Latest updates
Court clarifies test applicable to applications to restrain arbitration proceedings by non-parties
Shearn Delamore & Co- Arbitration & ADR
- Malaysia
- 04 April 2019
In a recent Court of Appeal case, the plaintiff sought an injunction to restrain arbitration proceedings between the second, third and fourth defendants, despite the fact that it was not a party to the proceedings. Among other things, the court had to consider whether Sections 10(1)(a) and 10(3) of the Arbitration Act 2005 apply to non-parties to arbitration proceedings and determine the test for accepting an injunction application to restrain arbitration proceedings by non-parties.
Post-Budget 2019 – major amendments to Labuan Business Activity Tax Act
Shearn Delamore & Co- Corporate Tax
- Malaysia
- 25 January 2019
In Malaysia, the Income Tax Act 1967 governs the imposition of income tax. However, in 1990 a separate tax act, the Labuan Business Activity Tax Act, was introduced to govern the imposition of tax on Labuan business activities carried out by Labuan entities. The Labuan act has now been substantially revised following Budget 2019. In particular, Labuan entities can no longer elect to pay the RM20,000 flat tax rate; instead, they will be subject to 3% tax on chargeable profits from any Labuan business activity.
Court rules on threshold to set aside arbitral award that conflicts with public policy
Shearn Delamore & Co- Arbitration & ADR
- Malaysia
- 17 January 2019
The Federal Court recently clarified the high threshold required for an arbitral award to be set aside on grounds of public policy pursuant to Section 37 of the Arbitration Act. According to the court, although public policy is a broad concept, when applying it for the purpose of setting aside an award under Section 37, it should be read narrowly. Further, even where such a conflict with public policy is established, the court's power to set aside an award under Section 37 remains discretionary.
Court of Appeal finds carrier breached contract to deliver cargo
Shearn Delamore & Co- Shipping & Transport
- Malaysia
- 19 December 2018
A high court recently dismissed a plaintiff's claim against the defendant-carrier for breach of its contract to carry and deliver cargo to the plaintiff on the basis that the plaintiff had failed to prove its claim. However, on appeal, the Court of Appeal upheld the plaintiff's claim and found the defendant liable.
Another failed attempt by Indian government to set aside arbitral award before courts
Shearn Delamore & Co- Arbitration & ADR
- Malaysia
- 18 October 2018
In 2005 the Indian government unsuccessfully applied to the Malaysian courts to set aside a partial award issued by the arbitral tribunal. In 2014 the Indian government issued the defendants with a notice to show cause, prompting the defendants to request the tribunal to be reconvened since there was a dispute on the quantification of sums payable. The tribunal granted the final award and the Indian government applied to the Malaysian High Court to set it aside.
High court finds DGIR's advance ruling is decision subject to judicial review
Shearn Delamore & Co- Corporate Tax
- Malaysia
- 12 October 2018
In a recent case, IBM Malaysia applied for an advance ruling from the director general of inland revenue (DGIR) to determine whether a payment made by it to IBM Ireland under a software distribution agreement would be considered royalty under the Income Tax Act and thus subject to withholding tax. One of the issues raised by the DGIR for consideration by the court was whether the advance ruling was a decision amenable to judicial review.
Arbitration Act 2005 does not oust courts' inherent jurisdiction
Shearn Delamore & Co- Arbitration & ADR
- Malaysia
- 09 August 2018
The legal battle between La Kaffa International Co Ltd and Loob Holding Sdn Bhd, which has garnered much public attention, recently made its way to the Court of Appeal. This court's decision clarifies that the Arbitration Act 2005 does not oust the inherent jurisdiction or the powers of the courts to order interim measures. However, by virtue of Section 8, the court will be slow to provide relief which is not clearly spelled out in act.
Plaintiff granted indemnity for losses following arrest of vessel on delivery of cargo
Shearn Delamore & Co- Shipping & Transport
- Malaysia
- 01 August 2018
A recent case before the High Court of Kuala Lumpur concerned an agreement to deliver cargo from Indonesia to India. The plaintiff, Jiang Xin Shipping Co Ltd, had brought an action against the defendant seeking indemnity for the losses incurred by the plaintiff in connection with an arrest of the plaintiff's vessel on delivery of the cargo.
Legal professional privilege and director general of inland revenue's powers
Shearn Delamore & Co- Corporate Tax
- Malaysia
- 11 May 2018
Members of the Malaysian Bar recently complained that Inland Revenue Board officers had carried out raids on them in order to audit their clients' accounts and gain access to those records. The Malaysian Bar then wrote to the director general of inland revenue (DGIR), stating that such audits breached the principle of solicitor-client privilege. However, the DGIR held that the Income Tax Act overrode the provisions of the Evidence Act that conferred solicitor-client privilege.
Court directs suit involving non-parties to arbitration agreement to proceed ahead of arbitration proceedings
Shearn Delamore & Co- Arbitration & ADR
- Malaysia
- 26 April 2018
The Court of Appeal recently considered the law governing a stay of proceedings in relation to non-parties to an arbitration agreement pending the outcome of arbitration proceedings. The court determined that the facts of the case supported the conclusion that the court proceedings involving the non-parties to the arbitration agreement should proceed ahead of the arbitration proceedings between the parties to the arbitration.
