure in the United States jumped from US$ 2,739 in 1990 to US$ 4,631

in 2000.10 Even in non-OECD countries, the increase in health care expenditures has been dramatic In Singapore, expenditures on health care amounted to over S$ 1.5 billion

in 200211 compared with S$ 635 million in 1980 and S$ 85 million in 1960.12 During this time period, Singapore’s total health expenditure as a percentage of GDP remained consistent even as Singapore experienced extraordinary economic growth rates.13 Health care expenditures have also increased substantially in developing nations Mexico’s expenditures nearly doubled in a decade from US$ 260 million in 1990 to US$ 490 million in 2000.14 As the world economies spend increasing amounts on health care each year, delivery of health care by a more efficient and economical means has become

a priority for many nations.15

Greater access to health care is the other compelling benefit of telemedicine With fewer financial resources available, less developed nations tend to be underserved

by health care professionals and institutions At a basic level, the number of health care professionals in developed countries is much higher than in developing countries For instance, on a per capita basis, Canada has eight (8) times as many doctors than Cambodia or Myanmar and more than twelve (12) times the number of nurses than

9

United States Department of Commerce Statistical Abstract of the United States: 2002 at 417

10 OECD Health Data, supra footnote 6

11

Singapore Ministry of Health Health Facts Singapore 2003

12 Singapore Ministry of Health Statistics cited in Toh Mun Heng and Linda Low, Health Care Economics,

Policies and Issues in Singapore (Singapore: Times Academic Press for the Centre for Advanced Studies,

National University of Singapore, 1991) at 25

UNCTAD Secretariat, “International Trade in Health Services: Difficulties and Opportunities for Developing

Countries,” in International Trade in Health Services: A Development Perspective (Geneva: UNCTAD-WHO

Joint Publication, 1998) at 4

Cambodia and nearly thirty-five (35) times the number of nurses than Myanmar.16 Even within the ASEAN region, the numbers of health care professionals servicing the medical needs of the population show a wide variance between the wealthier and underprivileged members (See Table 1) Infant and child mortality rates and maternal mortality rates also highlight the health care divide between rich and poor nations In the world’s wealthier developed nations only six (6) children per 1,000 die under the age of five (5) years compared to nearly twenty-seven (27) times that number in the world’s less developed countries, where 161 children per 1,000 population died under the age of five (5) years.17 Table 1 sets out the gap in health care between ASEAN’s wealthier nations

of Singapore, Brunei, and Malaysia and its poorer members by illustrating the stark differences in infant mortality and maternal mortality rates – two key measures of health care development

Telemedicine has emerged as a cost effective means available for developing nations to import expertise and training from developed countries without building and maintaining expensive health care facilities Its potential was noted in 1997 by Dr Hiroshi Nakajima, then Director-General of the World Health Organization when he stated that “developing an adequate and affordable telecommunication infrastructure can help to close the gap between the haves and the have-nots in health care.”18 The benefit

of telemedicine for wealthier nations is that it expands the trade potential for health care services and reduces health care costs at home Generally, expensive and state-of-the-art health care equipment and facilities together with the best trained medical personnel are concentrated in the urban centres of developed nations or at specialised institutes like Minnesota’s Mayo Clinic Telemedicine utilises existing health care infrastructure more

efficiently by expanding the market reach of these health care hubs through technology links as well as by reducing the need to expend human and capital resources in more rural, less efficient regions One report by McKinsey Consultants estimates “that the cost savings to the American health care system could amount to $270 billion per year with an annual outlay of $50 billion for the telecommunication and information systems necessary to support telemedicine.”19 In international trade, greater liberalisation of telemedicine services would allow the advanced health care economies to take advantage

of their comparative advantage as well as move towards realising greater economies of scale in the health care industry.20

Telemedicine, therefore, holds advantages for both developed and developing nations Developed nations stand to increase revenues by selling the expertise of their skilled health care personnel and the advanced diagnostic and treatment capabilities from their existing medical facilities to nations in need of their knowledge and technology The advantages of telemedicine for developing and least developed nations are obvious Rather than investing billions of dollars in the expensive medical infrastructure of hospitals and equipment, these nations can obtain top quality medical expertise and access to advanced medical technologies on an as-needed basis by linking into the telemedicine technology corridor Such linkages would certainly bring savings in early detection and diagnoses of illness Health care dollars that move out of the country when citizens go abroad could be retained at home.21 Telemedicine consultations and diagnoses could also benefit local health care professionals by offering a lower cost alternative to skills upgrading currently accomplished by sending people abroad or

19

Cited in The Economist, “Bugs and Viruses,” 26 February 1998 at 66

20

Matthew S Yeo, “Distance Health Services Under the General Agreement on Trade in Services,” (2002)

35:1 J Health Law 83 (Digital version) at 4

21

UNCTAD Secretariat, supra footnote 15 at 21

bringing in consultants Telemedicine could have the added benefit of stemming the

‘brain drain’ of qualified medical professionals flowing out of the developing world.22 Lending its weight to the telemedicine debate, the World Bank is supportive of telemedicine initiatives because it

enables tertiary health care units to access expensive equipment and expert advice from a centralised location, thereby improving diagnoses and reducing unnecessary referrals to already overcrowded hospitals Patients also benefit by avoiding the cost and hardship of traveling far longer distances.23

