Malaysia

Capital: Kuala Lumpur
Largest city: Kuala Lumpur
Official Language: Bahasa Malaysia
Government: Federal representative democratic constitutional monarchy
Area: 330,803 km2
Population: 32.7 million
Currency: Malaysian Ringgit (RM/MYR)
GDP total: RM3.712 trillion (USD900 billion)
GDP per capita: RM11,1388.50 (USD27,000)
Time zone: UTC+8
Calling code: +60
Internet TLD: .my

[Source: Wikipedia/ dosm.gov.my]

Q&A on Commercial Litigation

What is the court structure applicable to commercial disputes in Malaysia?
Depending on the amount claimed, commercial disputes can be filed at the Magistrate’s Court (for claims below RM100,000), Sessions Court (for claims of RM100,000 to RM1,000,000) and the High Court (for claims of RM1,000,000 and above).
Who decides questions of law and fact in Malaysian courts?
In the Malaysian legal system, the judge is the sole arbiter on questions of law and fact. The jury, which was adopted from the English legal system, was abolished in 1995.
The Malaysian judicial system is adversarial in nature, and requires the parties’ counsel to present evidence and arguments to advance their cases. The judge will make a decision based on the evidence and arguments presented by counsel. Generally, judges play a passive role in the proceedings and raise issues or questions only when necessary.
What is the nature of legal representation in Malaysia? Do foreign lawyers have a right of audience in the Malaysian courts?
Natural persons may be self-represented in the Malaysian courts, although this is very uncommon as most do engage lawyers. Companies must be represented by a lawyer. In order for a lawyer to practice law and appear before the Malaysian courts, the lawyer must be admitted as an advocate and solicitor of the High Court of Malaya or the High Court of Sabah and Sarawak and have a valid practising certificate.
Although foreign lawyers are allowed to practice in Malaysia upon obtaining a license from the Malaysian Bar Council, foreign lawyers are prohibited from advising and appearing before any court of justice in Malaysia under Rule 2 of the Legal Profession (Licensing of International Partnerships and Qualified Foreign Law Firms and Registration of Foreign Lawyers) Rules 2014. The permitted practice area for foreign lawyers in Malaysia is limited to transactions that are regulated by Malaysian law and at least one other national law, or transactions regulated solely by any law other than Malaysian law. .
What types of legal fee arrangements are generally adopted by Malaysian lawyers? To what extent are legal fees fixed by law in Malaysia?
Legal fees for contentious matters are not fixed by law and may be negotiated and agreed between lawyers and their clients. Legal fee arrangements typically include agreed fees either on a lump sum basis or a stage by stage basis. Time cost agreements are also adopted but are generally less common. Considerations will include the value of the subject matter, complexity of the dispute, the seniority and number of lawyers involved, etc. A client has the right to apply to the High Court to review a lawyer’s bill of charges, particularly when the fees imposed were not agreed beforehand.
In non-contentious matters, a lawyer and client may agree on fees provided that they are not lower than any scale of fees given under section 113 Legal Profession Act 1976 (LPA). For example, the Solicitors Remuneration Order 2005 provides for the remuneration of the solicitor in respect of sales, purchases or other forms of conveyances for completing any transaction involving immovable properties in its First Schedule.
What are the time limits applicable to commercial disputes in Malaysia?
In general, commercial and contractual disputes have a limitation period of 6 years from the time the cause of action accrued. However, in the event of a civil suit against the government or a body exercising a public duty, the limitation period is reduced to 3 years.
The limitation period can be extended in exceptional circumstances such as in cases of an action for recovery of land or where the cause of action involves fraud or mistake.
Are there any pre-action discovery procedures available to a party who wishes to initiate a claim in Malaysia ?
A party that is considering a claim may apply for pre-action discovery under Order 24 Rules of Court 2012 for the disclosure of certain documents or information.
However, the affidavit supporting such an application must make clear the type of document is sought and that the document requested is relevant and necessary. A discovery application that amounts to a “fishing expedition” for documents or evidence will not be allowed.
What role does mediation play in the litigation process? Is mediation imposed as a prerequisite to a commercial claim in the Malaysian courts?
Mediation is not a prerequisite for the parties to a commercial claim to take their action to court. However, the court may during the case management process advise parties to attempt mediation and to explore the possibility of an amicable settlement. The court offers a complementary mediation service with a judge or court officer as a mediator. If a settlement is reached, the court will proceed to record a consent order to conclude the proceedings.
How is a commercial claim initiated in the Malaysian courts?
A claim that involves disputes of facts begins with the filing of a writ and statement of claim in court. An action commenced by writ will require a trial with the calling of witnesses and the hearing of oral evidence.
Where the dispute is a matter of construction of a document or question of law with no substantial dispute of fact, the claim can be initiated by way of an originating summons. An originating summons will involve a hearing based on the documents produced.
Once the Registrar assigns a serial number, signs and seals the cause papers, the plaintiff will have 6 months to serve the claim on the defendant in accordance with the Rules of Court 2012.
What happens if a defendant fails to respond to a claim?
Where the defendant fails to respond to a claim by the plaintiff within the time stipulated, the plaintiff may enter a judgment in default of appearance against the defendant. The court may enter a final judgment or an interlocutory judgment pending the assessment of damages.
Are there any summary procedures which can be applied for by the plaintiff or defendant in a commercial claim?
In the course of the proceedings, the plaintiff may, on grounds that there are no triable issues and that the defendant has no defence, apply for a summary judgment for a speedy disposal of the suit. A summary judgment application will be decided based on the documents and will avoid the need for a full trial.
The plaintiff or the defendant may also, at any stage of the proceedings, apply for disposal of the case upon the determination of questions of law or construction of a document, provided that it is suitable to be determined without a full trial and it determines the whole cause or the matter.
