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Arbitration & ADR
The International Centre for Settlement of Investment Disputes (ICSID) was established in 1966 by the Convention on the Settlement of Investment Disputes between States and Nationals. ICSID is an independent, neutral and effective dispute settlement institution. Its availability to investors and states helps to promote international investment by providing confidence in the dispute resolution process. It is also available for state-state disputes under investment treaties and free trade agreements.
In ASM Development (KL) Sdn Bhd v Econpile (M) Sdn Bhd, Darryl Goon J (now JCA) held that an adjudication decision, even one which has been enforced as if it were a court judgment or order pursuant to Section 28 of the Construction Industry Payment and Adjudication Act 2012, is still a disputable decision. While the high court departed from ASM in one recent case, in another, it agreed with Darryl Goon J's decision. As such, there now appears to be two different schools of thought on this matter.
The concept of indefeasibility is the cornerstone of Peninsular Malaysia's land administration system, which is embodied in Section 340 of the National Land Code 1965. Once an interest is registered in the title of a property, it is immune against any adverse claims. While disputes on indefeasibility are not uncommon in Malaysia, the apex court recently faced another dispute involving the registered interest of a licensed financial institution and an unregistered interest of an owner.
The Construction Industry Payment Adjudication Act 2012 (CIPAA) was enacted to alleviate payment problems in the construction industry by allowing any payment dispute to be resolved speedily through adjudication. However, the losing party may opt to set aside or stay an adjudication decision pursuant to Sections 15 and 16 of the CIPAA. In a recent case, a dilemma arose as to whether the costs determined by the adjudicator in withdrawing adjudication proceedings could be challenged in court.
Section 30 of CIPAA: apex court maintains mandatory direct payment obligation against employer under receivershipMalaysia | 08 September 2020
Section 30 of the Construction Industry Payment and Adjudication Act 2012 creates a statutory obligation for a principal to make the payment awarded by an adjudication decision to a subcontractor in the event of the main contractor's failure to do so. In a recent case, an issue arose on whether direct payment could be ordered against a principal when winding-up proceedings against the main contractor were already afoot.
When a company is wound up by a court order, a liquidator steps in and manages the company. It is enunciated in the Malaysian company law regime that the legal standing of such company to bring or proceed with an action or proceedings is vested in the liquidator. If an action or proceeding is taken by a wound-up company, the liquidator's prior sanction must be obtained. The apex court recently handed down a landmark judgment on the validity of retrospective sanction granted by liquidators.
In a recent case, a high court faced a judicial review application filed by the United States in Malaysia. The facts leading to the application were uncommon and the court considered a novel aspect of industrial law jurisprudence in Malaysia. The high court judge's assessment of the facts in light of the sovereign immunity principle gives a fresh perspective in industrial law jurisprudence.
As Section 77 of the Strata Management Act provides that the amount due to a management corporation (MC) is a 'guaranteed sum', issues arise as to whether an MC is a secured creditor in the event that a parcel proprietor is insolvent and wound up. In a recent decision, the Federal Court decided that the outstanding amount due to an MC is an unsecured debt.
In general, when an individual asks "how can I protect my invention?", only one answer comes to mind: patents. While this is not wrong, most individuals are unaware of the patent's lesser-known sibling – the utility innovation. Utility innovations are commonly known as 'minor' or 'petty' patents. Much like patents, owners of a granted utility innovation have exclusive rights to exploit said utility innovation for 20 years. This article examines a recent case concerning a utility innovation.
A high court recently allowed a shareholder to convene a one-member extraordinary general meeting of a family-run company. In applying for a court-ordered meeting, applicants must prove that it is otherwise impracticable to hold the meeting. This case is significant to the issue of whether the application of this test is different for family-run companies.
Employers can offer fixed-term contracts to their employees (often for economic or management reasons). However, such prerogative is subject to scrutiny by the Malaysian courts so that it does not fetter employees' rights in terms of employment security. The Federal Court recently delivered a groundbreaking decision on this matter concerning a foreign employee.
Apex court rules that high court orders and decisions that do not finally dispose of litigants' rights are non-appealableMalaysia | 23 June 2020
Section 67 of the Courts of Judicature Act 1964 sets out the right to appeal in civil suits. However, confusion commonly arises when deciding whether an order or judgment made by a high court in a civil matter is appealable. The Federal Court recently clarified this issue by affirming that a decision made during a trial that does not finally dispose of the parties' rights is non-appealable.
