Litigation 2019 Second Edition

Last Updated December 05, 2019

Malaysia

Law and Practice

Authors



Steven Thiru & Sudhar Partnership is a firm of advocates and solicitors who focus exclusively on dispute resolution. The members of the firm practise in a wide array of dispute resolution areas and regularly appear at all levels of the courts in Malaysia, as well as in alternative dispute resolution centres. The firm also serves clients in advisory work and other pre-action matters. The firm's areas of practice include general litigation (especially contract and tort), administrative law, alternative dispute resolution, corporate and commercial law, energy law, housing law, employment law, land law, media law, tax law, and probate and trusts law. The dynamic and well-regarded group of practitioners is led by two senior partners who are well known in the profession: Steven Thiru is the 31st president of the Malaysian Bar and T Sudhar is the immediate past president of the Malaysian Institute of Arbitrators. Pupils in chambers, Ananthan Nithya Moorthi, Adrienne Senna, Ng Yee Lin, Michelle Mary Kuruvilla and Illysa Jace Chakrabathy assisted with the preparation of the chapter.

The Malaysian legal system is premised on common law. Statutes have been enacted for areas such as contract law, company law and criminal law. In such areas, common law principles have developed within the applicable statutory provisions. 

The doctrine of stare decisis applies in Malaysia in respect of rulings within the country. Nevertheless, the courts often consider principles from other jurisdictions, particularly Commonwealth countries. However, decisions from foreign jurisdictions are not binding and only have persuasive authority. 

Proceedings are adversarial and are conducted through both written and oral submissions.

Malaysia has a dual court system. There is the civil court system and the Shari'a (called Syariah in Malaysia) court system.

The civil court system is comprised of the subordinate courts and the superior courts. 

The subordinate courts consist of the magistrates court and the sessions court. The magistrate's court has the jurisdiction to hear claims of up to MYR100,000 in value, whereas the sessions court has a monetary jurisdiction of up to MYR1,000,000. 

The superior courts comprise of the High Court of Malaya, the High Court of Sabah and Sarawak, the Court of Appeal and the Federal Court (which is the final court of appeal in the country).

The jurisdiction of the Shari'a courts is stated in the Federal Constitution of Malaysia. This jurisdiction extends only to matters of Islamic law and to persons who profess the religion of Islam. 

Proceedings in Malaysian courts are generally open to the public. Depending on the relevant statutory provisions and the preferences of the presiding judge, certain types of applications are heard in the chambers of the judge. 

Parties may request that matters be heard in private (or in camera) in the interests of, for example, preserving the confidential aspects of a dispute or to preserve public or national security.

Documents filed at court may be accessed by the public by conducting a file search at the registry of the court.

The rights of audience in the Malaysian courts are preserved exclusively for advocates and solicitors admitted to the Malaysian Bar. 

Foreign lawyers have no rights of audience in the courts of Malaysia. However, under the Legal Profession (Amendment) Act 2012 and Legal Profession (Amendment) Act 2013, licences may be issued to foreign law firms to operate as an international partnership with a Malaysian law firm or as a qualified foreign law firm. Furthermore, a foreign lawyer may be employed by a Malaysian law firm. Foreign lawyers are only entitled to practise within the “permitted practice areas” as prescribed under the Legal Profession Act 1976 read with the relevant rules made by the Malaysian Bar Council. These “permitted practice areas” exclude appearing or pleading in any court in Malaysia.

The common law doctrines of champerty and maintenance prohibit the practice of third-party litigation and arbitration funding in Malaysia. Although these doctrines have been eroded in other common law jurisdictions, they subsist in Malaysia and the proposed amendments to the Arbitration Act 2005 to permit third-party arbitration funding did not come to fruition. It is therefore illegal and contrary to public policy for a party without an interest to fund the litigation or arbitration of another party.

Third-party funding is not permitted for either lawsuits or arbitrations.

Third-party funding is not permitted, regardless of whether it is for the plaintiff or the defendant.  

The amount of third-party funding does not arise, as third-party funding is not permitted.

The type of costs considered under third-party funding does not arise as such funding is not permitted.

Fees contingent on the outcome of the litigation or arbitration are prohibited by Section 112(1)(b) of the Legal Profession Act 1976 and by the common law doctrines of champerty and maintenance.

The issue of time limits for obtaining third-party funding does not arise, as such funding is not permitted.

There are no prerequisites prior to the commencement of an action. Nevertheless, it is common practice for a prospective plaintiff to issue a letter of demand to notify a prospective defendant of a potential claim. 

A letter of demand can be relied on as evidence in an action. Any failure to respond to the same without good reason may be detrimental to the prospective defendant. 

The Limitation Act 1953 (LA) applies to all civil actions and arbitrations commenced in Peninsular Malaysia. While the computation of the limitation period under the LA is dependent on a wide range of circumstances, contractual and tortious actions are generally subject to a six-year limitation period.

