Sep 2023

Malaysia

Law Over Borders Comparative Guide:

Commercial Litigation and Cross-border Enforcement

Sections

Scroll down to read the full chapter or click on the headings below to jump to the relevant section.

Top

1 . What is the structure and organisation of local courts dealing with commercial claims? What are the main procedural rules governing commercial litigation?

Civil procedure in Malaysia is governed by the Rules of Court 2012 (ROC), which is supplemented by practice directions (PDs) that provide guidance on the ROC.

The civil courts are divided into the Superior Courts (governed by the Courts of Judicature Act 1964) and the Subordinate Courts (governed by the Subordinate Courts Act 1948). The Superior Courts comprise three courts with different jurisdictions: the Federal Court, the Court of Appeal and the High Courts. The Subordinate Courts consist of the Sessions Courts and the Magistrates Courts.

Superior Courts

Federal Court

As of 31 March 2023, the Federal Court bench consists of 11 judges, namely the Chief Justice of the Federal Court, the President of the Court of Appeal, two Chief Judges of the High Courts and seven Federal Court judges. The Federal Court is the apex court of Malaysia and it exercises both original and appellate jurisdiction. The Federal Court’s original jurisdiction is governed by Article 128(1) and (2) of the Federal Constitution and it allows the Federal Court to determine any constitutional law issue. The Federal Court may, subject to leave being obtained first, hear appeals from any judgment or order of the Court of Appeal in respect of any civil cause or matter decided by the High Court in the exercise of its original jurisdiction. All proceedings at the Federal Court are generally heard and disposed of by three or five judges.

Court of Appeal

The Court of Appeal bench has 28 judges, namely the President of the Court of Appeal and 27 Court of Appeal judges. The Court of Appeal exercises appellate jurisdiction and has the jurisdiction to hear and determine appeals from any judgment or order of any High Court in any civil matter, whether it was made in the exercise of its original or of its appellate jurisdiction.[1] Unless leave is granted, the Court of Appeal will only hear appeals where the amount or value of the subject matter of the claim (exclusive of interest) is MYR 250,000 or above.[2] All proceedings at the Court of Appeal are generally heard and disposed of by three judges.

High Courts

The High Court bench has 105 judges, namely the Chief Judges of the High Courts, 67 High Court judges and 36 judicial commissioners. The High Court of Malaya and the High Court of Sabah and Sarawak are High Courts of coordinate jurisdiction[3] and hear cases at first instance as well as appeals against decisions from the Subordinate Courts. The High Court also hears appeals from a decision of a Subordinate Court in any civil matter where the amount in dispute or the value of the subject matter is above MYR 10,000, save where the matter involves a question of law.[4] All proceedings at a High Court are generally heard and disposed of before a single judge. 

Within the High Courts, various specialised courts have been set up, including the Intellectual Property Court, Construction Court, Family Court, Admiralty Court, Cyber Court and Islamic banking (Muamalat) Court.

Subordinate Courts

Sessions Court

The Sessions Court judge has unlimited jurisdiction to try, among others, all actions and suits of a civil nature where the amount in dispute or the value of the subject-matter does not exceed MYR 1 million, and all civil actions and suits for the specific performance or rescission of contracts, or for cancellation or rectification of instruments.[5] The Sessions Court may grant an injunction and make a declaration, regardless of whether any other relief, redress or remedy is or could be claimed. 

Magistrates Courts

For civil matters, a first-class magistrate has the jurisdiction to try all actions and suits of a civil nature where the amount in dispute or value of the subject matter does not exceed MYR 100,000,[6] whereas a second-class magistrate only has the jurisdiction to try original actions or suits of a civil nature where the plaintiff seeks to recover a debt or liquidated demand in money payable by the defendant, with or without interest, not exceeding MYR 10,000.[7] 


[1] Section 67 of the Courts of Judicature Act 1964.

[2] Section 68 of the Courts of Judicature Act 1964.

[3] Article 121 of the Federal Constitution.

[4] Section 28 of the Courts of Judicature Act 1964.

[5] Section 65 of the Subordinate Courts Act 1984.

[6] Section 90 of the Subordinate Courts Act 1984.

[7] Section 92 of the Subordinate Courts Act 1984.