In a recent case, the plaintiff obtained a judgment in default of defence against multiple defendants during the enforcement of the Movement Control Order in Malaysia. Subsequently, the judge held that various applications of the plaintiff and the defendants be heard by way of a Skype videoconference due to the ongoing COVID-19 pandemic. Dissatisfied with the videoconference, the plaintiff challenged its validity.
After succeeding in arbitration, the respondents in a recent case filed an originating summons pursuant to the Arbitration Act in a high court to enforce and recognise the entire award as a high court judgment. However, the appellant opposed the originating summons on, among others, the ground that only the dispositive portion of the award (which set out the orders or reliefs) – and not the entire award – was capable of being registered.
In order to curb the spread of COVID-19, the government introduced the Movement Control Order (MCO). During the MCO period, all courts and offices of advocates and solicitors are closed. However, a judicial notification of 26 March 2020 stated that parties can apply to the courts for an online hearing of civil matters via an e-review system, an exchange of emails or a video conference, subject to certain conditions.
The existence of arbitration clauses in construction contracts is not uncommon. This article examines the impact of a recent Federal Court decision on whether an arbitration clause or a judgment in default which had already been obtained despite the existence of the arbitration clause took precedence. The decision shows that the courts will not review whether a dispute exists between parties, regardless of whether a judgment in default has been obtained.
A high court recently issued the first decision regarding a constitutional challenge of the legitimacy of statutory adjudication under the Construction Industry Payment and Adjudication Act 2012. In this case, the court was also confronted with a challenge of the appointment of the late Vinayak Pradhan as the then director of the Asian International Arbitration Centre (AIAC) and the immunity asserted by the AIAC, Pradhan and the adjudicator.
High court grants injunction to restrain winding-up proceeding based on disputed adjudication decisionMalaysia | 31 March 2020
The high court recently delivered a significant decision for the construction industry regarding contractors' cash flow. This decision is welcome as it has laid down clear directions for stakeholders in the construction sector when they are faced with payment and financing issues, as well as for litigants. Further, this decision highlights the importance of conducting preliminary assessments to determine suitable dispute resolution avenues – namely, adjudication, litigation or arbitration.
Apex court finds controller of housing's powers to waive or modify provisions of statutory contract invalidMalaysia | 25 February 2020
The Federal Court recently delivered a landmark decision on a pertinent issue concerning the interests of house buyers. In arriving at its decision, the court considered Parliament's intention when enacting the Housing Development (Control and Licensing) Act and held that the minister of urban wellbeing, housing and local government has sole discretion to regulate and prohibit the terms and conditions of a contract of sale under the act – a social legislation protecting and advancing the interests of house buyers.
In the course of the hearing of a direct payment application filed under the Construction Industry Payment and Adjudication Act, the issue arose as to whether direct payment could be ordered against an employer when winding-up proceedings were underway against its contractor. To avoid protracted arguments, the subcontractor withdrew the winding-up proceedings during the hearing of the direct payment application. However, another creditor served a winding-up petition on the main contractor shortly thereafter.
Federal Court rules that Arbitration Act provisions do not apply to non-parties to arbitration agreementsMalaysia | 22 October 2019
The Federal Court recently held that Sections 8 and 10 of the Arbitration Act do not apply to a non-party to an arbitration agreement. The appellant in the case was granted leave to appeal to the Federal Court on two questions of law, including whether the requirements of Section 10 of the act must be met by a party litigant seeking an injunction to restrain the prosecution of an arbitration to which it is not a party but which would affect its proprietary rights.
The Federal Court recently addressed the proper construction of Section 93(3) of the Bankruptcy Act 1967 and Rule 276 of the Bankruptcy Rules 1967. In this appeal, the Federal Court was requested to decide whether, in the case of a petition presented by multiple petitioners, the bankruptcy notice and creditor's petition could be amended and the deletion of one or more petitioners could be allowed.
The attorney general is a public officer who has been given ample discretionary power under Article 145 of the Federal Constitution to institute, conduct or discontinue any criminal proceedings. The question is, where a public officer's decision is subject to judicial review, does this equally apply to the attorney general?
The Federal Court recently reaffirmed that where a final court order is proved to be null and void on grounds of illegality or due to a lack of jurisdiction, the court has inherent jurisdiction to set aside the order, even in the absence of an express enabling provision. However, is the rule different for winding-up orders?
Following a recent Court of Appeal decision on staying proceedings pending appeal, the test as to whether a stay ought to be granted under Section 44 of the Courts of Judicature Act has been simplified (ie, it now focuses on whether the true purpose of the stay is to preserve the integrity of the appeal). The new threshold to obtain a stay is considerably lower than that of the special circumstances rule under Section 73 of the Courts of Judicature Act.