Critics of telemedicine have raised the issue of misallocation of health care resources in developing countries “The risk,” according to one commentator from the developing world, “is that telemedicine will channel revenues away from rural and primary health care and towards specialized centres, thus concentrating technologies which cater to the affluent few in developing countries.”24 Another drawback of telemedicine is the expense of the enabling telecommunications and energy infrastructure25 as well as the reliability of the delivery systems Despite the misgivings with respect to telemedicine, the benefits of this new system of delivering health care globally make telemedicine a compelling technology for the future In the early stages, there are bound to be some issues related to the cost and reliability of the delivery systems, both of which are likely to be overcome by the same technology that spawned telemedicine This thesis does not, however, delve into the technological debate over the plausibility of telemedicine It moves ahead from the point that telemedicine is a proven and beneficial technology whose growth is delayed more by legal barriers than technological constraints The future progression of telemedicine depends on its ability

to overcome the formidable legal barriers at both the international and domestic levels

In its bid to move away from its traditional manufacturing base towards a knowledge based economy (KBE), the Singapore government has identified health care along with education and tourism as key sectors in reshaping Singapore’s economy In September 2002, the Healthcare Services Working Group (HSWG) presented its recommendations to Parliament’s Services Industry Subcommittee and the Economic Review Committee The final report tabled by the committees to Parliament recognised that other countries within ASEAN are also developing their health care sectors and pose significant competition for the city-state.26

Lower cost health care and sound health care facilities in both Thailand and Malaysia have caused the foreign patient flow into these countries to surge since the regional economic crisis of 1997 In a report prepared for the HSWG by Asia Market Intelligence, foreign patient flow in Thailand is estimated to have more than tripled between 1998 and 2001 to nearly a quarter of a million patients and is projected to swell

to nearly 500,000 foreign patients in 2004.27 Thailand’s Bumrungrad Hospital on its own attracted more foreign patients in 2001 than all of Singapore.28 The reasons for the success of the Thai medical establishment are its lower costing of services, marketing of medical holidays, and focussing on specialised procedures such as cosmetic surgery The number of patients travelling to Malaysia for medical treatment is estimated to show steady growth through to 2004 while foreign patient flow to Singapore has stagnated since the economic crisis and is projected to remain flat until 2004.29 In light of recent developments in the SARS crisis in East Asia and Singapore in particular, foreign patient

flows will likely show sluggish growth even beyond 2004 Singapore faces the challenge

of establishing its place in the medical marketplace between the lower cost alternatives found in other ASEAN nations and the higher quality of service associated with medical treatment in Western countries.30 Setting its sights high, the vision of the HSWG is to attract one million foreign patients to Singapore worth an estimated $2.6 billion in revenues by expanding its share of the Asian health care market from 1% in 2000 to 3%

by 2012.31

The HSWG report makes recommendations to support its dual strategy of building a strong brand for medical care and to attract large numbers of foreign patients The recommendations of the parliamentary committees focus on the measures required to bring patients into Singapore in order to make the city-state the region’s foremost medical hub The report makes passing reference to creating “one-stop centres” in important regional markets “to facilitate the inflow of foreign patients and market Singapore’s healthcare services”, investing in regional facilities, as well as “expanding the regional referral network via training of doctors from the region.”32 No mention is made in the report of employing telemedicine technology to further these aims These recommendations of the report are buried within the national marketing initiative designed to regain “mindshare” for Singapore as the region’s medical hub.33 It is submitted that the development of a Singapore presence in major centres throughout the region should be regarded as more than a mere marketing strategy Such a presence is fundamental to the creation of a strong and viable spoke system to funnel business generated from health care services into and out of the medical hub

Other service sectors such as the transportation industry have revolutionised the business model by implementing a hub-and-spoke model to gain economies of scale and the accompanying efficiencies Similarly, in its bid to retain its status as South East Asia’s premier medical hub, Singapore should focus on the spokes that not only siphon patients into Singapore but also provide a conduit for medical expertise based in Singapore to be delivered throughout the region As it stands, the Singapore strategy seems mired in traditional thinking by seeking to achieve greater economies of scale by attracting more patients to Singapore This approach ignores the economic reality that many neighbouring countries are improving their domestic health care systems compounded by the strong competition for wealthier patients from Western nations and other countries within ASEAN who are designing their own centres of medical expertise

Developing a regional telemedicine strategy would situate Singapore at the centre

of the region’s medical axis and consolidate the city-state’s position as a medical hub

By placing telemedicine as the cornerstone of a hub-and-spoke strategy, partnerships could be established with hospitals and clinics in the region and assistance provided to defray the cost of implementing the expensive telemedicine infrastructure A strong Singapore presence from the outset would position its medical personnel to provide expertise and education to local health care providers in less developed countries throughout the region By doing so, Singapore could achieve economies of scale for its health services sector by utilising technology to consult, diagnose, and treat patients in foreign countries, as well as educate foreign health care professionals Combined with these outflow services Singapore could develop a special relationship with its network of foreign hospitals and doctors to become the primary referral and treatment centre for more critical cases In sum, a telemedicine strategy would allow Singapore to reap the

benefits of scale economies for its health care sector without relying on the traditional growth model predicated on filling up more Singapore hospital beds with more patients