Federal Court rules on arbitrators' jurisdiction to award pre and post-award interest
Shearn Delamore & Co- Arbitration & ADR
- Malaysia
- 01 February 2018
The Federal Court recently held that under Section 42 of the Arbitration Act, judicial intervention is warranted only where the award substantially affects the rights of one or more parties. A perverse, unconscionable and unreasonable award is not grounds to set aside the award under Section 42. Further, according to the court, Section 42 provides no jurisdiction to deal with questions of fact.
Court rules in Silver Moon time charterparty case
Shearn Delamore & Co- Shipping & Transport
- Malaysia
- 24 January 2018
In a recent case, the plaintiff had instructed the defendant – the owner of the vessel Silver Moon – to head to the South Indian Ocean for cargo operations. Despite having received the instructions, the vessel had to deviate and deal with multiple repair works. In view of the vessel being unseaworthy, the plaintiff contended that the defendant was in repudiatory breach of the time charterparty and had the vessel arrested.
Federal Court reinforces law that supervisory courts may review arbitral awards
Shearn Delamore & Co- Arbitration & ADR
- Malaysia
- 19 October 2017
The Federal Court recently delivered its decision in a dispute involving the Laotian government and two foreign companies. The dispute related to the termination of a project development agreement and was set to be resolved by arbitration. Dissatisfied with the arbitration award, the Laotian government applied to the High Court to set aside the award on the ground that the arbitral tribunal had gone beyond the scope of arbitration.
Changes to National Cabotage Policy
Shearn Delamore & Co- Shipping & Transport
- Malaysia
- 09 August 2017
The prime minister recently proposed that Sabah, Sarawak and Labuan be exempted from the National Cabotage Policy, which governs maritime transport between Peninsular Malaysia and East Malaysia, effective June 1 2017. Under the proposal, foreign ships can transport cargo domestically. This announcement attracted differing opinions regarding its possible impact.
High court clarifies proceedings under Arbitration Act
Shearn Delamore & Co- Arbitration & ADR
- Malaysia
- 13 July 2017
The high court recently held that resisting an application for an interlocutory injunction is not a 'step in the proceedings'. The only steps that amount to a step in the proceedings under Section 10 of the Arbitration Act are those taken to advance the substantive dispute in the action. Parties' compliance with court directions will not constitute steps to advance the dispute.
Federal Court clarifies statutory rights granted by Advocates Ordinance
Shearn Delamore & Co- Arbitration & ADR
- Malaysia
- 06 July 2017
The Federal Court recently held that Sections 2(1)(a) and (b) of the Advocates Ordinance must be read with Section 8. The statutory right given to advocates admitted in Sabah to practise in Sabah by virtue of Section 8(1) of the Advocates Ordinance cannot be taken away by tying the non-exclusive right of barristers and solicitors in England to appear for parties in arbitration proceedings with the practice in Sabah.
Damages under marine cargo all-risk insurance policy
Shearn Delamore & Co- Shipping & Transport
- Malaysia
- 19 April 2017
A court recently considered an insurance claim under a marine cargo all-risk insurance policy for damages to a ship unloader crane that had occurred while it was being unloaded onto a barge at West Port, Port Klang. The court ultimately found that the plaintiffs had proven their case on the balance of probability and granted their claim for RM4.5 million, with costs.
High court gives effect to parties' intentions in face of ambiguously drafted clauses
Shearn Delamore & Co- Arbitration & ADR
- Malaysia
- 30 March 2017
In a recent case, the plaintiff opposed the defendant's stay application on the basis that, among other things, the ambit of the arbitration clause was confined to disputes arising before and during the completion of the work. The contract did not provide for disputes after completion of the work to be referred to arbitration. Despite the ambiguous clauses, the court upheld the arbitration clause to give effect to the parties' intentions.
Court rules on payment for bunkers
Shearn Delamore & Co- Shipping & Transport
- Malaysia
- 18 January 2017
In a recent high court case, the plaintiff's notice of lien stipulated that it had exercised a lien over the bunkers, and that the defendants should pay the plaintiff and not the second intervener. The defendants applied to set aside or strike out the plaintiff's subsequent in rem action, as they had no contractual nexus with the plaintiff for the purchase and supply of the bunkers. The court held that since there was no direct contract between the plaintiff and the defendants, a contractual lien did not arise.
Malaysian courts continue to give effect to arbitration agreements
Shearn Delamore & Co- Arbitration & ADR
- Malaysia
- 12 January 2017
A high court recently granted an order approving the defendant's application to stay the court proceedings and have the dispute referred to arbitration pursuant to the Arbitration Act 2005, finding that the plaintiff had, through its conduct, demonstrated that it intended to refer the dispute to arbitration. This case demonstrates the Malaysian courts continued attempts to give effect to arbitration agreements and to discount attempts to renege on agreements to arbitrate by relying on technical objections.