A limitation period is usually computed from the accrual of the cause of action, for example, when a contract is breached or when a plaintiff suffers damage and/or injury. The computation of a limitation period may, however, be postponed in certain circumstances, eg, where a plaintiff has a disability at the time of the accrual of the cause of action or where a claim involves fraud. 

The LA is not applicable to Sabah and Sarawak, which are subject to the Sabah Limitation Ordinance and the Sarawak Limitation Ordinance respectively.

A defendant residing in Malaysia becomes subject to the jurisdiction of the courts upon being served with an originating process.

Broadly speaking, the courts have jurisdiction over a non-resident defendant where: 

  • the cause of action arose in Malaysia;  
  •  a non-resident defendant is sued as a co-defendant with a Malaysian resident;  
  • the facts underlying the action occurred in Malaysia; 
  • the land under dispute is situated in Malaysia; or 
  • a plaintiff obtains leave of the court to serve a defendant outside Malaysia pursuant to Order 11 of the Rules of Court 2012 (ROC).

Generally, civil actions are commenced by the issuance of a writ or originating summons. Proceedings involving a substantial dispute of fact are commenced by writ, which is often filed and served with a statement of claim. Where the plaintiff does not file and serve the statement of claim with the writ, the plaintiff will have to file and serve the statement of claim within 14 days of the defendant's entering appearance. The writ and pleadings may be amended once before the close of pleadings. In all other circumstances, the writ and pleadings may only be amended with the leave of the court. 

Conversely, proceedings involving an application to the court or a judge under any written law are required to be commenced by originating summons supported by an affidavit. Amendments to the originating summons may only be made with the leave of the court. However, where it appears that a proceeding begun by originating summons would be more suitably tried by way of a writ (ie, because of a substantial dispute of fact), the court may convert the matter to that commenced by writ and proceed with the matter on that basis. 

The plaintiff is responsible to effect service of an originating process. 

An originating process must be personally served on an individual or by prepaid AR registered post addressed to the individual’s last known address. 

An originating process may be served on a corporation by leaving it at the corporation’s registered office, by sending a copy of it by registered post to the corporation’s principal place of business, or by handing the originating process to the secretary or any director of the corporation. 

Additionally, the court may permit the “substituted service” of originating processes where it is impracticable to effect service on a defendant through the prescribed methods. 

Where leave to serve an originating process out of jurisdiction is obtained, it must generally be served in accordance with the laws of that jurisdiction.

In a writ action, a defendant is required to file a Memorandum of Appearance within 14 days after service of the writ. Where a defendant fails to enter appearance within the stipulated timeframe, a plaintiff may enter a judgment in default against the defendant without the court having to determine the merits of the claim. There is no equivalent provision for originating summons. 

Representative actions are permitted under Order 15 Rule 12 of the ROC where numerous persons of a defined class have the same common interest in a claim and where the relief sought is beneficial to the defined class. Similarly, this rule allows an action to be brought against representative defendants.

There are no requirements to provide a client with a cost estimate of litigation at the outset. Nevertheless, the provision of such information is a matter of etiquette and best practice.

Both plaintiffs and defendants may make interim applications before trial. Aside from case management issues, Order 29 of the ROC permits parties to apply for a broad range of interim relief including injunctions, an order for the preservation of the subject matter and the sale of perishable property. 

A plaintiff may apply for a summary judgment under Order 14 of the ROC to obtain judgment before trial where there is no arguable defence. Such an application may only be moved after the defendant has entered appearance and should be made prior to the service of the defence.

A summary judgment application is made by way of a notice of application supported by an affidavit setting out the facts of the claim and the plaintiff’s belief that there is no arguable defence. The defendant is then entitled to file and serve a reply affidavit within 14 days of service of the application and its supporting affidavit. The plaintiff usually has a further right of reply by way of affidavit within 14 days of service of the defendant’s reply affidavit.

A prima facie case for summary judgment is established once the defendant enters appearance, the statement of claim has been served and the affidavit in support of the application complies with Order 14 Rule 2 of the ROC. The onus then shifts on to the defendant to raise a triable issue or a bona fide defence.

A plaintiff or defendant may also apply to strike out a defence or a claim where, under Order 18 Rule 19 of the ROC 2012:

  • it discloses no reasonable cause of action or defence; 
  • it is scandalous, frivolous or vexatious; 
  • it may prejudice, embarrass or delay the fair trial of the action; or
  • it is an abuse of the court process.

The applicant is required to show that the defence or claim is obviously unsustainable. The procedure for striking out an application is similar to that of a summary judgment, although it may generally be made at any stage of the proceedings. 

Order 27 Rule 3 of the ROC permits either party to apply to the court for an early judgment based on an admission made by the other side. 