The development of telemedicine has essentially three inhibitors; technology, investment, and the law Over the past decade, technological advances have transformed many visions of telemedicine into reality Investment is sure to follow a proven technology that has economic benefit spurring even greater technological advances The law, however, remains the major question mark, posing the greatest challenge to the successful deployment of telemedicine on a global scale

Health care is a service Providing a service in the international arena now raises legal issues of international trade In his definitive work on international trade under the GATT framework, John H Jackson identifies three levels of law involved in the international trade transaction; the private law such as contract law and conflict of laws, the rules and regulations imposed by national governments, and the agreements that exist between nations.34 All of these elements have a direct bearing on the global trade in telemedicine and each is a key issue to be resolved prior to the promulgation of telemedicine at the international level

This research paper explores the three Furies of the law upon which the immediate fate of international telemedicine depends – successful implementation of the international services agreement, imposition of accessible, fair and transparent national licensure measures, and a uniform approach to the international choice of law that is acceptable to all parties involved These three obstacles blocking the road to

34

John H Jackson, World Trade and the Law of GATT (Indianapolis: The Bobbs-Merrill Company Inc., 1969) at 7-9

telemedicine’s development share the same basic need They all crave certainty in the law

A nation will be reluctant to open up its health care sector to international trade without safeguards in place to protect the health and welfare of its citizens and the interests of its domestic medical establishment Foreign health care professionals will be equally reluctant to offer their services in another country that may put them at risk of civil and even criminal liability as well as the peril of practising without insurance coverage.35 So, how is certainty achieved in international telemedicine to allay such fears? The answer lies in formulating a clear and definite approach to licensing of foreign telemedicine providers and creating a set of predictable rules to resolve international tort disputes involving telemedicine

Without an international telemedicine agreement, it falls to the laws of individual nations to bring order to the cross border trade in telemedicine The decentralisation of the regulatory function of an international business activity such as telemedicine to individual states creates two basic problems An individual nation usually applies its own laws to a dispute that reflects its own legal traditions and self-interest.36 The other problem is one of orientation The study of international telemedicine has been probed and prodded from the various angles of international trade law, national licensing law, and the international conflict of laws Until now, the legal scholarship on telemedicine has dealt with specific pieces of the regulatory puzzle in isolation from one another The shortcoming of a piecemeal analysis is that it provides only a snapshot of the regulatory

issues vis-à-vis the particular branch of law under consideration Such an approach ignores the larger picture of providing a legal framework for the entire service of international telemedicine Promotion of the global trade in telemedicine depends on the effective regulation of all aspects of the trade in international telemedicine as a single integrated activity The perils of focussing too narrowly on individual regulatory issues

in analysing global trade was colourfully described by Westbrook in his essay on regulating transnational business

The literature describing each field recalls the old saw about the blind men and the elephant, because each body of doctrine is analysed with only a minimal acknowledgement of the larger problem of which it is a part The lack of articulation of the dominant problem has contributed to muddy analyses in each

of these areas Failure to recognize that they all have the same problem in common has made them inconsistent with one another and deprived each of the insights to be found in the others Appreciation that regulation of transnational

business lies at the heart of each of these component fields will improve analysis within each field and lead to cross-fertilization among them The elephant of transnational economic activity has grown ever larger while the

legal components of its regulation have remained largely separate The tail scholars describe it in tail-talk and the trunk scholars apply trunk-talk but the entire elephant has not often been addressed 37

Borrowing the terminology from Westbrook, the dominant issue under consideration here

is the regulation of the transnational business activity of telemedicine The international trade in services, the domestic laws overseeing the licensure of medical professionals, and private international law, are all important elements of the dominant issue but should

be considered in relation to each other as well as to the overall issue of international telemedicine Analysis that, for example, proposes a choice of law model for disputes arising out of international telemedicine without reference to the GATS is flawed from the outset because it ignores an important and related part of the overall activity In the end, the goal of this thesis is to look at all of the major legal issues that affect the development of the cross border trade in telemedicine

37

Ibid at 75 - Emphasis added

The legal dilemma of international telemedicine cuts two ways For importers of telemedicine services, nations will want to open their markets to much needed medical expertise at the price of allowing foreign medical personnel to ‘operate’ within their borders For exporters of telemedicine services, expanding outside its borders offers the prospect of lucrative markets for high value services but also potentially exposes its medical personnel to foreign laws Both importing and exporting nations will likely want

to ensure their own laws protect their own nationals However, solutions that either raise the protectionist bar too high or, alternatively, diminish the ability of consumer nations to protect their citizens will only stunt the growth of international telemedicine Therefore, the spread of telemedicine on an international basis depends on a fair and just legal accord between nations but even more importantly, an arrangement that is both transparent and definite In many ways, Singapore is the ideal nation on which to base a legal study of international telemedicine Being a small city-state, its telemedicine infrastructure would be designed mainly for external use Its health care and telecommunications infrastructure is well advanced especially in relation to many of its neighbouring countries It is a leading member of the ASEAN regional trading bloc and, from a development standpoint, Singapore is positioned between western developed societies and developing nations so it is potentially both an importer and exporter of telemedical services

