Gan Partnership

Kuala Lumpur

Clients faced with complex and difficult cases look to Gan Partnership. Known for its solid strength in dispute resolution, this internationally recognised law firm provides clients with an arsenal ranging from senior counsel with over 25 years’ experience before all levels of courts to aggressive junior and modern litigators. With the wide access to a network of eminent international and local technical consultants and experts, the resourceful and multilingual 26-member team provides comprehensive and innovative solutions to its clients spanning across various industries.

Updates

Arbitration & ADR

ICSID arbitration
International | 23 April 2020

The International Centre for Settlement of Investment Disputes (ICSID) was established in 1966 by the Convention on the Settlement of Investment Disputes between States and Nationals. ICSID is an independent, neutral and effective dispute settlement institution. Its availability to investors and states helps to promote international investment by providing confidence in the dispute resolution process. It is also available for state-state disputes under investment treaties and free trade agreements.

Litigation

Calling on performance bonds: new test for unconscionability?
Malaysia | 23 February 2021

With the recent enforcement of the Temporary Measures for Reducing the Impact of Coronavirus Disease (COVID-19) Act 2020, the question has arisen as to whether it provides a new ground for contractors to challenge calls on bank guarantees. A recent high court decision on the application of the Prevention and Control of Infectious Diseases (Measures Within Infected Local Areas) Regulations 2020 provides insight into how the courts may interpret the act.

Housing developers beware – aftermath of PJD
Malaysia | 16 February 2021

The Federal Court recently delivered a landmark decision concerning the delay of delivery of vacant possession for Schedule G and H-type contracts under the Housing Development (Control and Licensing) Regulations. This article focuses on the decision's impact on housing developers with respect to their completed and ongoing housing projects. While the dust on the calculation of liquidated and ascertained damages for housing projects is now settled, the storm may be brewing for housing developers.

Housing developers beware – Federal Court upholds Faber Union
Malaysia | 09 February 2021

In a recent landmark decision, the Federal Court unanimously held that Faber Union is good law. The key question that the court considered was where there is a delay in the delivery of vacant possession, does the date for the calculation of liquidated and ascertained damages begin on the date of the payment of the booking fee or on the date of the sale and purchase agreement?

Federal Court rules that termination clauses should be construed strictly
Malaysia | 02 February 2021

A recent Federal Court decision has breathed new life into the interpretation of termination clauses in contracts. Indeed, it sounded a cautionary note to the business community at large when the court held that termination clauses must be interpreted strictly. This decision is a warning to all contracting parties not to rush the termination of a contract. Instead, care and a meticulous reading of the entire contract are required to ensure strict compliance with the termination clauses.

Who has the right to sue a consultant?
Malaysia | 26 January 2021

As cashflow is crucial for main contractors in any ongoing construction project, prompt and expeditious payments by the employer are often expected. However, if the main contractor is dissatisfied with the payment certificate, can the main contractor sue the consultant for negligence? The Court of Appeal recently addressed this question and unanimously upheld a high court decision in dismissing a main contractor's claim against a consultant.

Oppression versus derivative actions: courts' wide discretion maintained
Malaysia | 19 January 2021

The Federal Court recently refused leave to appeal a Court of Appeal decision which had found that the courts' powers in an oppression action are broad and unfettered. This includes the power to order restitution to a company, a remedy traditionally seen as belonging to companies. The broad language used in the oppression provision is crucial in providing the courts with the necessary discretion to formulate remedies which are appropriate and just in the circumstances of a particular case.

Section 368 of Companies Act: apex court rules ex parte application for restraining proceedings is valid
Malaysia | 12 January 2021

A recent Federal Court decision regarding applications made by a company or its creditors under Section 368 of the Companies Act 2016 to restrain proceedings against the company under a proposed scheme of arrangement appears to be a welcomed decision. Clarity is now proffered on the procedure to be adopted when making such applications. Nevertheless, there may yet still be room for further judicial interpretation on applications concerning a scheme of arrangement.

De facto doctrine applies to defective judicial appointments and preserves judicial decisions
Malaysia | 22 December 2020

Pursuant to Rule 137 of the Rules of the Federal Court 1995, seven motions were filed in the apex court, requesting it to invoke its inherent power to review its decisions delivered in seven separate lawsuits. Interestingly, a common question arose from these motions premised on coram failure and further questions that were peculiar to the circumstances of each case. While the apex court dismissed all of the motions, its unanimous decision on coram failure is significant for ongoing and future cases.

