This country-specific Q&A provides an overview of Litigation that may occur in Malaysia.
This Q&A is part of the global guide to Litigation. For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/practice-areas/litigation-second-edition/
Published June 2019
What are the main methods of resolving commercial disputes in your jurisdiction?
In Malaysia, commercial disputes are normally resolved through court proceedings. There are also other forms of alternative dispute resolution mechanism such as arbitration and mediation.
Court proceedings are commenced in the respective Subordinate or High Courts pursuant to the Rules of Court 2012 and mediation is often directed by court before trial. Arbitration proceedings are presided by arbitrators and are governed by the Arbitration Act 2005 and are often held in Asian International Arbitration Centre (AIAC). Mediation Act 2012 (“MA”) governs mediation. A mediation under MA will not prevent commencement of any civil action in court or arbitration.
What are the main procedural rules governing commercial litigation?
The Rules of Court 2012 govern civil proceedings registered in the Magistrate’s Court, Sessions Court and the High Court; Rules of Court of Appeal 1994 govern appeals to the Court of Appeal whilst the Rules of the Federal Court 1995 govern appeals to the Federal Court.
What is the structure and organisation of local courts dealing with commercial claims? What is the final court of appeal?
Generally, the hierarchy of the court structure in Malaysia are classified into the subordinate courts and the superior courts.
The Magistrate’s Court and Sessions Court which are part of the subordinate courts and the High Court (consisting of the High Court of Malaya and the High Court of Sabah and Sarawak) which is one of the superior courts have original jurisdiction to hear commercial claims. A commercial claim may be commenced in any of these courts, depending on which court has the jurisdiction to hear the matter.
The appellate courts are the Court of Appeal and the Federal Court. The Federal Court is the final court of appeal and/or the apex court.
The court structure in Malaysia is as illustrated as follows:-
How long does it typically take from commencing proceedings to get to trial?
Typically, the Sessions Court and the High Court aim to dispose of cases within nine (9) months whilst the Magistrate’s Court six (6) months from the date of commencement of proceedings.
This timeline was first implemented by a former Chief Justice of Malaysia and also documented by way of a Practice Direction No.2 of 2014 for expeditious disposal of civil and commercial cases.
However, this timeline is merely directive and may be extended depending on the number of interlocutory applications filed by parties to the proceedings and the complexity of each case.
Are hearings held in public and are documents filed at court available to the public? Are there any exceptions?
The general rule provides that all trials proper are to be conducted in open court and are open to the public. This is encapsulated under Section 15 of the Courts of Judicature Act 1964 (“CJA”).
The documents are filed in court electronically and are available to the public. The documents can be purchased by anyone through a monitored system namely the “e-filing system”.
There are exceptions to this general rule. The Court is vested with powers to hear any cause or matter or any part thereof in camera or to preserve the confidentiality of the matter on an application of any party as long as the Court is satisfied that it is expedient in the interests of justice, public safety, public security or propriety, or for other sufficient reason so to do. [See proviso under Section 15(1) of the CJA]
What, if any, are the relevant limitation periods in your jurisdiction?
The limitation periods of different causes of action are provided for in the Limitation Act 1953 (“LA”). The limitation period of each causes of action differ.
The limitation period of actions founded on contract or tort is six (6) years [See Section 6(1) of LA]; actions to recover land is twelve (12) years [See Section 9 of LA]; actions to enforce judgment is twelve (12) years [See Section 6(3) of LA]; actions on breach of trust is six (6) years [See Section 22(2) of LA].
However, there is no limitation period for actions founded on fraudulent breach of trust. [See Section 22(1) of LA)
Besides, limitation period will be postponed in certain situations such as in cases of fraud or mistake. In such circumstances, the limitation period shall not begin to run until the Plaintiff has discovered the fraud or the mistake, as the case may be, or could with reasonable diligence have discovered it. [See Section 29 of LA]
What, if any, are the pre-action conduct requirements in your jurisdiction and what, if any, are the consequences of non-compliance?
There are no pre-action conduct requirements unless it is expressly provided in a contract that alternative dispute resolution mechanism should first take place prior to commencement of legal proceedings.
In Malaysia, one is entitled to commence legal action against another so long as there is a cause of action recognized by law. However, one may still apply to court for discovery against any parties prior to the commencement of an action akin to a Norwich Pharmacal Order.
The usual consequences of the non-compliance of court orders such as an injunction will be committal for contempt of court.
