MALAYSIA Trends and Developments Contributed by: Dhinesh Bhaskaran, Rabindra Nathan, Shanti Mogan and Lai Wai Fong, Shearn Delamore & Co
Arbitration Clauses In Liquidation Proceedings
This then resulted in the Government of Malaysia tabling the Constitutional (Amendment) Bill 2024 in March 2024 (“Citizenship Bill”). The Citizenship Bill aims to tighten Malaysian citizenship eligibil- ity, and to resolve the apparent discrimination concerning children born overseas to Malaysian mothers. The latter issue arises as the Malaysian Federal Constitution confers Malaysian citizen- ship upon children born outside the country to Malaysian fathers but not to Malaysian mothers. Some of the key amendments are as follows: • Children born overseas to Malaysian mothers may automatically be conferred Malaysian citizenship. • The age limit for citizenship applications is reduced to 18 from 21. • There will be a requirement for Bahasa Malay- sia proficiency for a foreign woman married to a Malaysian as part of her application for citizenship. • Children born in Malaysia would require at least one parent to be Malaysian in order to be eligible for citizenship. Previously children born in Malaysia to permanent residents would be granted citizenship. • Foreign women who become Malaysian through marriage would have their citizenship revoked if their marriage is dissolved within two years of gaining citizenship (previously two years from the date of marriage). The saving clause in the Citizenship Bill provides that the amendments apply retrospectively to persons born after the date of the Act coming into operation, and for applications made after the Act coming into operation.
On 6 June 2024, the Court of Appeal in Swissray Asia Healthcare Co Ltd v V Medical Services M Sdn Bhd [2024] 8 CLJ 21 dealt with the thresh- old when assessing whether to grant a fortuna injunction. In this case, the parties entered into a distribution agreement that contained an arbitration clause. In May 2016, V Medical Services received two medical machines which it had ordered from Swissray. When Swissray demanded payment, V Medical Services denied that any sums were owed and disputed the validity of the purchase. The parties attempted to settle the dispute but without success. Thereafter, V Medical Ser- vices applied for a fortuna injunction to restrain Swissray from presenting a winding-up petition against it on the ground that there existed a dis- puted debt without any final award or judgment. The High Court granted the fortuna injunction and Swissray filed the present appeal. The issue before the Court of Appeal was whether a higher threshold test ought to apply for an application for a fortuna injunction to stay or restrain a wind- ing-up petition where there exists an arbitration agreement. The Court of Appeal reversed the High Court’s decision and found that a fortuna injunction should only be granted where there was a genuine dispute of the debt. In this regard, the Court of Appeal found that there were numerous admissions of the debt by V Medical Servies and no genuine dispute of the debt existed. This decision makes it clear that a higher thresh- old test is required, if not this would open the doors to parties in breach of their contractual
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