What interim reliefs can a party seek to maintain the status quo or prevent further loss or damage pending the final decision of the Malaysian court?
Generally, parties may seek interlocutory injunctions or Mareva injunctions to preserve the status quo between the parties or the subject matter pending the disposal of the suit.
Other examples of injunctions include Quia Timet injunctions, which restrain the defendant from performing a threatened wrongful act; and Fortuna injunctions which prohibit or restrain a creditor from filing and presenting a winding-up petition.
What sort of evidence is required to support a commercial claim? How do the Malaysian courts evaluate oral and documentary evidence?
The admission of evidence in court is governed by the Evidence Act 1950. Only evidence that is relevant to the issues in question will be accepted by the court. The evidence that can be adduced includes oral evidence of witnesses, physical and electronic documents and the opinions of experts. Interestingly, illegally obtained evidence is admissible in court.
When will the court in Malaysia consider expert evidence and how are expert opinions treated?
Malaysian courts may accept an expert’s opinion as evidence. The expert may be appointed by the court or by the parties. However, an expert’s opinion does not bind the court, and the judge remains the sole arbiter in questions of fact and law.
Will parties be able to recover the costs incurred in pursuing a claim in the Malaysian courts?
Costs in a commercial claim granted to the successful party at the discretion of the court. The costs granted by the court are usually insufficient to fully reimburse the successful party for the total costs of litigation. Costs on an indemnity basis will only be granted if parties have included such a term in their agreement or if there are exceptional circumstances that justify it.
How long do commercial claims take to be resolved in the Malaysian courts?
The Malaysian courts are typically required by the court administration to resolve matters within 9 months. In straightforward cases (eg. where there is an admission of debt), a commercial claim can be resolved by way of summary judgment, which can be disposed of within 3 to 6 months.
Complex cases or cases which require a full trial can take longer than 9 months to be resolved. The proceedings can be drawn out in the event multiple applications (eg. injunctions, disclosure, stay, transfer, security of costs and etc) are filed by parties.
How can a successful party enforce a court judgment in Malaysia?
A court judgment can be enforced by a writ of execution issued by the successful party. Several orders are available under a writ of execution such as writ of seizure and sale for movable and immovable properties, writ of possession, and writ of delivery.
A judgment creditor may also apply by way of a garnishee proceedings to order a garnishee (i.e. a third party with debt due or accruing to the judgment debtor) to pay the judgment creditor as satisfaction of the debts owed to the judgment debtor.
Lastly, the judgment creditor may also file a petition for the winding-up or bankruptcy of the judgment debtor in default.
Can an unsuccessful party appeal against a court’s decision?
Yes. However, the right of appeal is dependent on the claim sum and the court of first instance.
For claims below RM250,000 commenced at the Magistrate’s Court or Sessions Court, the litigants may appeal to the High Court as of right. However, in the event the litigants are not satisfied with the outcome of the appeal at the High Court, they would have to apply for leave of court before they are able to file a further appeal to the Court of Appeal.
For claims above RM250,000 commenced at the Sessions Court, the litigants may appeal to the High Court and the Court of Appeal thereafter as of right. No application for leave is required in order to appeal to the Court of Appeal.
For claims above RM1,000,000 commenced at the High Court, the litigants may appeal to the Court of Appeal as of right. In the event the litigants are not satisfied with the outcome of the appeal at the Court of Appeal, they would have to apply for leave of court before they are able to appeal to the Federal Court (the apex court and the final appellate court).
How do the Malaysian courts approach the choice of governing law of a contract in cross-border litigation?
Generally, the Malaysian courts will respect the choice of law stipulated in international contracts, except where there are public policy reasons to refuse to do so. In the absence of a choice of law clause in the contract, the courts would examine the contract and infer an implied choice from the terms of contract or its surrounding circumstances, eg. the presence of a choice of forum clause, the use of terminology peculiar to a system of law and the currency in which money under the contract is expressed. If an implied choice is not found, the court would then adopt the system of law with which the transaction had the closest and most real connection, eg. the place of performance of the contract, the place where the contract was made.
Are foreign judgments recognised by the Malaysian courts?
Foreign monetary judgments from the UK, Singapore, Hong Kong, New Zealand, Brunei, Sri Lanka, and India are enforceable in Malaysia under the provisions of the Reciprocal Enforcement of Judgment Act 1958 (REJA). Requirements for enforcement include an application to the Malaysian court, and that the judgment finally and conclusively determines the dispute between the parties.
Judgments from other countries can still be enforced in Malaysia with a court action under common law principles. Considerations include whether the judgment is for a fixed sum, conclusive and from a court of competent jurisdiction.
How have the Malaysian courts responded to the Covid-19 pandemic to ensure that the commercial litigation process remains effective while ensuring the health and safety of those involved in the process?
The Malaysian courts, at the courts of first instance and the appellate courts, have been relatively quick to move hearings and trials online to ensure that cases proceed despite the ongoing Covid-19 pandemic and repeated lockdowns. Procedural rules such as the Rules of Court 2012 have been amended to incorporate the use of electronic means in the litigation and court process. The amendments have allowed for greater flexibility of using electronic communications for court hearings.
In its efforts to mitigate the effects of the Covid-19 pandemic, the government has enacted the Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (Covid-19) Act 2020 (also known as the COVID-19 Act). Some of the measures under the Act to mitigate the effect of the pandemic include the extension of the limitation period for legal actions and absolving parties from performing certain contractual obligations.