Additionally, parties may apply for the disposal of a matter without trial upon the determination of a question of law or construction under Order 14A.

Order 15 Rule 6 of the ROC permits interested parties to apply to intervene and be joined as a party to an action. An application to intervene may be made at any stage of the proceedings prior to final judgment and is made by way of a notice of application and an affidavit in support of the application. Generally, the discretion to grant leave to intervene may be exercised where an applicant establishes that they have an interest in the cause or matter in dispute.

Order 23 Rule 1 of the ROC permits a defendant to apply for security for costs at any stage of the proceedings by a notice of application and an affidavit in support. It is discretionary but the defendant must, at the very least, establish that:

  • a) the plaintiff is ordinarily resident out of jurisdiction;
  • b) the plaintiff is a nominal plaintiff who is suing for the benefit of some other person and there is reason to believe that they will be unable to pay the costs of the defendant if ordered to do so;
  • c) subject to (b) above, that the plaintiff’s address is not stated or incorrectly stated in the writ or originating summons; or
  • d) the plaintiff has changed their address during the course of the proceedings with a view to evading the consequences of the litigation. 

The costs of an interlocutory application are generally awarded to the successful party. Costs in the subordinate courts are capped while those awarded in the High Court are entirely discretionary. In exercising this discretion, the High Court is required to consider the factors listed in Order 59 Rule 16 of the ROC which include, among other things, the complexity of the application and the difficulty or novelty of the questions involved.

Case management is fixed in respect of most applications within one month of filing where the court, upon conferring with the parties, will ordinarily give binding timeframes for the fair and efficient disposal of an application. 

Discovery is available in civil cases in Malaysia as of right. The process ordinarily involves the court giving pre-trial directions on the filing and exchange of the bundles of documents that parties seek to rely upon in the case. 

In the event that a litigant seeks further documents from the opposing party, the litigant may file an application for discovery under Order 24 of the ROC. 

Discovery on application is available for documents that the court deems relevant and necessary for the fair disposal of a matter and, further, documents that are or have been in the possession, custody or power of the respondent to the application. Order 24 Rule 3 permits discovery over documents which a party relies or will rely upon and, further, documents that could adversely affect a party’s case or that of another, or support another party’s case.

The discovery process involves the production of the documents sought and, where appropriate, the filing and service of a list of the documents (that are the subject of the application for discovery) that are or have been in the possession, custody or power of the respondent and, further, the filing of an affidavit verifying such a list. 

It is possible to obtain discovery from third parties in Malaysia. This is provided for in Order 24 Rule 7A of the ROC. 

Order 24 Rule 7A entitles a party to apply for third-party discovery prior to or after the commencement of proceedings. Such applications are to be supported by an affidavit that must, among other things, describe the documents in respect of which the order is sought and state the relevance of the documents to an issue that has arisen or is likely to arise from the proceedings. 

Third-party discovery is also available with a view to obtaining information about persons who are likely to be parties to the intended proceedings (where proceedings have yet to commence). Such applications have been made in this jurisdiction against website administrators to disclose the identities of bloggers who operate under pseudonyms in potential defamation claims. The common law has accepted that the applicant for such an order must show that it has a viable claim against the prospective defendant and requires the documents sought to facilitate the action.

Third-party orders of discovery may be granted on condition that the applicant provides security for the costs incurred by the person against whom the order is sought. Further, third-party orders may be made with a requirement for the respondent to the order to depose an affidavit stating whether the documents are, or have been, in their possession and, if not, when they parted with them.

The general approach towards discovery involves two stages, which have been referred to in 5.1 Discovery and Civil Cases. The first stage involves court-mandated directions for discovery in the context of pre-trial directions. The second stage entails applications made by parties in respect of specific documents if such documents were not disclosed in the first stage. The test in the second stage is one of relevance and necessity and, further, satisfying the court that the document(s) is/are or have been in the possession, custody or power of the respondent to the application.

There are two primary alternatives to the discovery of documents in Malaysia. These are applications for interrogatories and applications for further and better particulars. 

Applications for interrogatories are governed by Order 26 of the ROC. These applications entail seeking the court’s leave to serve a list of specific questions on an opposing party that requires the latter to answer or clarify matters of evidence in respect of its case. Interrogatories are allowed in respect of matters that are directly in issue and where they are designed to obtain admissions of facts that would reduce the issues to be determined. The answers to interrogatories are to be deposed on affidavit.

Applications for further and better particulars are governed by Order 18 Rule 12 of the ROC. Unlike interrogatories, such applications are confined to matters of pleadings and do not relate to evidential matters. The particulars provided in response to the application are to be in the form of a pleading.

Two forms of legal professional privilege are recognised in Malaysia. They are legal advice privilege and litigation privilege.

Legal advice privilege relates to all communications and documents between a lawyer and a client where legal advice is sought. The privilege extends to in-house counsel as well as external legal representatives. The privilege applies irrespective of whether the material relates to litigation.

