MALAYSIA Law and Practice Contributed by: Will Fung, Penelope Gan and Kee Shao Yee, Richard Wee Chambers
NLC and general principles of law. Enforcement is typically preceded by a formal demand and the expiry of any contractual cure period. Loan claims may be pursued through civil proceedings where required. Guarantees are generally enforceable upon demand and may be pursued independently of the principal debt, provided they were validly author - ised and do not contravene statutory restrictions. The enforcement route depends on the asset class. Debentures creating fixed and floating charges are commonly enforced out of court through the appoint - ment of a receiver and manager. Security over land must be enforced by judicial sale under the NLC. Share pledges are usually enforced out of court by transfer or sale following default. Assignments of receivables are enforced by notifying obligors and redirecting payments. Enforcement may be affected by statutory morato - ria. During judicial management or after a winding-up order, enforcement is generally stayed without leave of court. Transactions entered into prior to insolvency may also be subject to avoidance challenge. Foreign lenders must consider land ownership restrictions and foreign exchange requirements relating to repatriation of enforcement proceeds. In practice, private credit enforcement is often stra - tegic rather than asset-wide. Share pledges are most frequently enforced, as control over shares enables the lender to drive a restructuring. Full realisation under debentures or judicial land sales is typically reserved for situations where consensual solutions are not achievable. 6.2 Foreign Law and Jurisdiction Malaysian courts generally uphold a contractual choice of foreign governing law and submission to a foreign jurisdiction, provided the choice is bona fide and does not contravene Malaysian public policy or mandatory statutory provisions. The chosen foreign law governs substantive matters, while procedural issues remain subject to Malaysian law. Exclusive jurisdiction clauses are ordinarily respected unless there is strong cause to depart from them, such as
injustice or inability to obtain a fair trial in the selected forum. Waivers of immunity in commercial transactions are also recognised under common law principles. An express waiver of jurisdictional immunity is generally enforceable, although immunity from execution over certain sovereign or diplomatic assets may persist unless clearly and validly waived, and enforcement remains subject to public policy and applicable statu - tory frameworks. 6.3 Foreign Court Judgments In Malaysia, a foreign court judgment may generally be enforced without a retrial of the merits. Judgments from designated reciprocating jurisdictions may be registered under the Reciprocal Enforcement of Judg - ments Act 1958, provided they are final, conclusive, for a definite sum, and not contrary to public policy. Once registered, they are enforceable as if they were Malaysian judgments. Judgments from non-recipro - cating jurisdictions may be enforced at common law by suing on the judgment debt, without reopening the merits, subject to limited defences such as fraud, lack of jurisdiction, breach of natural justice or public policy. Malaysia is a party to the New York Convention, and foreign arbitral awards are recognised and enforced under the Arbitration Act 2005. Enforcement is grant - ed without retrial of the merits, subject only to the limited grounds for refusal set out in the Convention. 6.4 A Foreign Private Credit Lender’s Ability to Enforce Its Rights One key risk is potential characterisation under the MLA. While arm’s length cross-border lending to corporate borrowers is generally not caught, a for - eign lender engaging in repeated onshore lending or enforcement activity could face licensing risk. To mitigate this, facilities are typically structured offshore, governed by foreign law, and administered without establishing a local presence. Restrictions on foreign interests in land under the NLC may also affect enforcement. Foreign entities are gen - erally restricted from holding or acquiring interests in Malaysian land without state authority approval. Mar -
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