How are commercial proceedings commenced? Is service necessary and, if so, is this done by the court (or its agent) or by the parties?
The first step to commencing commercial proceedings is to file a writ or originating summons in court. Once this is done, the writ or originating summons will be sealed by court and be assigned a suit or originating summons number. The writ should be endorsed with a statement of claim. Otherwise, a concise statement of the nature of the claim or the relief required in the action shall be stated in the writ.
Service of all cause papers are necessary and is done by the respective parties’ solicitors.
How does the court determine whether it has jurisdiction over a claim?
The jurisdiction of the Magistrate’s court and Sessions court is governed by the provisions under the Subordinate Courts Act 1948 (“SCA”) whilst the jurisdiction of the High Court is governed by the provisions under the Court of Judicature Act 1964 (“CJA”).
Generally, the courts’ jurisdiction is determined by a several factors such as the nature of claim, the amount of claim and the locality where the cause of action arises.
How does the court determine what law will apply to the claims?
Generally, Malaysian law should apply to causes of action that arise within the jurisdiction unless provided otherwise by way of an express choice of foreign law as agreed to by the parties.
In contractual disputes, the parties to the contract should agree on a choice of law to be the proper law of contract. This choice of law will determine the validity, interpretations, rights and obligations of the contract. If a contractual dispute with a clause dictating a foreign choice of law is tried in the courts in Malaysia, the substance of contract will be governed by the specified foreign law whilst the procedural matters will be governed by the lex fori ie Malaysian law. [See the Federal Court case of Scandinavian Bunkering (Singapore) Pte Ltd v MISC Bhd  3 MLJ 753] The choice of governing law will always be respected by the courts in Malaysia unless it is against public policy.
On the other hand, there is no codified Malaysian statute governing tortious claims. There are generally three (3) main sources of the law of torts in Malaysia, namely English common law, local judicial decisions and the common law principles.
In what circumstances, if any, can claims be disposed of without a full trial?
- There is no defence to the claim or that there is no issues to be tried. In such circumstance, the Plaintiff may apply to court for a summary judgement [See Order 14 of the Rules of Court 2012 (“ROC”)];
- The case involves questions of law or construction. In such circumstance, either party may apply to Court for disposal of case on point of law or tried of preliminary issue [See Order 14A and Order 33 rule 2 of the ROC];
- The claims are obviously unsustainable pursuant to Order 18 Rule 19 of the ROC. In such circumstances, both Plaintiff and Defendant may apply to strike out any pleadings filed in Court.
- The Defendant has failed to enter into appearance upon receipt of writ or has failed to file a statement of defence. In such circumstances, the Plaintiff may apply to enter into a judgement in default against the Defendant [See Order 13 and Order 19 of the ROC].
The elements under Order 18 Rule 19 of the ROC are:-
i. When it discloses no reasonable cause of action or defence;
ii. It is scandalous, frivolous and vexatious;
iii. It may prejudice. embarrass or delay the fair trial of action;
iv. It is an abuse of court process.
What, if any, are the main types of interim remedies available in your jurisdiction?
The main types of interim remedies are:-
(a) Interim Injunctions
Interim injunctions are governed under Order 29 of the ROC. They may be granted by court to compel anyone to do something (mandatory injunction) or restrain from doing certain things (prohibitory injunction). An injunction should only be granted:-
(i) When there are serious issues to be tried;
(ii) When damages would not be an adequate remedy;
(iii) When the balance of convenience tilts in favour of granting an injunction.
Interlocutory injunctions are usually granted to preserve the status quo pending final disposal of the case. The Court may grant an injunction to restrain a Defendant from removing from the jurisdiction or disposing of or concealing its assets which may be necessary to meet the Plaintiff’s claim (Mareva Injunction).The Court may also order an Anton Piller Injunction based on Order 29 of ROC to allow the Plaintiff to enter the Defendant’s premises for inspection and seizure of evidence or offending goods. This is regarded as an extreme relief and will only be granted when:-
(i) There is a strong prima facie case against the Defendant;
(ii) The damage must be very serious to the Plaintiff;
(iii) There is clear evidence that Defendant has incriminating documents or things; with real
possibility that the Defendant may dissipate its assets or destroy such materials.