Litigation privilege applies to communication and documents that are made for the purpose of litigation. For this privilege to apply, it must be shown that the material was prepared for the dominant purpose of litigation that is pending or in contemplation. 

Discovery may be resisted on a number of grounds in Malaysia. These include, among others, legal professional privilege, confidentiality and that the material is classified as “without-prejudice communications”.

Resisting discovery on the grounds of confidentiality has succeeded in the context of statements made in the course of disciplinary, investigatory and/or inquiry proceedings. However, such arguments against disclosure would be balanced against the relevance and necessity of the document in the suit.

Communications that are labelled as, or in substance considered, “without-prejudice” communications are exempt from disclosure. Negotiations or admissions or a party’s willingness to amicably resolve a matter are considered “without-prejudice” communications and are beyond discovery. However, a mere assertion of a “without-prejudice” label does not automatically exclude such communications from discovery. The court would have to assess the substance of the communication to uphold the claim. 

Injunctive relief may be ordered to prevent the initiation or continuation of an act or to compel the performance of an act. There are two forms of injunctions in Malaysia – permanent and interim/interlocutory.

Permanent or perpetual injunctions are only granted after hearing both parties, and normally at the end of the trial. They have the effect of binding the parties finally and perpetually. Interim or interlocutory injunctions can be granted at any stage of the proceedings and are usually granted in urgent cases to preserve the status quo pending the determination of a matter. They are not final in nature and will only bind the parties until the matter has been determined. 

In granting injunctions, the Malaysian courts have been consistent in applying the principles in the English decision of American Cyanamid v Ethicon (1975) AC 396. 

There is a series of injunctions a court may grant depending on the necessity and circumstances of the case. Some of these injunctions include Mareva injunctions (which restrain defendants from dissipating, disposing of or concealing their assets to defeat an action brought against them).

Injunctions may be granted in urgent cases. Order 29 Rule 1(3) of the ROC allows for an injunction application to be made even before the issuance of an originating process. However, the originating process must be commenced within two days of the granting of the injunction (or such period deemed appropriate by the court), or the defendant may apply for the discharge of the injunction. An application under this provision can be made ex parte. 

Injunction applications can be heard ex parte. Such applications must be supported by an affidavit that must contain a clear and concise statement of the facts giving rise to the claim and application for the injunction, a statement on why the application has been moved ex parte, clarification on whether notice has been given to the opposing party, and if not, the reason for the absence of notice. The supporting affidavit must also contain any response the opposing party is likely to proffer to the claim or application, any facts which may lead the court not to grant the application ex parte at all, any similar application made and the precise relief sought. 

The injunction, if granted, will last for 21 days unless revoked or set aside. Upon the granting of the injunction, the court must fix a date to hear the application inter partes within 14 days from the date of the order.

The giving of an undertaking as to damages is a key requirement for the granting of an injunction. An applicant is required to furnish an undertaking regarding damages in their application for an injunction, where compensation will be given for any losses suffered by the opposing party in the event the injunction is discharged. 

Injunctive relief in the form of a Mareva injunction can have worldwide effect and may be granted even if the respondent's assets are abroad. The granting of such an injunction would result in the respondent being restrained from disposing of or transferring the foreign assets before judgment is granted. 

The Malaysian courts are ordinarily reluctant to allow injunctions to extend to third parties, or non-parties. However, injunctions may be granted that have an indirect impact on third parties. In the context of Mareva injunctions, the courts have set aside injunctions deemed to be too wide and oppressive to third parties. 

As injunctions are court orders, failure to comply could result in the initiation of committal proceedings. Even though injunctions are ordered in civil proceedings, non-compliance with their terms can result in penal consequences in the form of a fine or custodial sentence. 

Civil trials are conducted in Malaysia as a mixture of witness and expert examination and the filing and exchange of documents by parties in the matter.

The initial stage of the trial process involves a series of pre-trial case managements before the judge or the registrar assigned to the court. At these sessions, pre-trial and administrative directions are rendered to the parties in preparation for the trial.

The delivery of opening speeches is usually dispensed with at the trial and the matter proceeds directly to the evidence-taking stage. Evidence-taking for each witness is divided into three stages, namely: examination-in-chief, cross-examination and re-examination. A witness’s evidence is chiefly contained in their witness statement. Ordinarily, the examination-in-chief stage proceeds swiftly with the witness statement being taken as read and admitted into evidence. The second stage involves the cross-examination of the witness by counsel appearing for the opposing party. The final stage of evidence-taking is the re-examination of the witness.

Following the evidence-taking stage of a trial, the judge could render directions for the filing and exchange of post-trial written submissions.