Top

2 . What pre-action considerations apply?

In Malaysia, there are generally no steps that a party must take before commencing court proceedings. Unlike the Civil Procedure Rules in the United Kingdom, the ROC does not impose any pre-action protocols on parties. Be that as it may, the parties may have agreed to certain pre-dispute negotiations or procedures in their contracts or agreements, with which they will be contractually bound to observe and comply. 

A party can apply for a pre-action discovery order under Order 24 rule 7A (1) of the ROC before the commencement of proceedings, for the purpose of, or with a view to, identifying possible parties to any proceedings. In a pre-action discovery application, the applicant must:

  • specify or describe the documents in question; 
  • show that the documents are relevant to an issue arising or likely to arise in the proceedings, or reveal the identity of the likely parties to the proceedings, or both by (where practicable), referencing any pleading served or intended to be served in the proceedings; and 
  • show that the person against whom the order is sought is likely to have or have had them in their possession, custody or power. 

A plaintiff may also apply for a disclosure order against a third-party bank pursuant to Order 24 rule 7A of the ROC. This application is also known as a ‘Bankers Trust’ application and is used to ascertain information from the bank accounts of fraudsters and other recipients of fraud monies. The overriding test in a Bankers Trust application is that there must be a viable case against the wrongdoers and the plaintiff requires discovery to facilitate an action. 

Top

3 . What are the main alternative dispute resolution (ADR) methods used to settle large commercial disputes?

In Malaysia, arbitration and adjudication are the main alternative dispute resolution methods used to settle large commercial disputes. Mediation is also commonly used in Malaysia. 

Top

4 . How long, on average, do court proceedings take to reach trial?

Generally, the procedure and timelines for each stage in the litigation process are provided for in the ROC. Courts have considerable discretion to fix the deadlines in the proceedings and may make any order and directions for just, expeditious and economical disposal of the proceedings. Depending on the size and complexity of the case, it will generally take around 9 to 12 months for a relatively straightforward commercial case to reach trial.

Top

5 . What disclosure obligations apply? Are parties required to disclose unhelpful documents as well as those on which they rely?

Under Order 24 rule 3 of the ROC, the court may at any time in the proceedings order any party to give discovery by making and serving on any other party a list of the documents that are, or have been, in its possession, custody or power and may at the same time or subsequently also order it to make and file an affidavit verifying such a list and to serve a copy thereof on the other party. Generally, the list of documents is then verified by way of an affidavit, which is filed and served on the other party.

The documents that parties may be ordered to disclose are: 

  • documents on which the party relies or will rely on; and
  • documents that could adversely affect its own case, adversely affect another party’s case, or support another party’s case. 

The provisions in Order 24 of the ROC are subject to any written law or any rule of law that authorises or requires the withholding of any document on the grounds that the disclosure of it would be injurious to the public interest. Privileged documents that are not subject to discovery/disclosure include public interest privilege, affairs of state privilege and legal professional privilege.

The duty to provide disclosure under any order continues throughout the proceedings until the proceedings in which the order was made are concluded.[8]


[8] Order 24 rule 8A of the Rules of Court 2012.

Top

6 . Can witnesses be required to attend trial and face cross-examination?

Yes. The evidence-in-chief of each witness, which are typically required to be exchanged before trial, can only be admitted as evidence provided that the witness attends the trial for oral cross-examination. Order 38 rule 1 of the ROC provides that as a general rule, witnesses in a writ action are to give evidence orally for examination. In this regard, witnesses are first examined-in-chief, then cross-examined and finally, re-examined. 

As for expert witnesses, they are also generally required to give oral evidence on issues on which the expert witnesses of the respective parties are unable to agree. Where the experts reach agreement on an issue during the course of their discussions, the parties may agree to be bound by the agreement and hence remove the issue from contention and from the areas on which the experts may be cross-examined.[9]


[9] Order 40A rule 5 of the Rules of Court 2012.

Top

7 . What discretion do the courts have in making costs orders?

The court has full discretion to order costs as well as full power to determine by whom and to what extent the costs are to be paid.