(b) Appointment of Receiver
An application may also be made to the Court for the appointment of a receiver under Order 30 Rule 1 of the ROC. This appointment is generally made to preserve any properties or assets pending disposal of a court proceeding. An application for an injunction, ancillary or incidental to an order appointing a receiver, may also be joined with the application to such an order. [See Order 30 Rule 1(3) of the ROC]
After a claim has been commenced, what written documents must (or can) the parties submit and what is the usual timetable?
The statement of claim (if have not already endorsed in the writ) must be filed in court before the expiration of fourteen (14) days after the Defendant enters an appearance. [See Order 18 Rule 1 of the ROC]
Thereafter, the Defendant has fourteen (14) days from the time limited for appearing or after the statement of claim is served on him, whichever is later, to file and serve his statement of defence. [See Order 18 Rule 2 of the ROC]
Unless it relates to matters which shall be specifically pleaded (wherein the Plaintiff has fourteen (14) days to serve his Reply to the Statement of Defence), a Reply from the Plaintiff to the Defendant’s Statement of Defence is discretionary. [See Order 18 Rules 3(1) and (4) of ROC] If there is no Reply to a Defence, there is an implied joinder of issue on that Defence. [See Order 18 Rule 14 of the ROC]
However, if the Defendant has pleaded a counterclaim against the Plaintiff and the Plaintiff wishes to defend it, the Plaintiff shall serve his Defence to the Counterclaim within fourteen (14) days from the service of the Counterclaim on him. [See Order 18 Rule 4 of the ROC]
After the close of pleadings, the court will usually direct for exchange and filing of bundle of documents prior to the exchange and filing of witness statements. There is no specified written timeline in doing so. It is upon the discretion of the Court and would normally be dependent on the complexity of the case and volume of documents involved.
The parties can exhibit and file in court documents which are relevant and necessary to the claim or defence.
The court can also order for discovery of documents by either party. The documents should fulfil the criteria laid out under Order 24 Rule 3 of the ROC in that the documents must be :-
- Documents that the party relies on or will rely on; and
- Documents that could adversely affect the party's case, adversely affect another party's case or support another party's case.
What, if any, are the rules for disclosure of documents? Are there any exceptions (e.g. on grounds of privilege, confidentiality or public interest)?
The rules for disclosure of documents are found under Order 24 of the ROC. Generally, all documents relevant and necessary to the case may and can be disclosed by parties.
Yes, there are exceptions to this general rule.
Certain classes of documents are deemed privileged, confidential under the law. The classes of documents are enumerated under the Evidence Act 1950 (“EA”):-
- Privileged Documents include:-
i. Professional communication between an advocate and solicitor with his clients in the course and for the purpose of his employment [See Section 126 of EA];
ii. Communication made to a public officer in official confidence [Section 124 of EA], Section 124 of EA also applies to communications made in official confidence by a private person to a public officer.
- Confidential Documents include:-
i. Communication between a person and his legal advisers [See Section 129 of EA]. However, the law also provides that the issue of confidentiality is not a bar to the admissibility of any document, when relevant, in court. This means a court may still be able to allow production of confidential documents for limited viewing if the said documents are relevant.
- Against Public Interest:-
i. Communication made to a public officer in official confidence shall not be produced in court when the Court considers the disclosure will be detrimental to public interest [See Section 124 of EA];
ii. This is not a closed category and will be dependent on the Court’s finding on whether the production of the documents concerned may be against the public interest.
- Privileged Documents include:-
How is witness evidence dealt with in commercial litigation in your jurisdiction (and in particular, do witnesses give oral and/or written evidence and what, if any, are the rules on cross-examination)? Are depositions permitted?
For legal proceedings commenced by way of writ, witnesses of facts generally give evidence by witness statements and are subject to cross examination by the adverse party at trial. These witness statements will be admitted in court as sworn evidence during the examination in chief of the said witnesses.
The questions posed during cross examination must relate to the relevant facts but need not be confined to facts to which the witness testified during his examination in chief. Leading questions may be asked during cross examination. [Sections 138 and 143 of the EA]
For legal proceedings begun by originating summons and on any application made by notice of application, evidence shall be given by affidavit and parties are at liberty to apply for leave to cross-examine the deponents of affidavits.
Depositions are allowed under Order 39 rule 1 of the ROC where the court sees it necessary for the purpose of justice. A court order is a pre-requisite to the admission of evidence by deposition.
Is expert evidence permitted and how is it dealt with? Is the expert appointed by the court or the parties and what duties do they owe?