In light of the legal hurdles facing the development of telemedicine, the primary goal of this thesis is to consider the legal approaches that would foster agreement between nations to enable the development of international telemedicine Since this thesis examines the issue from the Singapore perspective, I will consider the relevant Singapore laws and whether they correspond with the specified goal of promoting

Singapore as an international telemedicine hub Successful implementation of telemedicine on a global scale depends on compliance with the governing international agreement on trade, adapting the country’s medical licensure requirements, and a consensus between participating nations on an approach to the international conflict of laws In sum, this paper looks at the main issues affecting the trade in telemedicine from both the international and the Singapore perspectives The first chapter begins with a look at telemedicine within the framework of the international agreement recently negotiated on trade in services – the General Agreement on Trade in Services (GATS) Chapter 1 also considers the viability of the GATS as an effective framework agreement for promoting trade in telemedicine Chapter 2 addresses regulatory issues encountered

at the national level This section discusses the requirements of national licensure in the field of health care and the various models of compliance suitable for telemedicine Chapters 3 and 4 address the central issues of international tort litigation: selection of the appropriate jurisdiction and choice of law Applying the principles of private international law, these chapters present Singapore’s jurisdictional requirements for bringing an international tort action It also canvasses a broad range of choice of law approaches from around the world as a backdrop for an assessment of the current approach of the Singapore courts

As a final introductory note, my analysis limits the scope of professional coverage

of this thesis Telemedicine services will inevitably come to involve all health care professionals including physicians, nurses, medical technicians, physiotherapists, and even dentists and chiropractors For clarity of presentation, however, I have limited my discussion to physicians although in most cases the conclusions can be extrapolated to other health care professionals

CHAPTER I TELEMEDICINE AND INTERNATIONAL FREE TRADE

A The Liberalisation of the Trade in Services

The movement to recognise trade in services is a recent development For centuries, global trade regulation was confined to the trade in goods and economists largely ignored the economic contribution of services Services, however, have recently received the attention of the international trading community and have moved

to the forefront of international trade discussions during the past decade

In the trading environment, services are very different from goods Services account for a substantial and growing proportion of the economic activity and trade of countries In his submission to the United States Senate Finance Committee in 1999, the Under Secretary for International Trade called services

the critical component in providing economic stability and vitality in the

next century Services trade has become the engine of growth Services

make up the bulk of jobs in modern economies and services inputs have

become the critical factor to competitive success in manufacturing and in

overall economic activity.38

Global trade in services leaped from US$ 85 billion in the early 1970s to US$ 350 billion in 1980.39 In 2000, world trade in commercial services amounted to US$ 1.435 trillion.40 In the late 1980s, trade in services was estimated to account for approximately twenty-five (25) per cent of all international commerce.41

Fred Lazar, “Services and the GATT: US Motives and a Blueprint for Negotiations,” (1990) 24:1 J World Trade

135 at 135 According to the World Trade Organization, global services trade in 2000 accounted for nearly 20 per cent of reported international trade (WTO, International Trade Statistics at 20)

Despite the importance of services to national economies, especially those of developed nations, the trade potential of services appears yet to be realised One commentator remarks that

[w]hile services represent the dominant component of the GNP and trade of developed countries, they are less dominant in overall international trade Only about 20-25% of international trade flows are attributable to services.42

This figure likely does not fully reflect the true volume of services trade, however, due to the underreporting of services trade, and the difficulty in quantifying trade flows and compiling statistics due to the intangible nature of services.43 The dearth of trade statistics relating to services is due to the difficulty in capturing trade flows since a service transaction does not involve a good physically crossing a customs border Instead, the service flow usually entails the producer or consumer of the service crossing a border or the service delivered electronically rather than as a physically identifiable good.44 Finally, an important distinction between services and goods is the widespread domestic regulation that applies to many services because of their perceived importance to a state’s national interest

[G]overnments directly regulate certain specific services sectors because of their perceived political sensitivity Justifications for regulation include consumer protection, standards maintenance, national security, prestige, cultural preservation, competition, immigration control, financial prudence, environmental protection, employment, development, and other political goals.45

In the GATS negotiations, wide segments of the service economy such as telecommunications, air and marine transportation, and financial services were excluded from the Agreement because of the perceived national interests involved

42

Tycho H E Stahl, “Liberalizing International Trade in Services: The Case for Sidestepping the GATT,” (1994) 19:2 Yale J Int’l L 406 at 409

43

See Section C(3)(a)(iii) infra – The Data Dilemma in Services Trade

Benz, supra footnote 39 at 99-101

Other service areas such as legal services and health care are also subject to heavy governmental regulation in many countries

B The Origin of the GATS

Central to an understanding of the creation of the General Agreement on Trade

in Services (GATS) in international trade is a brief review of the origins of the General Agreement on Tariffs and Trade (GATT).46 The GATT was established with the construction of a new world order in the wake of World War II Prior to the war, many countries sought to protect their faltering economies by erecting trade barriers during the great depression of the 1930s The barriers did little to resolve the situation and, in fact, exacerbated the world’s economic problems at the time The poor economic circumstances of this era led to the rise of new governments and political conflict between nations that culminated in the devastation of the Second World War Following the war, trade liberalisation was regarded as one of the cornerstones of the new political and economic world order that would usher in greater global prosperity and limit political conflict between nations