The general rule is that costs are to be paid by the losing party to the winning party. In assessing the costs to be paid, the court will consider all relevant circumstances and, in particular, the factors provided for in Order 59 rule 16(1) of the Rules of Court 2012, which include the complexity of the item of costs or of the cause or matter in which it arises and the difficulty or novelty of the questions involved; the skill, specialised knowledge and responsibility required of, and the time and labour expended by, the solicitor or counsel; the number and importance of the documents, however brief, prepared and used; and where money or property is involved, its amount or value. 

A plaintiff who is ordinarily resident out of the jurisdiction, or is a nominal plaintiff who is suing for the benefit of another person and in respect of whom there is reason to believe that they will be unable to pay the costs of the defendant may be ordered to provide security for costs in civil proceedings.[10]

In addition, section 580A of the Companies Act 2016 has previously allowed for security for costs to be ordered against a company if it appears by credible testimony that there is reason to believe that the company cannot pay the costs of the defendant if the defendant is successful in its defence.


[10] Order 23 rule 1 of the Rules of Court 2012.

Top

8 . What are the main types of interim remedies available?

The court has powers to grant a wide range of interim remedies, including: 

  • Interim injunctions. Orders directing a defendant to do or refrain from doing something pending the trial where there is a serious question to be tried, damages are not an adequate remedy, and the balance of convenience lies in favour of granting an injunction.
  • Anton Piller orders or search orders. Mandatory injunctions requiring a defendant to provide access to its premises to allow documents and materials to be removed and preserved pending trial, to preserve the subject matter of a cause of action and of related documents.
  • Mareva injunctions or freezing orders. Orders preventing the defendant from dissipating assets so as not to frustrate any judgment that the plaintiff may eventually obtain against the defendant. 
  • Interim payments. Orders requiring a party to pay a sum of money into court on account of damages, debts or other sums that they may be held liable to pay the other party. A party may also be required to pay a portion of the sum claimed by the other party if the court is satisfied that, if the action proceeded to trial, the other party would obtain judgment for substantial damages against that party.
  • Quia timet injunctions. Injunctions to prevent an injury from occurring, which will only be granted if the plaintiff can show a strong probability that unless restrained, the defendant will do something that will cause the plaintiff irreparable harm. 
  • Appointment of provisional liquidator. Orders appointing provisional liquidators at any time after the presentation of a winding-up petition to preserve the assets of the company pending the hearing of the petition in company winding-up proceedings.
  • Appointment of receivers and managers. Orders appointing receivers and managers when it appears just and appropriate to do so to receive, manage or preserve property, or to restrain other parties from taking that property pending the trial.
Top

9 . What approach do the local courts adopt with respect to arbitration? What arbitration law applies and is it based on the UNCITRAL Model Law?

The Malaysian courts generally adopt a pro-arbitration stance and would usually uphold the validity of an arbitration clause. The Malaysian courts also tend to recognise and enforce arbitral awards unless the arbitral awards can be challenged within the limited grounds set out in sections 37 and 39 of the Arbitration Act 2005. 

The national law governing arbitration is the Malaysian Arbitration Act 2005, which is based on the 1985 UNCITRAL Model Law on International Commercial Arbitration (UNCITRAL Model Law) and the New Zealand Arbitration Act 1996. The Arbitration Act 2005 applies to both domestic and international arbitrations where the seat is in Malaysia.

Top

10 . Can arbitrators grant interim relief?

Pursuant to section 19 of the Arbitration Act 2005, unless otherwise agreed by the parties, the arbitral tribunal, may, at the request of a party, grant interim measures. The arbitral tribunal may grant an interim measure, whether in the form of an award or in another form, at any time prior to the issuance of the final award, to order a party to:

  1. maintain or restore the status quo, pending the determination of the dispute; 
  2. take action that would prevent, or refrain from taking action that is likely to cause, current or imminent harm or prejudice to the arbitral process itself; 
  3. provide a means to preserving assets out of which a subsequent award may be satisfied;
  4. preserve evidence that may be relevant and material to the resolution of the dispute; or 
  5. provide security for costs of the dispute. 
Top

11 . On what grounds can an arbitration award be appealed?

An arbitral award made by an arbitral tribunal pursuant to an arbitration agreement is final and binding on the parties,[11] and is not appealable based on questions of fact or law. Save in cases involving the correction or interpretation of an award under the provisions of the Arbitration Act 2005, the arbitral tribunal shall not vary, amend, correct, review, add to or revoke an award that has been made.