Expert evidence is permitted when the court is required to form an opinion upon a point of foreign law, existence of any general custom or rights or of science or art, or as to identity or genuineness of handwriting or finger impressions. [Section 45 of the EA]
The experts will be giving evidence in written reports. The written reports shall be signed by the expert and exhibited in an affidavit sworn or affirmed by him.
The experts, as the case may be, may be appointed by the court or by the parties [See Orders 40 and 40A of the ROC]. In either instances, the duty of an expert is to assist the court on the matters within his expertise.
Can final and interim decisions be appealed? If so, to which court(s) and within what timescale?
Yes. The final and interim decisions may be appealed.
Appeals from the Subordinate Courts to the High Court
The decisions of the Subordinate Courts may be appealed to the High Court provided that the amount in dispute or the value of the subject-matter is more than ten thousand ringgit (RM10,000) except on a question of law [See Section 28(1) of CJA].
A notice of appeal must be filed in court within fourteen (14) days from the date of the decision appealed from [See Order 55 Rule 2 of the ROC].
Appeals from the High Court to the Court of Appeal
The decisions from the High Court may be appealed to the Court of Appeal as of right except in the following circumstances [See Section 68 of CJA]:-
- When the amount or value of the subject-matter of the claim (exclusive of interest) is less than two hundred and fifty thousand ringgit (RM250,000), except with the leave of the Court of Appeal;
- Where the judgment or order is made by consent of parties;
- Where the judgment or order relates to costs only which by law are left to the discretion of the Court, except with the leave of the Court of Appeal; and
- Where, by any written law for the time being in force, the judgment or order of the High Court, is expressly declared to be final.
An appeal from the High Court to the Court of Appeal must be made within one (1) month from the date of the order appealed against, failing which an extension of time must be sought by way of leave of the Court. [See Rule 12 of the Rules of the Court of Appeal 1994]
Appeals from the Court of Appeal to the Federal Court
Appeals of the decisions from the Court of Appeal to the Federal Court may only be made when either of the elements under Section 96 of CJA is fulfilled and upon obtaining of leave of the Federal Court :-
- When it involves determination of novel principles or a question of importance upon which further argument and a decision of the Federal Court would be to public advantage; or
- When from any decision as to the effect of any provision of the Constitution including the validity of any written law relating to any such provision.
An appeal to the Federal Court must be made within one (1) month from the decision of the Court of Appeal [See Section 97(1) of the CJA].
What are the rules governing enforcement of foreign judgments in your jurisdiction?
In Malaysia, there are two (2) avenues by which person may enforce a foreign judgment.
(a) Registration under the Reciprocal Enforcement of Judgment Act, 1958 (“REJA”)
The applicable law is provided for under the REJA. Enforcement of foreign judgment is done by registering the foreign judgment in the High Court. [See Order 67 of the ROC for the procedural steps] Once the foreign judgment is registered in the High Court, it can be enforced in the same way as a local judgment.
There are several requirements to be met before a foreign judgment can be registered, as provided under Sections 3 to 5 of the REJA:-
- The foreign judgments must be from the superior courts of reciprocating countries as spelled out under the First Schedule of REJA (United Kingdom, Hong Kong, Singapore, New Zealand, Sri Lanka, India and Brunei);
- The foreign judgment must be a final and conclusive judgment by a court having jurisdiction in the matter;
- The foreign judgment must be for a fixed sum of money;
- The foreign judgment must be registered within 6 years from the date of judgment;
- The foreign judgment must not have been wholly satisfied at the point of application for registration;
- The foreign judgment must be enforceable by execution in the country of the original court at the point of application for registration;
- The foreign judgment was not obtained by fraud;
- The foreign judgment was not contrary to public policy in Malaysia;
- The rights under the judgment are vested in the person seeking to enforce the judgment;
- The judgment debtor receives notice of proceedings to defend the action and appears in the proceedings.
(b) Recognition and Enforcement of the Foreign Judgments under the Common Law
This mode of enforcement is usually adopted when the foreign judgments are from countries not recognized under the REJA.
Under this mode, the foreign judgment must be for a final and definite sum and from a foreign court having jurisdiction to try the case. The judgment creditor will commence legal proceedings against the judgment debtor in Malaysia by treating the foreign judgment as a debt. Thereafter, the judgment creditor (Plaintiff) may enforce the local judgment in accordance to the law of Malaysia.
In such instance, the Plaintiff will normally apply for summary judgment since the action is based on a final foreign judgment.
