Latest updates

Federal Court rules that Arbitration Act provisions do not apply to non-parties to arbitration agreements
Gan Partnership
  • Litigation
  • 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.

High court rules that non-parties to arbitration are not bound by confidentiality
Shearn Delamore & Co
  • Arbitration & ADR
  • Malaysia
  • 17 October 2019

A high court recently ruled that the prohibition against third parties publishing, disclosing or communicating information relating to arbitration proceedings does not extend to non-parties to an arbitration. This decision will affect the extent to which the confidential documents used in arbitral proceedings remain confidential.

2018 developments in statutory adjudication
  • Construction
  • Malaysia
  • 09 September 2019

In 2018 Malaysia saw considerable developments in case law on statutory adjudication. Stakeholders' use of this form of dispute resolution mechanism continues to grow exponentially with no sign of abating. This article examines some of the significant decisions that the Malaysian courts handed down in 2018 and their impact on statutory adjudication under the Construction Industry Payment and Adjudication Act.

Federal Court rules on test applicable to applications to restrain arbitration proceedings made by non-parties
Shearn Delamore & Co
  • Arbitration & ADR
  • Malaysia
  • 08 August 2019

The Federal Court recently overturned a Court of Appeal decision on the test which applies to applications to restrain arbitration proceedings made by non-parties to the proceedings. The Federal Court concluded its judgment by affirming the findings of the High Court in this case, including that the balance of justice was in favour of the injunction order and that there were serious issues to be tried.

High court clarifies aviation regulator's dispute resolution jurisdiction
SKRINE
  • Aviation
  • Malaysia
  • 07 August 2019

The Kuala Lumpur High Court recently granted summary judgment for a combined sum exceeding RM40 million for outstanding passenger service charges. In coming to this decision, the court dealt with the jurisdiction of the nation's aviation regulator to resolve disputes between aviation service providers prescribed under the Malaysian Aviation Commission Act 2015.

Wrongful vessel arrest in collision claim
Shearn Delamore & Co
  • Shipping & Transport
  • Malaysia
  • 31 July 2019

In a recent case, a plaintiff claimed that the defendant's vessel had collided into its vessel. To stop the plaintiff from arresting the vessel, the defendant obtained a letter of undertaking from the London Protection and Indemnity Club. However, notwithstanding the issue of the first letter of undertaking, the plaintiff arrested the vessel. The defendant subsequently asked the court to, among other things, declare the first letter of undertaking binding on the parties and set aside the warrant of arrest.

Proper construction of Section 93(3) of Bankruptcy Act and Rule 276 of Bankruptcy Rules
Gan Partnership
  • Litigation
  • 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.

Judicial review leave principles reaffirmed as high court dismisses AirAsia's leave application
SKRINE
  • Aviation
  • Malaysia
  • 10 July 2019

The Kuala Lumpur High Court recently dismissed a judicial review leave application brought by AirAsia Berhad and AirAsia X Berhad (collectively, AirAsia) against the Malaysian Aviation Commission, with Malaysia Airports (Sepang) Sdn Bhd being named as the second respondent. AirAsia argued that the passenger service charge rates prescribed in the regulations were ceiling rates rather than fixed rates and, as such, AirAsia was not required to pay the revised amount.

Caveat venditor – has the pendulum swung too far?
Bodipalar Ponnudurai De Silva
  • Company & Commercial
  • Malaysia
  • 08 July 2019

'Caveat emptor' or 'buyer beware' is a familiar concept. The effects and consequences of caveat emptor have been criticised over time and, as a result, commercial law has slowly developed more stringent protection for consumers and buyers. As such, the ramifications of a recent apex court's decision are far reaching. In short, liability can now be imposed on sellers even if the buyer has previously accepted the same product without qualification.

Civil aviation security: new regulations take effect
SKRINE
  • Aviation
  • Malaysia
  • 19 June 2019

The Civil Aviation (Security) Regulations 2019 (Security Regulations) recently entered into force. Among other things, the regulations have established new aviation security authorities, implemented national security programmes and introduced new security and screening controls. Passengers, operators (including aerodrome operators), ground handlers and other persons who fail to comply with the Security Regulations could face a fine of up to RM200,000 or up to five years' imprisonment (or both).

Court of Appeal determines that negative declaratory arbitration awards are enforceable
Shearn Delamore & Co
  • Arbitration & ADR
  • Malaysia
  • 23 May 2019

A recent Court of Appeal case addressed whether a negative declaratory arbitration award is enforceable. The decision emphasises the narrow grounds that enable the high courts to refuse to recognise or enforce an arbitration award, as long as the requirements of Section 38(2) of the Arbitration Act are complied with. It also establishes a precedent that there is no barrier to the enforcement of a negative declaratory arbitration award.

Attorney general's discretion is not unfettered
Gan Partnership
  • Litigation
  • 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?

Do databases constitute 'plant' and qualify for capital allowances?
  • Corporate Tax
  • Malaysia
  • 10 May 2019

In a recent case before the High Court, CIMB Bank Bhd had written to the director general of inland revenue (DGIR) to seek his confirmation on whether certain databases qualified for capital allowances under the Income Tax Act 1967. The DGIR opined that the databases were not 'plant' but 'goodwill' and would not qualify for capital allowances. However, the High Court rejected the DGIR's argument and held that he had had no basis for his submission.

Foreign ships repairing undersea cables now exempt from cabotage policy
Shearn Delamore & Co
  • Shipping & Transport
  • Malaysia
  • 08 May 2019

The government has decided to exempt from its cabotage policy foreign vessels repairing undersea cables at any cable landing station in Malaysian waters. This decision has eliminated restrictions which generated unintended effects and created significant delays and costs in repairing undersea cables. Now, highly specialised, purpose-built vessels can berth in Malaysian waters to repair undersea cables.

Directors duty to act in company's best interests: how much is too much?
Bodipalar Ponnudurai De Silva
  • Company & Commercial
  • Malaysia
  • 22 April 2019

A recent case suggests that there are limits to the way in which directors can act when taking steps to protect a company. The case is a useful reminder that while directors may avail themselves of the shield provided by the judicial management regime in order to allow a company time to regain its footing, the courts will not hesitate to put checks and balances in place to prevent the misuse of such legislation, albeit for the purpose of safeguarding a company's survival.

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.

Exclusion clauses – abuse of freedom of contract?
Bodipalar Ponnudurai De Silva
  • Company & Commercial
  • Malaysia
  • 18 February 2019

It is common for large conglomerates to require customers to execute agreements with standard boilerplate terms and conditions. The fine print of these boilerplate terms and conditions typically contains an exclusion clause which seeks to restrict or limit the liability of the corporations. However, what happens when these corporations default under the agreement and then seek refuge behind the exclusion clause to disclaim liability?

Federal Court will not condone irregularities in court orders
Gan Partnership
  • Litigation
  • 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?

Post-Budget 2019 – major amendments to Labuan Business Activity Tax Act
  • 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.