Court rules former director of AIAC's directorship is non-justiciable
Malaysia | 15 December 2020

The Kuala Lumpur High Court recently struck out two originating summonses against the former director of the Asian International Arbitration Centre (AIAC). The court's ruling included that the appointment of the director of the AIAC was not justiciable. It is hoped that this decision will provide valuable case law and put similar challenges to rest, as such challenges are not only vexatious but also a waste of judicial time and resources.

Consequential order: functus officio rule stretched for interest of justice
Malaysia | 01 December 2020

The Federal Court recently confirmed that the court is entitled to issue a further order subsequent to its final and perfected judgments or orders only in limited circumstances. However, a change or substitution of one form of remedy with another form of remedy ordered in a subsequent application does not amount to variation subject to the facts of each case. This decision reinforces the inherent jurisdiction of the court to grant consequential orders to ensure that justice is achieved.

Derivative proceedings: leave of court is substantive legal requirement
Malaysia | 24 November 2020

The Court of Appeal recently ruled that Sections 347(1) and (2) of the Companies Act 2016, which require leave of court to be obtained before any action may be initiated on behalf of a company and any such action to be brought in the name of the company, are substantive law and not merely procedural. Following this decision, it is clear that violations of Sections 347(1) and (2) are not mere irregularities, but illegalities.

Competing claims in curial and arbitral proceedings: recent anti-arbitration injunction developments
Malaysia | 17 November 2020

Are the Malaysian courts adopting a minimalist judicial intervention approach when considering anti-arbitration injunctions? This article discusses a recent Federal Court decision which dealt with the issue of competing claims in curial and arbitral proceedings where not all parties were before both forums, and two recent high court decisions that made reference to the Federal Court decision.

Can management corporations stop parcel owners from operating Airbnbs?
Malaysia | 10 November 2020

A recent Federal Court judgment determined whether the management corporation of a stratified development can introduce a new bylaw forbidding parcel owners from using their units to carry out short-term rentals, even if the express condition of the title stipulates that the building is a commercial building. More robust regulations may be implemented in Malaysia to regulate short-term rentals such as Airbnb due to this apex court's decision.

Post-ASM: is an adjudication decision a disputed debt?
Malaysia | 13 October 2020

In ASM Development (KL) Sdn Bhd v Econpile (M) Sdn Bhd, Darryl Goon J (now JCA) held that an adjudication decision, even one which has been enforced as if it were a court judgment or order pursuant to Section 28 of the Construction Industry Payment and Adjudication Act 2012, is still a disputable decision. While the high court departed from ASM in one recent case, in another, it agreed with Darryl Goon J's decision. As such, there now appears to be two different schools of thought on this matter.

From bare trustee to chargee: does registration of a charge assure an indefeasible interest?
Malaysia | 06 October 2020

The concept of indefeasibility is the cornerstone of Peninsular Malaysia's land administration system, which is embodied in Section 340 of the National Land Code 1965. Once an interest is registered in the title of a property, it is immune against any adverse claims. While disputes on indefeasibility are not uncommon in Malaysia, the apex court recently faced another dispute involving the registered interest of a licensed financial institution and an unregistered interest of an owner.

CIPAA: court has no discretion to set aside adjudicator's costs order
Malaysia | 15 September 2020

The Construction Industry Payment Adjudication Act 2012 (CIPAA) was enacted to alleviate payment problems in the construction industry by allowing any payment dispute to be resolved speedily through adjudication. However, the losing party may opt to set aside or stay an adjudication decision pursuant to Sections 15 and 16 of the CIPAA. In a recent case, a dilemma arose as to whether the costs determined by the adjudicator in withdrawing adjudication proceedings could be challenged in court.

Section 30 of CIPAA: apex court maintains mandatory direct payment obligation against employer under receivership
Malaysia | 08 September 2020

Section 30 of the Construction Industry Payment and Adjudication Act 2012 creates a statutory obligation for a principal to make the payment awarded by an adjudication decision to a subcontractor in the event of the main contractor's failure to do so. In a recent case, an issue arose on whether direct payment could be ordered against a principal when winding-up proceedings against the main contractor were already afoot.

Apex court decides on validity and effects of retrospective sanction by liquidators
Malaysia | 25 August 2020

When a company is wound up by a court order, a liquidator steps in and manages the company. It is enunciated in the Malaysian company law regime that the legal standing of such company to bring or proceed with an action or proceedings is vested in the liquidator. If an action or proceeding is taken by a wound-up company, the liquidator's prior sanction must be obtained. The apex court recently handed down a landmark judgment on the validity of retrospective sanction granted by liquidators.