Can the costs of litigation (e.g. court costs, as well as the parties’ costs of instructing lawyers, experts and other professionals) be recovered from the other side?
Order 59(2) of the ROC provides that all costs incidental to a court proceedings shall be awarded in the full discretion of the Court and the Court has full power to determine by whom and to what extent such costs should be paid.
The Court, in the assessment and award of costs, may have regard to all relevant circumstances, including the costs of legal counsel, expert witness and consultants etc [See Order 59 Rule 16(1)(g) of the ROC].
What, if any, are the collective redress (e.g. class action) mechanisms in your jurisdiction?
In Malaysia, class action is generally known as a representative action. The primary rules are provided under Order 15 Rule 12 of the ROC. However, it is essential to note that in a representative action, other rules may also be applicable, as the case may be, such as when there is a need to add, drop or substitute any parties in the course of proceedings. In such an instance, the rules of misjoinder or non-joinder of parties as provided under Order 15 Rule 6 of the ROC will be relevant.
To institute a representative actions, there are three (3) requirements to be satisfied:-
- that all the members of the class had a common interest;
- that they all had a common grievance; and
- that the relief was in its nature beneficial to them all.
What, if any, are the mechanism for joining third parties to ongoing proceedings and/or consolidating two sets of proceedings in your jurisdiction?
A third party may be joined to an ongoing proceedings vide Order 15 Rule 4 and Order 15 Rule 6 of the ROC.
Order 15 Rule 4 provides that two or more persons may be joined together in one action as Plaintiffs or as Defendants with the leave of the court except when the following two conditions are met, a leave of court is exempted:-
- If separate actions were brought, a common question of law or fact would arise in all the actions, and
- The claims arise out of the same transaction or series of transactions.
Besides, under Order 15 Rule 6, the Court may also on its motion or on application, order any of the following persons to be added as a party to an ongoing proceedings:-
- Any person who ought to have been joined as a party or whose presence before the Court is necessary in order to ensure that all matters in may be effectually and completely determined and adjudicated upon; or
- Any person between whom and any party to the cause or matter there may exist a question or issue arising out of any relief claimed in the cause or matter which, the Court is of the view that it would be just and convenient to determine as between him and that party as well as between the parties to the cause or matter.
Consolidation of two separate proceedings is also available under Order 4 Rule 1 of the ROC. The Court is empowered to grant a consolidation order of causes or matters when the Court is satisfied that it will be just to do so as long as any of the requirements below is fulfilled:-
- There is common question of law or fact;
- The rights to relief are in arising out of the same transactions or series of transactions; or
- For some other reasons consolidation is desirable.
Are third parties allowed to fund litigation? If so, are there any restrictions on this and can third party funders be made liable for the costs incurred by the other side?
In Malaysia, litigation funding by third parties is not a common practice and is not allowed in common law.
If a party to a proceeding enters into a contract with a third party financier in which a financial funding is promised in consideration of receiving a share of the award, Justice Ravinthran in the case of Mastika Jaya Timber Sdn Bhd v Shankar a/l Ram Pohumall  5 MLJ 707 has held that such an agreement is deemed a champertous agreement and is illegal and against public policy.
What is the main advantage and the main disadvantage of litigating international commercial disputes in your jurisdiction?
The main advantage of litigation in Malaysia is the low cost factor and the speedy resolution of dispute. In recent years, there have been a significant increase in the appointment of new judges and setting up of additional courts for effective disposal of civil and commercial cases. Apart from the Civil and Commercial Courts, the Malaysian judicial system has set up specialized courts such as Intellectual Property Courts, Cyber Courts, Admiralty Courts, Construction Courts and Family Courts. The possible disadvantage may be the lacking of foreign law expert and foreign language interpreter although this can be resolved through assistance from foreign lawyers and the consulate office.
What is the most likely growth area for disputes in your jurisdiction for the next 5 years?
The likely growth areas should be infrastructure and construction disputes, assets recovery and insolvency litigation and online/ social media publication claims.
Will be the impact of technology on commercial litigation in your jurisdiction in the next 5 years?
Court Recording Transcription system in Malaysian Courts has created an efficient tool for litigants where notes of proceedings are recorded and made available to parties immediately. E-filing system has proven to be both effective and efficient way for filing and processing court papers and orders. From the litigation perspective, it is hoped that an application is made available for quick research on mobile devices to aid lawyers attending courts.