A recent Federal Court decision has simply reaffirmed the position of Malaysian law in relation to breaches of trust. The majority of the Federal Court held that imputed constructive knowledge of an assignment is insufficient to hold the debtor liable to the assignee for the debt. The decision also illustrates a disinclination to depart from the established law on the requirement of dishonesty in a breach of trust.
Section 126 of the Evidence Act 1950 imposes a legal obligation on all solicitors to protect and keep confidential any information obtained from their clients, including any legal advice that has been proffered. However, as much as the importance of this privilege is understood and embraced, it may still have come as a surprise when the Federal Court decided that a breach of this privilege by solicitors could entail a legal action against said solicitors.
The Federal Court recently examined whether the Bolam test or the test in the Australian case of Rogers v Whitaker with regard to the standard of care in medical negligence should apply, following conflicting decisions by the Malaysian Court of Appeal and legislative changes in Australia. The Federal Court's decision provides a clearer legal position with regard to the distinction between diagnosis and treatment on the one hand and the duty to advise of risks on the other hand.
The Federal Court recently examined whether an objection pertaining to the unlawfulness of a notice of appeal could, as a matter of procedural law, be undertaken by way of a mere preliminary objection. Further, the court assessed whether the filing of a single notice of appeal in respect of a decision on eight separate and distinct interlocutory applications complied with the procedural rules set out in the Rules of the Court of Appeal 1994.
The Federal Court recently restated the Malaysian courts' position in respect of their intervention in arbitration. The decision has clarified that once the parties agree to submit to arbitration in the event of disputes and put that agreement into writing, the courts will be less willing to allow one party to subsequently seek to depart from the arbitration agreement without sufficient justification.
The Federal Court recently set out the circumstances under which a notice of appeal under Rule 5 of the Rules of the Court of Appeal or a notice of cross-appeal under Rule 8 can be filed. In short, where the respondent wants to reverse or set aside part of a lower-instance finding, decision or judgment which was not appealed in the appellant's notice of appeal, it is incumbent on the respondent to file an independent and separate notice of appeal, rather than a notice of cross-appeal.
The Federal Court recently upheld a Court of Appeal decision which found that a company had failed to identify with sufficient particularity what confidential information its former employee had misused. This case clarifies that despite the existence of confidentiality agreements, companies and employers must prove what confidential information has been misused, as confidentiality agreements are not meant to hinder former employees' ability to compete.
The Federal Court recently ruled that Order 57 of the Rules of Court 2012 does not confer power to the high courts to transfer proceedings to another high court of coordinate jurisdiction. The true position of the law is that a high court has power to transfer proceedings to another high court of coordinate jurisdiction only within its territorial jurisdiction.
The Federal Court was recently invited to reconsider the applicable test for an oppression petition under Section 181 of the Companies Act 1965 in light of recent developments in the English law of oppression. The court held that there was no valid reason to redefine the test for oppression under Section 181.
The Federal Court has clarified an issue which has long plagued the banking industry by holding that a bank with absolute assignment of the rights to land may realise its security under the assignment without having to create a charge, regardless of any subsequent issue of a title document. The decision will prevent future defaulting borrowers from bringing actions against banks despite no charge being created and reduce unnecessary litigation.
The High Court recently considered whether the Construction Industry Payment and Adjudication Act applies retroactively to contracts entered into and disputes arising before the act came into force. In a lengthy judgment, the High Court found that Parliament's intention was to apply the act to all construction contracts – including payment disputes under construction contracts – regardless of when they were made.
In a recent Federal Court case, appeals arose in the context of claims brought by purchasers against a solicitor for breach of fiduciary duty in a solicitor-client relationship in connection with property which the solicitor had purchased for himself instead of on behalf of his clients. The court held that solicitors cannot repudiate or negate the existence of a solicitor-client relationship merely on the contention of the absence of a retainer.
The purchase of property through statutory public auction conducted pursuant to a high court order of sale has been considered a safe and protected transaction. However, the Federal Court recently ruled that chargees need not compensate purchasers when an auction sale is set aside for non-compliance with the rules of court and the purchaser may lose the property without compensation, save for a refund of the purchase price.
In a recent Federal Court case, the court held that an arbitration award may be enforced within 12 years of the date on which the award is registered as a judgment of court. The court's judgment has given equal treatment, insofar as the statute of limitations is concerned, to a judgment arising from registration of an arbitral award and a judgment pronounced at the conclusion of a court-conducted litigation.