Embassy dismisses employee: exercise of jure imperii or act of jure gestionis?
Malaysia | 18 August 2020

In a recent case, a high court faced a judicial review application filed by the United States in Malaysia. The facts leading to the application were uncommon and the court considered a novel aspect of industrial law jurisprudence in Malaysia. The high court judge's assessment of the facts in light of the sovereign immunity principle gives a fresh perspective in industrial law jurisprudence.

Apex court rules that maintenance charges owed by parcel proprietors constitute unsecured debts
Malaysia | 11 August 2020

As Section 77 of the Strata Management Act provides that the amount due to a management corporation (MC) is a 'guaranteed sum', issues arise as to whether an MC is a secured creditor in the event that a parcel proprietor is insolvent and wound up. In a recent decision, the Federal Court decided that the outstanding amount due to an MC is an unsecured debt.

Utility innovation infringement and invalidation disputes
Malaysia | 04 August 2020

In general, when an individual asks "how can I protect my invention?", only one answer comes to mind: patents. While this is not wrong, most individuals are unaware of the patent's lesser-known sibling – the utility innovation. Utility innovations are commonly known as 'minor' or 'petty' patents. Much like patents, owners of a granted utility innovation have exclusive rights to exploit said utility innovation for 20 years. This article examines a recent case concerning a utility innovation.

Section 314 of Companies Act: court orders one-member extraordinary general meeting
Malaysia | 21 July 2020

A high court recently allowed a shareholder to convene a one-member extraordinary general meeting of a family-run company. In applying for a court-ordered meeting, applicants must prove that it is otherwise impracticable to hold the meeting. This case is significant to the issue of whether the application of this test is different for family-run companies.

Apex court rules that foreign employee on successive fixed-term contract is permanent employee
Malaysia | 14 July 2020

Employers can offer fixed-term contracts to their employees (often for economic or management reasons). However, such prerogative is subject to scrutiny by the Malaysian courts so that it does not fetter employees' rights in terms of employment security. The Federal Court recently delivered a groundbreaking decision on this matter concerning a foreign employee.

Apex court rules that high court orders and decisions that do not finally dispose of litigants' rights are non-appealable
Malaysia | 23 June 2020

Section 67 of the Courts of Judicature Act 1964 sets out the right to appeal in civil suits. However, confusion commonly arises when deciding whether an order or judgment made by a high court in a civil matter is appealable. The Federal Court recently clarified this issue by affirming that a decision made during a trial that does not finally dispose of the parties' rights is non-appealable.

Courts' discretion to hold virtual hearings
Malaysia | 16 June 2020

In a recent case, the plaintiff obtained a judgment in default of defence against multiple defendants during the enforcement of the Movement Control Order in Malaysia. Subsequently, the judge held that various applications of the plaintiff and the defendants be heard by way of a Skype videoconference due to the ongoing COVID-19 pandemic. Dissatisfied with the videoconference, the plaintiff challenged its validity.

Whole arbitration award or just dispositive portion: what should be registered with the courts?
Malaysia | 26 May 2020

After succeeding in arbitration, the respondents in a recent case filed an originating summons pursuant to the Arbitration Act in a high court to enforce and recognise the entire award as a high court judgment. However, the appellant opposed the originating summons on, among others, the ground that only the dispositive portion of the award (which set out the orders or reliefs) – and not the entire award – was capable of being registered.

COVID-19: courts go online to regulate administration of justice
Malaysia | 12 May 2020

In order to curb the spread of COVID-19, the government introduced the Movement Control Order (MCO). During the MCO period, all courts and offices of advocates and solicitors are closed. However, a judicial notification of 26 March 2020 stated that parties can apply to the courts for an online hearing of civil matters via an e-review system, an exchange of emails or a video conference, subject to certain conditions.

Arbitration clauses – an overriding promise?
Malaysia | 28 April 2020

The existence of arbitration clauses in construction contracts is not uncommon. This article examines the impact of a recent Federal Court decision on whether an arbitration clause or a judgment in default which had already been obtained despite the existence of the arbitration clause took precedence. The decision shows that the courts will not review whether a dispute exists between parties, regardless of whether a judgment in default has been obtained.

Court rules on challenges to AIAC and statutory adjudication
Malaysia | 07 April 2020

A high court recently issued the first decision regarding a constitutional challenge of the legitimacy of statutory adjudication under the Construction Industry Payment and Adjudication Act 2012. In this case, the court was also confronted with a challenge of the appointment of the late Vinayak Pradhan as the then director of the Asian International Arbitration Centre (AIAC) and the immunity asserted by the AIAC, Pradhan and the adjudicator.