However, parties may apply to set aside or resist the recognition and enforcement of an award under the following limited grounds set out in sections 37 and 39 of the Arbitration Act 2005: 

  • a party to the arbitration agreement was under an incapacity; 
  • the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication in that regard, under the laws of Malaysia; 
  • the party making the application was not given proper notice of the appointment of an arbitrator of the arbitral proceedings, or was otherwise unable to present their case; 
  • the award deals with a dispute that is not contemplated by, or does not fall within, the terms of the submission to arbitration; 
  • the award contains decisions on matters that are beyond the scope of the submission to arbitration; 
  • the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties; 
  • the subject matter of the dispute is not capable of settlement by arbitration under the laws of Malaysia; or
  • the award is in conflict with the public policy of Malaysia. 

Recognition and enforcement of the arbitral award may also be refused where the award has not yet become binding on the parties or has been set aside or suspended by a court of the country in which, or under the law of which, that award was made.[12]


[11] Section 36 of the Arbitration Act 2005.

[12] Section 39 of the Arbitration Act 2005 – Malaysian Bio-XCell Sdn Bhd v. Lebas Technologies Sdn Bhd & Another Appeal [2020] 3 CLJ 534 (CA).

Top

12 . What international conventions and agreements on enforcement of judgments or arbitral awards is your jurisdiction a party to?

In terms of arbitral awards, Malaysia has acceded to the Convention on Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention) on 5 November 1985. Subject to the “reciprocity” reservation Malaysia will apply the New York Convention only to the recognition and enforcement of awards made in the territory of another contracting state. Malaysia further declares that it will apply the New York Convention only to differences arising out of legal relationships, whether contractual or not, which are considered as commercial under Malaysian law.

Malaysia is also a party to the ASEAN Comprehensive Investment Agreement between members of the Association of Southeast Asia Nations (ASEAN) countries and Convention on the Settlement of Investment Disputes between States and Nationals of Other States 1965 (ICSID Convention). The Convention on the Settlement of Investment Disputes Act 1966 makes provision for the recognition and enforcement of ICSID awards. Malaysia is not a party to any international conventions and agreements on enforcement of judgments.

Top

13 . What types of judgments in commercial matters are enforceable and what types are excluded?

Domestic judgments

Unless set aside, all domestic judgments are enforceable.

Foreign judgments

A foreign judgment may be recognised and enforced under the Reciprocal Enforcement of Judgments Act 1958 (REJA) or under common law by commencing an action on the judgment itself. A foreign judgment can generally be registered if it is final and conclusive between the parties, is for a sum of money, and applicable procedural requirements are complied with. A foreign judgment may be enforced as if it were a judgment of the Malaysian courts only after it has been registered.

REJA applies only to judgments made by superior courts from the reciprocating countries as listed in the First Schedule of the Act, namely the United Kingdom, Hong Kong, Singapore, New Zealand, Republic of Sri Lanka (Ceylon), India (excluding certain states) and Brunei Darussalam. 

An application to register foreign judgments must be filed within six years of the date of the judgment or any appeal decision therefrom; 

In order for a foreign judgment to be enforceable under REJA, the following requirements must be met:

  • it is final and conclusive as between parties ;
  • there is payable thereunder a sum of money, not being a sum payable in respect of taxes or other charges of a like nature or in respect of a fine or other penalty; and
  • being a judgment from a country or territory added to the First Schedule of REJA.

The registration of a judgment under REJA may be set aside if the Court is satisfied that:

  • the judgment is not a judgment to which REJA applies or was registered in contravention of REJA;
  • that the courts of the country of the original court had no jurisdiction in the circumstances of the case;
  • that the judgment debtor, being the defendant in the proceedings in the original court, did not (notwithstanding that process may have been duly served on him in accordance with the law of the country of the original court) receive notice of those proceedings in sufficient time to enable him to defend the proceedings and did not appear;
  • that the judgment was obtained by fraud;
  • that the enforcement of the judgment would be contrary to public policy in Malaysia; or
  • that the rights under the judgment are not vested in the person by whom the application for registration was made.