The matter would then either be fixed for delivery of the court’s decision in the case (based purely on the written arguments of parties) or fixed for oral clarification (where counsel would be accorded the opportunity to tender oral submissions in support of the written arguments proffered). If the latter course is adopted, the matter would be fixed for decision at a subsequent date, where the judge would deliver their ruling in the case.

At case-management sessions prior to trial or a hearing, the court renders administrative directions for the case. These include, among others, directions on the filing and exchange of documents for the case, the calling of witnesses for trial and the scheduling of a hearing date for the trial. In the present day, at case managements, courts have become inclined to enquire into the possibility of resolving the dispute by way of an out-of-court settlement of the matter or the use of alternative dispute resolution mechanisms (such as mediation or conciliation). 

Trial by jury for civil cases does not exist in Malaysia. It has also been abolished for criminal trials in the country.

The Evidence Act of 1950 (the Act) governs the rules of evidence in Malaysia. For evidence to be used in proceedings, it has to be both relevant and admissible. Once evidence is admitted, the court assesses its weight in determining the extent to which it wishes to rely upon the evidence.

The Act also refers to the "best evidence rule" where direct evidence is considered the best evidence. Direct evidence supports the truth of an assertion directly without requiring any inference to be drawn from it such as eyewitness evidence. Circumstantial evidence on the other hand is also admissible but may not carry as much weight as direct evidence, as it is the duty of the court to draw inferences to connect it to a conclusion of fact.

In respect of documentary evidence, the Act provides that documents may be proved by either primary evidence or secondary evidence. Ideally, the original documents should be admitted. However, the Act also provides for instances where secondary evidence may be tendered in cases where, for example, the original document has been lost or destroyed, or the person in possession of the document refuses to produce it.

Parties are allowed to adduce expert evidence to assist the court in respect of matters of, among others, art, science or foreign law, as the court may not be equipped with the requisite expertise to form its own opinion. 

The ROC permit court-appointed experts to participate in taking the evidence of a matter.

Generally, all trials are conducted in open court and are open to the public. Trials may be conducted in camera where the court is satisfied that it is expedient to keep the matter private in the interests of justice, public safety, public security and propriety. 

The level of intervention by a judge at a trial or hearing varies with the holder of the office. 

At trial, judges ordinarily play a passive role in the examination of witnesses and merely observe the demeanour of the witnesses to determine their credibility and the weight attached to their testimonies. However, judges may ask a witness questions of their own. In such instances, the judge would accord counsel the opportunity to ask the witness consequential questions of their own in respect of the questions posed by the bench. The level of judicial intervention is at its highest when a matter is fixed for oral clarification after evidence-taking. At these sessions, the judge poses specific questions to counsel on aspects of their respective cases.

At hearings, judges ordinarily accord parties the opportunity to summarise their arguments, as opposed to delivering oral arguments at length in repetition of their written submissions filed prior to the hearing. Judges generally pose specific questions to counsel during such hearings. 

The main stages in civil proceedings are as follows:

  • the filing and exchange of pleadings;
  • the conduct of pre-trial case managements and compliance with pre-trial directions;
  • the filing and disposal of interlocutory applications;
  • the filing and exchange of written submissions for hearings;
  • the trial or hearing in itself and the filing of post-trial written submissions.

A civil suit is commenced when the originating process is filed. This is through either a writ of summons or originating summons. A defendant to a suit is given 14 days to enter appearance and another 14 days to file and serve their defence and counterclaim (if any). 

Depending on the urgency of the matter, a hearing would ordinarily be fixed within two months after the commencement of proceedings. However, a trial would be fixed approximately six months after the commencement of the matter, depending on the schedule of the judge.

Trials usually take up to three to five days in respect of the evidence-taking and a decision by the judge is delivered within one month of the filing of post-trial written submissions. 

Hearings are ordinarily completed in a day, with a decision ordinarily delivered on the same day.

In general, parties are free to settle their intended or pending proceedings without the approval of the court. However, there are exceptions to this, eg, settlement of disputes involving children, persons acting under a disability, matrimonial finance, probate, and certain defamation claims.

The confidential and “without prejudice” aspects of negotiations are important elements in the settlement of a dispute. It is inherent in the privilege of “without prejudice” that the contents of any settlement agreement will remain confidential and thus removed from the public domain until a settlement has been reached and the privilege lifted. A duty of confidentiality will not apply to information which is already in the public domain. 

Where a claim is settled after proceedings have been issued, the settlement agreement should provide for how these proceedings are to be dealt with. The settlement may itself take the form of a consent order, or alternatively, a detailed settlement agreement may have been negotiated to dispose of the claim. 

For example, in the event that the consent order is for the payment of a sum of money, the judgment creditor can enforce the judgment by a third-party debt order, a charging order, or an attachment-of-earnings order. 

The court will not impose terms upon the parties which were not originally agreed. Enforcement is limited to the basis of the order.