High court grants injunction to restrain winding-up proceeding based on disputed adjudication decision
Malaysia | 31 March 2020

The high court recently delivered a significant decision for the construction industry regarding contractors' cash flow. This decision is welcome as it has laid down clear directions for stakeholders in the construction sector when they are faced with payment and financing issues, as well as for litigants. Further, this decision highlights the importance of conducting preliminary assessments to determine suitable dispute resolution avenues – namely, adjudication, litigation or arbitration.

Apex court finds controller of housing's powers to waive or modify provisions of statutory contract invalid
Malaysia | 25 February 2020

The Federal Court recently delivered a landmark decision on a pertinent issue concerning the interests of house buyers. In arriving at its decision, the court considered Parliament's intention when enacting the Housing Development (Control and Licensing) Act and held that the minister of urban wellbeing, housing and local government has sole discretion to regulate and prohibit the terms and conditions of a contract of sale under the act – a social legislation protecting and advancing the interests of house buyers.

Direct payment under CIPAA where main contractor is in liquidation
Malaysia | 21 January 2020

In the course of the hearing of a direct payment application filed under the Construction Industry Payment and Adjudication Act, the issue arose as to whether direct payment could be ordered against an employer when winding-up proceedings were underway against its contractor. To avoid protracted arguments, the subcontractor withdrew the winding-up proceedings during the hearing of the direct payment application. However, another creditor served a winding-up petition on the main contractor shortly thereafter.

Federal Court rules that Arbitration Act provisions do not apply to non-parties to arbitration agreements
Malaysia | 22 October 2019

The Federal Court recently held that Sections 8 and 10 of the Arbitration Act do not apply to a non-party to an arbitration agreement. The appellant in the case was granted leave to appeal to the Federal Court on two questions of law, including whether the requirements of Section 10 of the act must be met by a party litigant seeking an injunction to restrain the prosecution of an arbitration to which it is not a party but which would affect its proprietary rights.

Proper construction of Section 93(3) of Bankruptcy Act and Rule 276 of Bankruptcy Rules
Malaysia | 30 July 2019

The Federal Court recently addressed the proper construction of Section 93(3) of the Bankruptcy Act 1967 and Rule 276 of the Bankruptcy Rules 1967. In this appeal, the Federal Court was requested to decide whether, in the case of a petition presented by multiple petitioners, the bankruptcy notice and creditor's petition could be amended and the deletion of one or more petitioners could be allowed.

Attorney general's discretion is not unfettered
Malaysia | 14 May 2019

The attorney general is a public officer who has been given ample discretionary power under Article 145 of the Federal Constitution to institute, conduct or discontinue any criminal proceedings. The question is, where a public officer's decision is subject to judicial review, does this equally apply to the attorney general?

Federal Court will not condone irregularities in court orders
Malaysia | 29 January 2019

The Federal Court recently reaffirmed that where a final court order is proved to be null and void on grounds of illegality or due to a lack of jurisdiction, the court has inherent jurisdiction to set aside the order, even in the absence of an express enabling provision. However, is the rule different for winding-up orders?

Lower threshold for staying proceedings pending appeal
Malaysia | 25 September 2018

Following a recent Court of Appeal decision on staying proceedings pending appeal, the test as to whether a stay ought to be granted under Section 44 of the Courts of Judicature Act has been simplified (ie, it now focuses on whether the true purpose of the stay is to preserve the integrity of the appeal). The new threshold to obtain a stay is considerably lower than that of the special circumstances rule under Section 73 of the Courts of Judicature Act.

Dishonesty must be present before debtor in assignment can be made liable
Malaysia | 19 June 2018

A recent Federal Court decision has simply reaffirmed the position of Malaysian law in relation to breaches of trust. The majority of the Federal Court held that imputed constructive knowledge of an assignment is insufficient to hold the debtor liable to the assignee for the debt. The decision also illustrates a disinclination to depart from the established law on the requirement of dishonesty in a breach of trust.

Stricter confidentiality obligation on lawyers
Malaysia | 20 February 2018

Section 126 of the Evidence Act 1950 imposes a legal obligation on all solicitors to protect and keep confidential any information obtained from their clients, including any legal advice that has been proffered. However, as much as the importance of this privilege is understood and embraced, it may still have come as a surprise when the Federal Court decided that a breach of this privilege by solicitors could entail a legal action against said solicitors.

Court rules on applicable test in medical negligence suits
Malaysia | 05 December 2017

The Federal Court recently examined whether the Bolam test or the test in the Australian case of Rogers v Whitaker with regard to the standard of care in medical negligence should apply, following conflicting decisions by the Malaysian Court of Appeal and legislative changes in Australia. The Federal Court's decision provides a clearer legal position with regard to the distinction between diagnosis and treatment on the one hand and the duty to advise of risks on the other hand.