Foreign judgments from a country not listed under the First Schedule of REJA can be enforced by way of a common law action in Malaysia provided that the following requirements are met:

  • the judgment is for a definite sum of money, other than a sum payable in respect of taxed, penalties or multiple damages; and
  • it is final and conclusive.

However, an action on a foreign judgment at common law may be defended on the following limited grounds:

  • that the foreign court had no jurisdiction;
  • that the judgment was obtained by fraud;
  • that the judgment would be contrary to Malaysian public policy; and
  • that the proceedings in which the judgment was obtained were opposed to natural justice.[13]

[13] See Hua Daily News Bhd v. Tan Thien Chin & Ors [1986] 2 MLJ 107.

Top

14 . What is the process for registration of foreign judgments and arbitral awards?

Foreign judgment

As stated above, a foreign judgment may be recognised and enforced under REJA or under common law by commencing an action on the judgment itself. 

For registration of foreign judgments under REJA, the relevant provisions are found in sections 3 and 4 of REJA, read together with Order 67 rule 2 of the Rules of Court 2012, that essentially provide for a two-stage process which is as follows:

  • Stage 1 – ex parte proceeding. An originating summons must be filed together with an affidavit in support exhibiting a certified sealed copy of the foreign judgment. Provided that the requirements set out in sections 3 and 4 of REJA are met, the court shall then grant an ex parte order giving leave to register the foreign judgment. The order shall also state the period within which an application may be made to set aside the registration of the said foreign judgment, commonly 14 days. The foreign judgment cannot be executed until after the expiration of the time period in which an application may be made to set aside the registration. 
  • Stage 2 – inter partes proceeding. An application to set aside the ex parte order must be made within the time period specified in the ex parte order granting leave to register the foreign judgment. In seeking to set aside the ex parte order, the judgment debtor can only rely on the limited grounds set out in section 5 of REJA.

As for registration of foreign judgment under common law, the following procedures typically apply:

  • By way of a writ action. The judgment creditor must file a writ and statement of claim and upon service on the judgment debtor and appearance being entered by the judgment debtor, an application for summary judgment can be made. The application for summary judgment shall be supported by an affidavit exhibiting among others, a certified sealed copy of the foreign judgment. In the event the court is satisfied that there are no triable issues the court may then grant a summary judgment order. 
  • By way of an originating summons. The originating summons must be supported by an affidavit exhibiting among others, a certified sealed copy of the foreign judgment. 

Arbitral award

Malaysia is a signatory to the Convention on Recognition and Enforcement of Foreign Arbitral Awards 1958 (the New York Convention), which came into force on 3 February 1986 in Malaysia. 

The provisions on recognition and enforcement of arbitral awards are contained in sections 38 and 39 of the Arbitration 2005 Act read with Order 69 rule 8 of the ROC, that provide for a two-stage process,[14] which is as follows:

  • Stage 1 - ex parte proceeding. An originating summons must be filed with an affidavit in support exhibiting the duly authenticated original or duly certified copy of the award, and the original or duly certified copy of the arbitration agreement. An ex parte order giving permission to enforce an arbitral award will be made at this stage.
  • Stage 2 - inter partes proceeding. An application to set aside the ex parte order must be made within 14 days after service of the ex parte order on the party against whom the order is made. In seeking to set aside the ex parte order, the party can only rely on the limited grounds set out in section 39 of the Arbitration Act 2005.

[14] CTI Group Inc v. International Bulk Carriers SPA [2017] 9 CLJ 499 (FC).

Top

15 . Once the judgment or award is registered, what are the available methods of execution?

Once the judgment or award is registered, it will have the same force and effect as a Malaysian judgment.

For the enforcement and/or execution of judgment or order for the payment of money, the following options may be pursued: 

  • A writ of execution, which includes a writ of seizure and sale (for judgment sum), a writ of possession (for judgment for possession of immovable property) and a writ of delivery (for judgment or delivery of movable property); 
  • the appointment of a receiver or a receiver and manager; 
  • the examination of the judgment debtor where the judgment debtor will be ordered to attend court for oral examination as to his assets and means under section 4(1) of the Debtors Act 1957;
  • a garnishee order, which compels a third party who owes money to the judgment debtor to pay the said sum directly to the judgment creditor; 
  • a charging order in respect of shares held by the judgment debtor; and
  • bankruptcy or winding-up proceedings.