In March, 1948, the Havana Charter established the International Trade Organization (ITO) as the international agency that would oversee international trade issues and the GATT.47 The initial set of trade rules came into force in January 1948 as the Protocol of Provisional Application of the General Agreement on Tariffs and Trade (GATT) Despite the temporary nature of the GATT rules, the GATT outlived the

ITO The ITO never came into force because it did not receive sufficient ratification by member nations including the United States

Over the next five decades, the GATT served as the main regulator of international trade despite its lack of institutional roots and its impermanent origins The focus of GATT was on liberalising the trade in goods with a view to eliminating tariffs and other non-tariff barriers The GATT accomplished more openness in international trade through a variety of rules agreed upon by member states regarding the treatment of foreign produced goods (most-favoured-nation treatment and national treatment), the elimination of subsidies and quotas, and the imposition of rules relating

to the dumping of goods As the world economy became more complex and diverse, the GATT responded to these changes with a series of eight rounds of multilateral trade negotiations (MTNs) By the mid-1980s, however, the changing nature and sheer growth of international trade rendered the GATT a less effective mechanism in facilitating the liberalisation and expansion of world trade Recognising the limitations

of GATT, Ministers from the Member States of GATT met in Punta del Este, Uruguay

in 1986 to launch the Uruguay Round of MTNs.48 Included in the GATT Ministerial Declaration was a commitment to conduct negotiations on two fronts; the trade in goods and the trade in services.49 The outcome of this final series of MTNs was the establishment of the World Trade Organization (WTO) as a replacement to GATT with its own administrative structure and permanent status The creation of the WTO also brought with it an expansion of the scope of global trade regulation with the inclusion

of the General Agreement on Trade in Services (GATS) and the Agreement on

General Agreement on Tariffs and Trade (GATT) Punta del Este Ministerial Declaration, (1986) 25 I.L.M

1623 – herein referred to as “Punte del Este Declaration”

Related Aspects of Intellectual Property Rights (TRIPS) The GATT continues to function as an important trade agreement under the WTO mandate alongside the GATS and the TRIPS Agreements There are currently 146 members of the WTO Another thirty-one (31) governments hold observer status and are in various stages of the accession stream.50 All members of the WTO are automatically members of GATT, GATS, and TRIPS.51

The GATS is largely considered an instrument of compromise created in an environment of mistrust and the virtual non-existence of statistical data The mistrust flowed from the developing nations who have watched an economic gulf widen between them and the economically powerful developed nations over the past forty (40) years Many developing nations feared that an international trade agreement on services would provide little economic benefit for their fledgling service sectors but would open up these sensitive areas to the onslaught of the technological and financial might of the developed nations and their multinational corporations.52

The misgivings of the developing world were based largely on their perceived vulnerability and the detrimental effect that would accompany greater liberalisation of the trade in services In the early stages of the Uruguay Round negotiations, the view of many in the developing world was that

[g]iven that developing countries are net importers of services, and that they play only a marginal role as the exporters of services, which is confined largely to exports of Services with a low technology and high labour content, developing countries would obviously be anxious to ensure that they are not marginalized in any future international compact on trade in Services.53

The feelings of mistrust and inferiority of developing countries sprung from the assumption “that their services industries would not be competitive globally or locally and assumed that huge American firms were prepared to swoop down on the vulnerable LDC markets.”54 In order to ease the fears of the developing nations and bring them to the negotiating table, the Punta del Este Declaration on the Negotiations

on Trade in Services provided that

[n]egotiations in this area shall aim to establish a multilateral framework

of principles and rules for trade in services as a means of promoting

economic growth of all trading partners and the development of

developing countries.55

Early in the negotiations, a clique of developed countries attempted to proceed with “parallel negotiations on goods and services [in order to] expand the scope for trading-off concessions.”56 In the end, however, the developing nations were successful in extracting a commitment that “services trade would proceed outside the legal framework of the GATT and separated from trade in goods, in order to eliminate the potential for cross-linkages between GATT issues and services.”57 In order to bring the developing world into the negotiations for a multilateral agreement

on trade, this “explicit legal separation was a must.”58

The final text of the GATS recognises the distinctive role of developing nations within the Agreement and takes into account their special situation Foreshadowing the contents of the GATS, the Members recognise “the right of members to regulate, and to introduce new regulations, on the supply of services within their territories in

order to meet national policy objectives and the particular need of developing countries to exercise this right.”59

C An Overview of the GATS

More than a quarter of a century before the GATS came into effect, John H Jackson warned of the dangers of the “incomprehensible maze of machinery” known as GATT Jackson believed that an understanding of the intricate mechanics of GATT was essential so that “[w]hen a new machine is built, the builders will not forget or misunderstand the parts of GATT that are useful and therefore valuable.”60 Although regulating the trade in services is a relatively new concept, the GATS negotiators drew heavily on the concepts and lessons learned from GATT over the decades The GATS

is, however, a very different apparatus reflecting its uniqueness in the scope of trade coverage (services rather than goods), the shape of global politics during its development, and its ability to bind member governments

