MALAYSIA Law and Practice Contributed by: Samantha Chiang Xin Li, Yee Yik Shien and Tay Zi Li, Zi Li & Partners
Where a foreign judgment falls outside the scope of the REJA, it may only be enforced in Malaysia at com- mon law. In such cases, the judgment creditor must commence an action in the Malaysian courts by suing against the foreign judgment as a debt due from the judgment debtor, subject to conditions including: • it is final and conclusive for a fixed sum of money; • it is enforceable by execution in that jurisdiction and has not been stayed or satisfied in whole; • it was not obtained by fraud; and • its enforcement would not be contrary to Malaysian public policy. Foreign Arbitral Award Foreign arbitral awards made in a contracting state that is a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958) (the “New York Convention”) are enforce- able in Malaysia under the Arbitration Act 2005 (the “Arbitration Act”). The High Court may, on application by a party, grant permission to enforce such an award if the applicant produces: • the duly authenticated original award or a duly certified copy; and • the original arbitration agreement, or a duly certi- fied copy. The High Court may refuse enforcement of a foreign arbitral award only on the limited grounds set out in the Arbitration Act, including where: • a party to the arbitration agreement was under incapacity, or the agreement is invalid; • the party against whom enforcement is sought was not given proper notice of the arbitration or was unable to present its case; • the award deals with disputes beyond the scope of the arbitration agreement; • the composition of the tribunal or procedure was not in accordance with the parties’ agreement or the Arbitration Act; • the award is not yet binding, or has been set aside or suspended by a competent court; • the subject matter is not arbitrable under Malaysian law; or
• enforcement would be contrary to Malaysian public policy. 6.4 A Foreign Lender’s Ability to Enforce Its Rights Except as noted in 3.2 Restrictions on Foreign Lend- ers Receiving Security there are generally no other restrictions that might impact a foreign lender’s abil- ity to enforce its rights under a valid loan or security agreement. In Malaysia, the impact of insolvency proceedings on lenders’ enforcement rights depends on the type of process commenced. In a winding-up (whether by court order or creditors’ voluntary resolution), there is no automatic morato- rium on enforcement. Secured creditors have first priority over secured assets in the insolvency of the company and remain entitled to enforce their security in accordance with the terms of their security docu- ments. 7. Bankruptcy and Insolvency 7.1 Impact of Insolvency Processes However, once a liquidator is appointed, all company property comes under the liquidator’s control and unsecured creditors cannot commence or continue proceedings without leave of the court. The liquidator has exclusive authority to realise assets and distribute proceeds in accordance with statutory priorities as set out in 7.2 Waterfall of Payments , though secured creditors may enforce their security independently. By contrast, restructuring processes may impose moratoriums that restrict lenders: • Scheme of arrangement – no automatic morato- rium applies, but a court may grant a restraining order (up to three months, extendable) preventing enforcement or legal proceedings against the com- pany while the scheme is considered. • Judicial management – an interim moratorium arises immediately upon filing of a judicial manage- ment application, preventing enforcement actions (including by secured lenders) until the application
368 CHAMBERS.COM
Powered by FlippingBook