For failure to comply with judgments and orders to do or abstain from doing an act, the court may make an order for committal under Order 45 rule 5 of the ROC.

Top

16 . What interim measures are available pending enforcement?

Interim measures granted by courts

In Malaysia, the courts have wide powers to grant interim orders at any time and this includes before, during and after a judgment has been entered. Various interim measures have been developed in order to assist the effective enforcement of judgments, both domestic as well as foreign, and such measures include among others, the following:

  • interim injunctions: orders directing a defendant to do or refrain from doing something pending the enforcement where there is a serious question to be tried, damages are not an adequate remedy, and the balance of convenience lies in favour of granting an injunction;
  • Anton Piller orders or search orders: mandatory injunctions requiring a defendant to provide access to its premises to allow documents and materials to be removed and preserved pending enforcement, to preserve the subject matter of a cause of action and of related documents;
  • Mareva injunctions or freezing orders: orders preventing the defendant from dissipating assets so as not to frustrate any judgment that the plaintiff may eventually obtain against the defendant, pending enforcement;
  • orders for the appointment of receivers and managers: when it appears just and appropriate to do so to receive, manage or preserve property, or to restrain other parties from taking that property pending enforcement;
  • an order requiring a third party who was involved in or facilitated a wrongdoer to disclose certain information or documents which may allow the plaintiff to identify or sue the wrongdoer and ultimately recover their losses[15] and
  • an order for disclosure against a third party bank for information pertaining to a defendant’s bank account.[16]

Interim measures granted by arbitral tribunal

Pursuant to section 19 of the Arbitration Act 2005, unless otherwise agreed by the parties, the arbitral tribunal, may at the request of a party, grant interim measures prior to the issuance of the award. After the issuance of the award, the arbitral tribunal does not have the power to grant interim measures. Pending the enforcement of an arbitral award, a party who wishes to obtain interim measures must apply to the Court. 


[15] Norwich Pharmacal Co. v Customs and Excise Commissioners [1973] 2 All ER 943.

[16] Bankers Trust Co v. Shapira [1980] 3 All ER 353.

EXPERT ANALYSIS

Chapters

Bermuda

Charlotte Donnelly
Keith Robinson
Mahogany Bean

British Virgin Islands

Kate Lan
Nicholas Lee
James Noble

Canada

Robert J.C. Deane
Sean Gallagher

Cayman Islands

Amelia Tan
Joni Khoo
James Noble

China

Jessica Fei

England and Wales

Ben Bruton
Jake White
Suzanne Labi

Germany

Dr. Justus Jansen
Jamsched Amiri

Guernsey

Elaine Gray
Rebekah Johnston
Robin Gist

Hong Kong

Ian De Witt
Natalie Lam

Japan

Claire Chong
Kaori Sugimoto

Jersey

Christopher Tan
John Kelleher

Norway

Carl E. Roberts
Eline Hellem Langeland

Pakistan

Mansoor Hassan Khan

Saudi Arabia

Fahad AlDehais AlMalki
Salman AlAnazi
Talal AlOtaibi

Singapore

Calvin Ong
Monisha Cheong
Wendy Lin
Josephine Choo

South Korea

Daniel Chua
SeungMin Lee
Youjoun Ha

Taiwan

Angela Y. Lin
Joyce N. Chang

Thailand

Jittipong Champreechar
Napassorn Panitchewakul
Sarocha Thongperm

United Arab Emirates

Ayman Ibrahim
Hassan Al Shaqsi
Nasser Al Osaiba
Sleiman Jorr

United States

Arthur Schoen
Julia Mano Johnson
Natalie Holden

Powered by SimSage

Popular Articles

Latest Articles

Irish government confirms deferral of referendum on Unified Patent Court

11h

Pérez-Llorca enters Mexico through landmark merger with 100-lawyer González Calvillo

13h

Gibson Dunn unveils hire of Linklaters’ former leveraged finance co-head in London

15h

Orrick hires Kramer Levin’s life sciences head in New York

18h

McDermott hires two senior Shearman tax specialists in Paris

1d