ABOUT THE AUTHORS

Raymond Mah
Managing Partner, MahWengKwai & Associates

Raymond Mah is recognised by Legal 500 as a “Real estate and construction disputes expert” and “strong for contentious employment issues”. AsiaLaw Profiles ranks Raymond as a Notable Practitioner in Dispute Resolution. Raymond was one of Asian Legal Business’ 40 Under 40 Brightest Young Legal Minds in 2015 and is named by Asia Law Portal as one of “30 people to watch in the business of law in Asia in 2017.” He is recognised as one of Malaysia’s Top 100 Lawyers by the Asia Business Law Journal in its 2021 A-List.

Raymond graduated from the University of Queensland, Australia with a double Bachelor of Economics and Laws (Honours Class I) and was admitted to the Malaysian Bar in 2005. He is a Fellow of the Chartered Institute of Arbitrators and the Malaysian Society of Adjudicators. He is empanelled as an arbitrator and adjudicator with the Asian International Arbitration Centre (AIAC).

His primary area of practice is in civil and corporate litigation, appeals and arbitration, and appears regularly at the High Court, Court of Appeal and Federal Court. His experience includes a variety of construction and land related disputes.

Denise Phang
Senior Associate, MahWengKwai & Associates

Denise Phang is a civil litigator and is particularly active in land dispute cases such as land acquisition, breach of sale and purchase agreements, trespass and other corporate and commercial matters including construction, adjudication and arbitration.

Denise graduated with a Bachelor of Laws (Hons) from the University of London and completed her Certificate in Legal Practice (CLP) in 2014. She commenced her pupillage at MahWengKwai & Associates and was admitted to the Malaysian Bar in 2015.

ABOUT THE FIRM

Name: MahWengKwai & Associates
Address: Level 10-1, Tower B, Menara Prima, Jalan PJU 1/39, Dataran Prima, Petaling Jaya, Selangor, 47301 Malaysia
Telephone: + 603 7887 2702
Email: lawyers@mahwengkwai.com
Website address: www.mahwengkwai.com
Key contact: Raymond Mah, Managing Partner, raymond.mah@mahwengkwai.com
Established: 1985 by Dato’ Mah Weng Kwai
Number of lawyers: 26
Languages: English, Chinese, Malay

Brief description:
MahWengKwai & Associates (MWKA) is a leading full-service law firm focused on serving small-medium enterprises (SMEs), family businesses and high-net-worth individuals (HNWIs). MWKA’s corporate team of specialised lawyers is committed to providing the best solutions for different types of companies ranging from enterprises, private limited companies to public listed companies and large international corporations. Much of the firm’s corporate matters in which we have represented clients, whether individual or company, include negotiating, drafting agreements and advising on merger and acquisition transactions, project based transactions, oil & gas commercial transactions, regulatory compliance and corporate governance, corporate restructuring exercises, foreign investment and general corporate contracts. MWKA’s dispute resolution team comprises experienced and energetic lawyers with a passion for their respective practice areas. They handle run of the mill matters in the lower Courts as well as complex and precedent-setting cases in the appellate and apex Courts of Malaysia. The firm represents clients in various disputes including administration of estates, citizenship, company, commercial, construction, debt recovery, defamation, employment, family, injunctions, insolvency, judicial review, land acquisition, medical negligence, real estate, strata management, and white-collar crime.

Key practice areas:
Administrative and regulatory, Capital markets, Civil litigation, Commercial and Corporate transactions, Commercial arbitration, Corporate governance, Criminal, Financial services regulatory, Healthcare, Insolvency, Intellectual property, International arbitration, Labour and employment, Litigation, Mergers & Acquisitions, Personal injury, Privacy and data protection, Tax, Technology, Trusts and estates, White-collar crime, Employment and Industrial Relations, Strata management, Land acquisition and Adoption/Citizenship/Family matters.

Sign in

Sign Up

Forgotten Password