The GATS is merely the first step in the slow process of global trade liberalisation as it extends to the trade in services Over time, the success of GATS in reducing barriers to service trade on a multilateral level will determine whether this new product is a smooth running engine of trade or merely a poor functioning contraption destined for the junkyard of international agreements This section examines the main elements of the GATS and assesses its prospects of success as a liberalising tool for global services trade Health care services and telemedicine within the GATS context are given special attention

59

General Agreement on Trade in Services (15 April 1994), Marrakesh Agreement Establishing the World Trade

Organization (1994) 1869 U.N.T.S 183, 33 I.L.M 1167 (1994) - herein referred to as “GATS,” Preamble

60

Jackson, supra footnote 34 at 3

1 Cross Border Delivery: The Mode of Supply of Telemedicine

Article 1 of the GATS sets out the scope and definition of terms and phrases used in the GATS Avoiding a precise meaning for what constitutes a service, the expansive and circular definition of a service provided in GATS is really no definition

at all Article 1 of the GATS sets out that a service “includes any service in any service sector” with the exception of non-commercial and non-competitive services supplied by governments.61 Rather than attempting to define the essence of a service, the GATS categorises trade in services according to the way that it is delivered Article 1(2) of the GATS sets out the four modes of supply; cross border supply, consumption while abroad, commercial presence, and the presence of natural persons.62 Article XXVIII of the GATS reinforces the expansive meaning of a supply of a service stating that a supply of a service “includes the production, distribution, marketing, sale, and delivery

The first mode of supply set out in Article 2(1)(a) of the GATS defines a trade

in service as “the supply of a service from the territory of one Member state into the

Aly K Abu-Akeel, “Definition of Trade in Services Under the GATS: Legal Implications,” (1999)

32:2 Geo Wash J Int’l L & Econ 189 at 190-91

territory of any other Member.”65 The movement of neither the supplier nor the consumer is required under this mode It is only the service that moves Cross border trade in services was the least contentious mode of supply in the GATS during the Uruguay Round negotiations Although the final Agreement included the four main modes of supply, developing countries initially opposed the definition of trade in services extending to modes other than cross border supply.66 The international trade

in telemedicine involves a service using modern methods of telecommunication in which the service supplier is situated in a different state than the consumer of the service It, therefore, fits squarely within the meaning of a cross border supply of a service The cross-border supply of telemedicine will likely receive less opposition from developing countries because it is not a direct challenge to local health care professionals in the way of commercial presence or the presence of natural persons.67

2 Most-Favoured-Nation (MFN) Treatment and Transparency:

General Obligations

a) The Most-Favoured-Nation clause

The MFN clause contained in Article II is one of the general obligations of the GATS All WTO Members agree to abide by its provisions and extend its coverage to

“any measure covered by” the GATS Article II of the GATS states that

each Member shall accord immediately and unconditionally to services and service suppliers of any other Member treatment no less favourable than that

it accords to like services and service suppliers of any other country.68

Therefore, MFN treatment dictates that a WTO member country must treat all services and service suppliers from other WTO member countries equally The MFN

obligation extends to any measure affecting trade in services in all service sectors regardless of whether specific commitments have been registered

The inclusion of the MFN provision in the GATS is an important cornerstone for the liberalisation of international services trade since most countries have become or are soon to become members of the WTO One observer has pointed out, however, that

a country that does not allow any foreign suppliers into its domestic markets would still comply with the MFN provision by treating all foreign service suppliers the same while, at the same time, undermining the principle of liberalisation.69 Related to this problem is the issue of free riders in relation to the MFN provision A nation that is a free rider is essentially a member country that takes all the benefits of MFN offered by liberalised economies within the multilateral agreement without reciprocating by opening up their own economies.70 The potential detriment caused by free riders in the system is that the open economies have already extended MFN treatment and so have

no remaining leverage to pry open the markets of these closed members.71 More importantly, the free rider syndrome discourages nations from opening their markets since they are not accorded reciprocal access, and creates a rush to the bottom in which nations only deregulate their economies “to the lowest common denominator set by those least willing to eliminate trade restrictions.”72

The rationale for inclusion of an MFN provision is to entice the smaller, more disadvantaged nations to sign on to a multilateral agreement.73 Less developed nations would unlikely succeed in gaining concessions within a bilateral context because of

their diminished bargaining power The MFN provision in a multilateral agreement resolves this problem by obligating members who open their markets to one member to open their markets to all other members on the same terms and conditions As one commentator writes “[n]ot surprisingly the MFN clause may well have brought about the dramatic expansion in GATT membership over the past forty years.”74

The important MFN status under the GATS is, therefore, accorded to all sectors contained under the agreement and is a critical component of the Agreement According to one commentator,

the adoption of an unconditional MFN rule may be expected to provide export opportunities in many sectors, even if specific commitments on market access and national treatment have not been entered in national schedules, given that many Members already maintain relatively open services markets.75