A settlement agreement may be set aside if the general contractual principles that render a contract void apply. The circumstances in which a settlement agreement may be ineffectual and set aside include:

  • where one of the parties lacks capacity;
  • where there has been fraud or misrepresentation of a material fact in certain circumstances;
  • where there have been certain forms of duress and undue influence; and
  • where the agreement is illegal. 

The different forms of relief that the court may grant include general damages and special damages, and equitable relief, such as specific performance and injunctive relief. A successful party may also be awarded costs at the discretion of the court. 

Damages are the pecuniary compensation made to a claimant who has suffered loss or damage as a result of an actionable wrong for which the defendant is responsible. Such a right may arise under a statute as well as under common law. The normal function of damages for breach of contract is the same as that in tort, namely, compensatory. The aim is to compensate the true loss suffered by the innocent party and place them in the same position, as far as money is concerned, as they would have been in if the contract had been performed. The court may sometimes depart from this general policy and award a greater sum, such as aggravated damages where there has been intangible injury to the claimant, and where this injury was exacerbated by the defendant’s conduct. There are also circumstances where the court may award exemplary or punitive damages to penalise the defendant who committed the tort. 

Sometimes parties to a contract will have agreed, as a term of the contract, the damages payable on a breach. These are liquidated damages clauses and provide a fixed, pre-determined rate of damages payable. 

The court derives its power to grant pre-judgment interest under Section 11 of the Civil Law Act 1956. The court has unfettered discretion to order pre-judgment interest. It also has discretion as to the rate of interest, which part of the debt is subject to interest, and the period for which interest should be charged. 

Generally, a successful litigant is prima facie entitled to pre-judgment interest. The court will, however, take into account other factors, such as the nature of the claim, whether there was a delay on the claimant’s part, the conduct of the parties, and the reasonableness of the defence raised.

Every judgment debt carries interest of 5%, subject to change by the chief justice, from the date of judgment until the judgment is satisfied. 

A judgment must be enforced within 12 years from the date it was pronounced in accordance with the provisions of the LA. Furthermore, any method of enforcement that takes place more than six years from the date of judgment requires the leave of the court. 

Various methods of execution are available. One example is through a writ of execution, which includes a writ of seizure and sale, a writ of possession, and a writ of delivery. Another method is via garnishee proceedings where a judgment creditor can apply to the court to have the money paid directly to them in circumstances where a garnishee owes money to a judgment debtor. Bankruptcy and winding-up proceedings are also commonly used methods of enforcement.

A foreign judgment must be registered before it can be enforced. The Reciprocal Enforcement of Judgment Act 1958 enables judgments made in the United Kingdom, Singapore, Hong Kong, New Zealand, Sri Lanka, Brunei and India to be enforced in Malaysia. The said Act also provides the requirements for the registration of a foreign judgment, which include that the judgment must be a final and conclusive judgment made by a superior court for a definite sum. Another requirement is that the enforcement of the judgment cannot be contrary to public policy in Malaysia.

In Malaysia, the appellate jurisdiction is only conferred upon the High Court, Court of Appeal and Federal Court by virtue of the Courts of Judicature Act 1964. 

The High Court is empowered to hear and determine appeals from the subordinate courts or tribunals pursuant to written law. 

The Court of Appeal is empowered to hear and determine appeals for judgments of the High Court in the exercise of its original or appellate jurisdiction. 

The Federal Court is the apex court in Malaysia. It has the jurisdiction to determine appeals from judgments of the Court of Appeal in respect of civil matters decided by the High Court in the exercise of its original jurisdiction. 

In civil disputes, there is a two-tier process for appellate matters at the Federal Court. Before an appeal from the Court of Appeal can be heard at the Federal Court, the applicant/appellant must first obtain leave to appeal to the Federal Court. Leave to appeal to the Federal Court is preserved for, among others, cases with points of law of general importance that have not previously been determined by the Federal Court or cases that relate to the effect of a provision of the Federal Constitution. Once leave is granted, the appeal is heard in full at the Federal Court.

An appeal from the subordinate courts to the High Court is only permitted where the value of the dispute is more than MYR10,000. However, an exception is made for questions of law, where regardless of the amount in dispute or the value of the subject matter, the High Court is empowered to determine the appeal. 

An appeal to the Court of Appeal that originated in the High Court will not be allowed where the judgment was recorded by the consent of the parties or if the judgment was declared to be final under any written law. Appeals are allowed as of right for claims above MYR250,000 and for judgments given in the court on the trial of an interpleader issue. Leave of the Court of Appeal is required where the amount in dispute or the value of the subject matter is less than MYR250,000; where the judgment is on costs only, which are left to the discretion of the High Court; or for interpleader proceedings dealt with summarily. 