Applying Court of Appeal rules
Malaysia | 18 July 2017

The Federal Court recently examined whether an objection pertaining to the unlawfulness of a notice of appeal could, as a matter of procedural law, be undertaken by way of a mere preliminary objection. Further, the court assessed whether the filing of a single notice of appeal in respect of a decision on eight separate and distinct interlocutory applications complied with the procedural rules set out in the Rules of the Court of Appeal 1994.

Court rules that stay of proceedings is mandatory
Malaysia | 18 April 2017

The Federal Court recently restated the Malaysian courts' position in respect of their intervention in arbitration. The decision has clarified that once the parties agree to submit to arbitration in the event of disputes and put that agreement into writing, the courts will be less willing to allow one party to subsequently seek to depart from the arbitration agreement without sufficient justification.

Federal Court spells out restriction for notices of cross-appeal
Malaysia | 10 January 2017

The Federal Court recently set out the circumstances under which a notice of appeal under Rule 5 of the Rules of the Court of Appeal or a notice of cross-appeal under Rule 8 can be filed. In short, where the respondent wants to reverse or set aside part of a lower-instance finding, decision or judgment which was not appealed in the appellant's notice of appeal, it is incumbent on the respondent to file an independent and separate notice of appeal, rather than a notice of cross-appeal.

Courts weigh in on requirements for breach of confidentiality claims
Malaysia | 18 October 2016

The Federal Court recently upheld a Court of Appeal decision which found that a company had failed to identify with sufficient particularity what confidential information its former employee had misused. This case clarifies that despite the existence of confidentiality agreements, companies and employers must prove what confidential information has been misused, as confidentiality agreements are not meant to hinder former employees' ability to compete.

High court cannot transfer proceedings to another high court of coordinate jurisdiction
Malaysia | 17 May 2016

The Federal Court recently ruled that Order 57 of the Rules of Court 2012 does not confer power to the high courts to transfer proceedings to another high court of coordinate jurisdiction. The true position of the law is that a high court has power to transfer proceedings to another high court of coordinate jurisdiction only within its territorial jurisdiction.

Federal Court maintains wide scope of Companies Act 1965 in oppression cases
Malaysia | 02 February 2016

The Federal Court was recently invited to reconsider the applicable test for an oppression petition under Section 181 of the Companies Act 1965 in light of recent developments in the English law of oppression. The court held that there was no valid reason to redefine the test for oppression under Section 181.

Court rules on banks' rights under absolute assignment after issue of title to land
Malaysia | 20 October 2015

The Federal Court has clarified an issue which has long plagued the banking industry by holding that a bank with absolute assignment of the rights to land may realise its security under the assignment without having to create a charge, regardless of any subsequent issue of a title document. The decision will prevent future defaulting borrowers from bringing actions against banks despite no charge being created and reduce unnecessary litigation.

High Court rules on statutory adjudication
Malaysia | 11 August 2015

The High Court recently considered whether the Construction Industry Payment and Adjudication Act applies retroactively to contracts entered into and disputes arising before the act came into force. In a lengthy judgment, the High Court found that Parliament's intention was to apply the act to all construction contracts – including payment disputes under construction contracts – regardless of when they were made.

Solicitors cannot repudiate solicitor-client relationship unless properly ended
Malaysia | 19 May 2015

In a recent Federal Court case, appeals arose in the context of claims brought by purchasers against a solicitor for breach of fiduciary duty in a solicitor-client relationship in connection with property which the solicitor had purchased for himself instead of on behalf of his clients. The court held that solicitors cannot repudiate or negate the existence of a solicitor-client relationship merely on the contention of the absence of a retainer.

Chargee not liable to purchaser when order for sale is set aside
Malaysia | 17 February 2015

The purchase of property through statutory public auction conducted pursuant to a high court order of sale has been considered a safe and protected transaction. However, the Federal Court recently ruled that chargees need not compensate purchasers when an auction sale is set aside for non-compliance with the rules of court and the purchaser may lose the property without compensation, save for a refund of the purchase price.

Arbitration awards may be enforced within 12 years of registration
Malaysia | 23 December 2014

In a recent Federal Court case, the court held that an arbitration award may be enforced within 12 years of the date on which the award is registered as a judgment of court. The court's judgment has given equal treatment, insofar as the statute of limitations is concerned, to a judgment arising from registration of an arbitral award and a judgment pronounced at the conclusion of a court-conducted litigation.