A contentious issue in the GATS is the ambiguous wording contained in the MFN clause which extends MFN treatment to “like services and service suppliers.”76 Such uncertain language is likely to undermine the effectiveness of the clause with respect to complex areas such as health care in which the determination of “like services” may become a difficult and controversial exercise in interpretation especially when discussing the scope of the meaning of ‘practice of medicine.’77

Barriers to trade are often imbedded within a country’s domestic regulations In his report to Congress, David Aaron, Under Secretary of the Department of Commerce singled out Asia’s “lack of transparency in the requirements for acquiring permits and

licenses” and its arbitrary application of regulations and laws as creating real barriers to services trade.78 Transparency is also an important provision of the GATS that promotes trade liberalisation Transparency is important in the context of a services agreement because it allows protectionist national policies to be identified and subsequently challenged It is doubly important in the services sectors because the trade barriers tend to be non-tariff in nature and erected under the guise of domestic laws, rules, or regulations Transparency is an important element in telemedicine development The most imposing barriers to trade involve licensure legislation and conflict of laws, the ambiguity of which can be overcome by clearly articulated practice requirements, jurisdictional rules and choice of law approaches

The transparency provision set out in Article III of the GATS requires Members

to publish all relevant existing laws, regulations, or administrative guidelines that affect trade in services.79 The transparency provision mandates that “all relevant measures of general application which pertain to or affect” the GATS are to be “publish[ed] promptly and at the latest by the time of their entry into force.”80 The transparency provision of the GATS should assist the trade in telemedicine by requiring nations to openly publish the requirements of licensure

3 Market Access and National Treatment: Discretionary Obligations

Part III of the GATS deals with Specific Commitments of Member countries relating to Market Access (Article XVI) and National Treatment (Article XVII) These provisions were subject to extensive and heated negotiations during the Uruguay Round

with the nations diametrically opposed on the binding nature of these obligations.81 The United States led the charge to make the market access and national treatment commitments as compulsory obligations In the end, however, this move towards greater market liberalisation was unsuccessful The final text of the GATS registered the position of most least developed and developing nations that were apprehensive about opening up their domestic service suppliers to competition from the more advanced and sophisticated service economies from abroad.82 The market access and national treatment provisions, therefore, were drafted to reflect the status quo and would move towards greater openness over time on a sector-by-sector basis

In the end, the member nations assented to an agreement that “took the progressive approach to its logical conclusion and decided that national treatment and market access would be negotiable specific commitments rather than general obligations.”83 This positive commitment approach only provides market access and national treatment to sectors that a country lists in its schedule and subject to the terms, limitations, and conditions set out in its schedule Market access and national treatment provide a two-step approach towards market liberalisation in which

market access is the policy instrument by which governments exercise their discretionary powers as to how foreign services, or service suppliers, shall

be granted access to their domestic markets The principle of national treatment comes into play once access has been granted.84

The following sections discuss the interplay of market access, national treatment, and the specific commitment approach, all of which are critical elements of the GATS

a) Market Access

The market access provision of Article XVI states that

each member shall accord services and service suppliers of any other Member treatment no less favourable than that provided for under the terms, limitations, and conditions agreed and specified in its Schedule.85

b) National Treatment

The wording of the national treatment clause and the MFN clause in the GATS are similar but have slight yet important differences Article XVII dealing with national treatment provides that for the sectors scheduled “each member shall accord to services and service suppliers of any other Member treatment no less favourable than that it accords to its own like services and service suppliers.”88

The principle of national treatment takes the MFN principle one step further The MFN principle requires the member country to place all foreign firms on an equal footing with each other The principle of national treatment obligates a member country to treat foreign and domestic producers the same The national treatment

provision outlined in Article III of the GATT dictates that members accord the same treatment to foreign goods as its own goods.89 The GATS does not, however, contain the same obligation for services A member is only obligated to treat foreign services

or service providers on an equal footing to its own domestic services and service providers for the sectors that the member state has filed commitments Accordingly, the national treatment provision in GATS has been described as having a greater potential reach that has been narrowed in practice According to Mattoo,

the domain of [the national treatment] obligation in the GATS includes not

only measures affecting services products, but also measures affecting service suppliers It is more limited in application because, while national treatment under the GATT applies across the board, under the GATS it applies only to scheduled sectors, and may be subject to limitations.90

The principle of national treatment was contentious from the outset Developing nations were opposed to a principle that would treat foreign service providers on an equal footing with their domestic service providers in industries of national significance such as health care On the issue of national treatment, a senior Indian trade representative articulated the view of developing nations by drawing a comparison to the national treatment provision under the GATT

Under the provisions of the GATT, national treatment is intended to ensure that an imported product is not discriminated against in the domestic market vis-à-vis the domestic product More importantly, national agreement [sic treatment] in GATT terms is accorded to products, not to the producers, whereas in the case of Services an attempt is being made to apply the principle of national treatment to foreign enterprises or the suppliers of

Services [S]uch equivalent treatment for foreign enterprises amounts

to a guarantee of equal opportunity to foreign nationals and foreign enterprises Such national treatment can only be a function of a degree

of economic integration and homogeneity of economic structure and

policies – which cannot be applicable to developed and developing countries alike.91