Appeals to the Federal Court are only allowed if the conditions in s96(a) or (b) of the Courts of Judicature Act 1964 are satisfied. In making an application for leave to appeal to the Federal Court, the applicant/appellant must propose questions of law that are to be admitted for full appeal. These questions must satisfy the conditions stated in 10.1 Levels of Appeal or Review to a Litigation.

Appeals from the decision of a subordinate court to the High Court would require the party to file a Notice of Appeal within 14 days of the decision being reached. 

In respect of appeals to the Court of Appeal where leave to appeal is not required, the Notice of Appeal must be filed within 30 days of the date of the impugned decision. If leave of the court is required, the same 30-day timeframe will apply for leave to be filed as is required to file a Notice of Appeal. Upon the granting of leave, the Notice of Appeal must then be filed within 14 days. 

For all appeals to the Federal Court, an application for leave to appeal must be made within 30 days of the impugned decision.

An appeal is considered as a re-hearing of the matter from the court below. At appeals, the appellate court can only draw inferences of facts and make an order which ought to have been made by the original court from which the appeal has come. This is usually confined to issues raised on the grounds of appeal. 

As a general rule, if a point was not raised in the pleadings, it will not be open for argument on appeal. Similarly, if a point was not raised in the courts below, despite being pleaded, it will generally not be entertained on appeal. However, a new point could be raised in respect of points of law and facts for which no further evidence is required. The overriding principle in determining if a new point should be entertained is whether the interests of justice would be served by the admittance of the point.

New evidence can only be admitted on appeal if special grounds can be shown that the evidence could not have been obtained with reasonable diligence during the trial, that the evidence would have an important influence on the result of the case, and that the evidence is apparently credible. 

Apart from applications for leave to appeal to the Federal Court, there are no statutory provisions that empower appellate courts to impose conditions on the granting of appeals. In respect of applications for leave to appeal at the Federal Court, if leave is granted, the ensuing appeal at the Federal Court is meant to be confined to the questions of law that were admitted for the full appeal.

Some of the orders that an appellate court can make include:

  • dismissing the appeal by affirming the decision of the lower court;
  • allowing the appeal by reversing the decision of the lower court; 
  • confirming certain parts and varying certain parts of the decision of the lower court; and
  • ordering a retrial (where applicable).

The costs of litigation encompass both the costs which each party pays for legal representation as well as the “fees, charges, disbursements, expenses and remuneration” which a party that has been awarded costs may seek from its opponent. The latter costs, or costs as between parties, are usually paid by the losing party to the successful party unless there are special grounds to order otherwise – Order 59 Rule 3 of the ROC.

As a general rule, costs as between parties are determined on a standard basis, whereby the court will only award costs of a reasonable amount, in respect of costs which were reasonably incurred and are reasonable in amount. Any doubts as to the reasonableness of the costs awarded on a standard basis will be resolved in favour of the paying party – Order 59 Rule 16(3) of the ROC. 

Costs as between parties may, however, be assessed on an indemnity basis in circumstances such as where the paying party conducted the matter in a dishonest or otherwise improper manner. Under the indemnity basis, all costs are allowed unless they are of an unreasonable amount or unreasonably incurred – Order 59 Rule 16(4) of the ROC. An assessment of costs on an indemnity basis differs from on a standard basis, in that any doubt as to the reasonableness of costs is resolved in favour of the receiving party.

Costs generally follow the event. A successful party may, however, be deprived of costs in certain circumstances, such as the dishonest conduct of proceedings. 

There are scale costs for matters proceeding before the subordinate courts, while the High Court will determine costs with regard to all the relevant circumstances, such as the factors in Order 59 Rule 16 of the ROC which include, among other things, the complexity of the matter and the skill, time and labour expended by the solicitor or counsel.

The interest awarded on every judgment debt is inclusive of costs. The interest rate is currently fixed at 5% per annum and is to be calculated from the date of judgment until the judgment debt is satisfied.

The majority of disputes can be referred to arbitration in Malaysia. However, disputes which are not arbitrable in Malaysia include criminal matters, prosecutions, issues of public policy, family law matters, and aspects of insolvency law.

The Malaysian courts are generally pro-arbitration and Malaysia is viewed as a safe seat for the recognition and enforcement of arbitration awards.

The courts will only compel parties to pursue ADR on application by one of the parties, if it can be shown that before the dispute, the parties had agreed to ADR as a form of dispute resolution. Currently, there are no sanctions in place for unreasonably refusing ADR. However, as the English courts have imposed cost sanctions on parties who refuse reasonable offers to mediate and to engage in other alternative dispute resolution processes, it remains to be seen whether the English position will be adopted in Malaysia.

The Mediation Act 2012 was introduced to facilitate the mediation process. Generally, the parties have freedom to appoint their mediator. If the parties cannot come to a consensus, they can request the Malaysian Mediation Centre of the Bar Council to appoint a qualified mediator from its panel. Should the mediation result in an agreement between the parties, the agreement is reduced into writing in the form of a settlement agreement. On the other hand, if the mediation is not successful, the parties may pursue their respective rights in litigation or arbitration. 