In the end, though, national treatment was extended to service suppliers as well as services

One shortcoming in the drafting of the national treatment provision is the fragmentation of the national treatment provision.92 Under the spirit of national treatment, a service provider in a scheduled sector should be treated the same as a provider of the service in the scheduling country By allowing countries to schedule commitments according to mode of supply, however, a country can discriminate against

‘like’ services simply because they are delivered differently.93 The practice of medicine by foreign providers would be granted an equal footing to local practitioners for scheduled modes of supply but discrimination would still be permitted under other modes of supply.94

The mutually agreed technique of scheduling commitments would thus seem

to suggest that Members may legitimately retain the right to discriminate between the same service supplied by different modes.95

Arguably, this provision for discrimination under national treatment works to the advantage of telemedicine Few countries would open up their health care sectors

to trade if a foreign physician was entitled to equal treatment in all respects to a local physician By allowing differentiation between modes of supply, a country can permit telemedicine providers to offer their particular brand of service while, at the same time distinguishing them from local physicians

Another problem arises as to what is considered a comparable service under the interpretation of ‘like services and service suppliers.” In terms of telemedicine

services, there are substantial differences between telemedicine and the regular practice

of medicine It could be argued, for example, that the service provided by a foreign trained physician is unlike a service performed by a locally trained physician.96 There

is also a large enough difference between the conventional face-to-face practice of medicine and the electronic delivery of telemedicine that could allow a country to consider telemedicine an unlike medical service and thereby not be entitled to national treatment Again, this differentiation could work to the benefit of telemedicine providers

The usage of the word “like” in Article XVII (1) when referring to the discrimination obligation towards foreign services and service suppliers and “like” domestic services and service suppliers raises serious difficulties One observer writes that

non-[s]triking the appropriate balance between, on the one hand, allowing regulators the freedom to make distinctions between services products and,

on the other, preserving liberal trading conditions, will be even more difficult in services than in goods.97

What this means for telemedicine is that when registering a commitment a country should set out whether telemedicine is included in the practice of medicine and, if it is accorded a different treatment, the ways in which the two are different

c) The Specific Commitment Approach of the GATS

Member countries are only required to grant national treatment to foreign services or service providers on the same footing as local services or service providers

in the service sectors that they have deemed as open to trade A country gives notice of

its intention to liberalise specific service sectors by taking the positive step of registering a commitment as part of its national schedule If a country has not deposited a commitment for a certain service sector then there is no obligation to extend market access or national treatment The GATS approach of registering Member commitments for market access and national treatment has caused confusion

by its complexity and raised difficulties from the standpoint of data collection In addition, the adoption of a positive commitment approach has reduced the overall effectiveness of the GATS as a tool for services trade liberalisation and is considered

“one of the architectural weaknesses of the GATS”98 It is, nonetheless, the approach that was able to achieve an international consensus and will govern the services trading regime for the foreseeable future

i) The Classification Structure

During the Uruguay Round, the Group of Negotiations on Services (GNS) tried to achieve uniformity of national schedules by providing guidelines to nations on the scheduling of commitments The GNS based its sectoral classification list for the GATS on the United Nations Central Product Classification (CPC) system Although the GATS system adopts many of the classifications used by the CPC, it makes significant modifications to the classification arrangement of services including the sectors relating to telemedicine The CPC classifies goods and services into a hierarchical structure of 10 sections divided into 70 divisions, 305 groups, 1167 classes, and 2096 subclasses.99 The Services Sectoral Classification List issued by the GNS pared the list down to 12 sectors, 55 subsectors, and 117 sub-subsectors.100

98

Sauve, supra footnote 66 at 132

99

United Nations Department of Economics and Social Affairs, Statistics Division, Central Product

Classification Version 1.0, ST/ESA/STAT/Ser.M/77/Ver.1.0,.as amended by Version 1.1

100

GNS Services Sectoral Classification List, Doc MTN.GNS/W/120, 10 July 1991

The GNS also rearranged the structure of the classification list into its own classification format By implementing its own classification model, the GNS rendered harmonisation with the CPC format more difficult and introduced a degree of confusion into the classification structure For instance, despite the many sectors involved in classifying telemedicine services, the CPC approach makes the classification process very straightforward With the exception of the telecommunications component, all the services of telemedicine are captured under a single section, namely, Section 9 – Community, social and personal services Within section 9, telemedicine services fall under the two neighbouring divisions of education services (92) and health and social services (93) The further subdivision of education services and health and social services into groups, classes and subclasses makes the CPC classification model a compartmentalised and easy-to-follow classification model

The Services Sectoral Classification List developed by the GNS for the GATS attempts to incorporate the same service subdivisions as found in the CPC but does so

in a bewildering approach that separates related services into different sectors Such an approach leads to confusion, eliminates the benefits gained from harmonisation with the established CPC system such as data collection and analysis, and renders negotiations more difficult because they must occur simultaneously in many sectors rather than within a single sector Tables 2 and 3 set out the classification approaches

of the UN CPC and the GATS Services Sector Classification List respectively as they pertain to telemedicine sectors

ii) National Schedules

Article XX of the GATS prescribes the content requirements that are to be included in specific commitments registered by Member states in their national