In Malaysia, it is common for parties to commence legal proceedings without first attempting mediation. In such circumstances, it is common practice for the judge to encourage the parties to attempt mediation before proceeding with the suit. If the parties are agreeable to mediation, the judge may mediate the matter himself or refer the parties to another judge or registrar to conduct the mediation. Where mediation fails, the case is returned to the hearing judge for disposal. 

The Asian International Arbitration Centre (AIAC) is the default appointing body for arbitration and provides institutional support as a neutral and independent venue for the conduct of domestic and international arbitration and other ADR proceedings. The AIAC is a non-profit, non-governmental international arbitral institution which has been accorded independence and certain privileges and immunities by the government of Malaysia.

The Malaysian Mediation Centre (MMC) is a body established through the Malaysian Bar Council to promote mediation as a means of ADR and to provide a proper avenue for successful dispute resolution. The MMC offers mediation services and provides mediation training for those interested in becoming mediators, and it accredits and maintains a panel of mediators. Currently, the MMC consists of lawyers who have completed the mediation training programme and it deals with civil, commercial and matrimonial matters. 

Both domestic and international arbitration in Malaysia are governed by the Arbitration Act 2005 which adopted the United Nations Commission on International Trade Law Model Law on International Commercial Arbitration (UNCITRAL Model Law) with certain adjustments to cater to domestic requirements.

A notable aspect of the Arbitration Act 2005 is the "opt in" and "opt out" provisions that act as distinguishing factors between international and domestic arbitrations. While Parts I, II and IV of the 2005 Act are mandatory in nature and apply to all arbitrations seated in Malaysia, Part III of the 2005 Act (Additional Provisions Relating to Arbitration) only applies to international arbitrations if the parties agree to "opt in" either in part or in whole. Equally, Part III of the 2005 Act will, by default, apply to domestic arbitrations unless the parties agree to "opt out" in part or in whole.

Malaysia is also a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (New York Convention). As such, applicable laws concerning the recognition and enforcement of arbitration agreements and the enforcement of foreign arbitral awards will apply in Malaysia. 

While many civil disputes may be referred to arbitration, certain disputes are reserved for national courts. Examples of disputes that may not be settled by arbitration include criminal matters, bankruptcy or insolvency matters, intellectual property rights, and antitrust and competition law matters.

The Arbitration Amendment (No 2) Bill 2018 was passed in Dewan Negara on 5 April 2018 and the Arbitration Amendment (No 2) Act 2018 came into operation on 8 May 2018. The Arbitration Amendment Act, inter alia, repealed Section 42 of the Arbitration Act 2005, and as a result, parties are no longer able to refer questions of law to the High Court vide a Section 42 reference. An award can now only be challenged on the limited and strictly procedural grounds set out in Section 37 of the Arbitration Act 2005, including if the award was induced or affected by fraud or corruption, if there was a breach of the rules of natural justice, or if the award is in conflict with the public policy of Malaysia.

Under Section 38 of the Arbitration Act 2005, an award may be enforced by first applying to the High Court to recognise it as binding. It may subsequently be enforced by entry as judgment in the terms of the award. It is necessary for the applicant to produce a duly authenticated original or certified copy of the award and the original or certified copy of the arbitration agreement. 

Steven Thiru & Sudhar Partnership

Unit A1-12-01
Arcoris Mont Kiara
Jalan Kiara
50480
Kuala Lumpur
Malaysia

+603 6411 9000

+603 6411 9009

gregorydas@stsp.my www.stsp.my
Author Business Card

Law and Practice

Authors



Steven Thiru & Sudhar Partnership is a firm of advocates and solicitors who focus exclusively on dispute resolution. The members of the firm practise in a wide array of dispute resolution areas and regularly appear at all levels of the courts in Malaysia, as well as in alternative dispute resolution centres. The firm also serves clients in advisory work and other pre-action matters. The firm's areas of practice include general litigation (especially contract and tort), administrative law, alternative dispute resolution, corporate and commercial law, energy law, housing law, employment law, land law, media law, tax law, and probate and trusts law. The dynamic and well-regarded group of practitioners is led by two senior partners who are well known in the profession: Steven Thiru is the 31st president of the Malaysian Bar and T Sudhar is the immediate past president of the Malaysian Institute of Arbitrators. Pupils in chambers, Ananthan Nithya Moorthi, Adrienne Senna, Ng Yee Lin, Michelle Mary Kuruvilla and Illysa Jace Chakrabathy assisted with the preparation of the chapter.

Compare law and practice by selecting locations and topic(s)

{{searchBoxHeader}}

Select Topic(s)

loading ...
{{topic.title}}

Please select at least one chapter and one topic to use the compare functionality.