MALAYSIA: An Introduction to Dispute Resolution

One of the key takeaways from the worldwide lockdown is the importance of incorporating and utilising technology in trade. The legal industry is no exception, with litigators adapting to the new normal of presenting a submission before a computer screen and staring into a lens rather than the eyes of the presiding judge.

The Malaysian courts have also embraced the digital wave, by accommodating virtual hearings and trials even at the early stage of the pandemic. A laudable initiative was taken by the legislature by swiftly amending the Rules of Court 2012 to codify rules and best practices to enable the service of papers through electronic communication and proceedings through remote communication technology. Thus, it comes to no surprise that, while most aspects of the world came to a halt, the courts continued in their unwavering duty to administer justice.

The Housing Industry 

The pandemic years saw several landmark decisions rendered across numerous areas of law. Beginning with the housing industry, the Federal Court in the case of Ang Ming Lee struck down Regulation 11(3) of the Housing Development (Control and Licensing) Regulations 1989 (HDR) as being ultra vires its parent legislation, the Housing Development (Control and Licensing) Act 1966 (HDA). The net effect is that any amendment to the statutorily provided sales and purchase agreement may only be approved by the Minister of Urban Wellbeing, Housing and Local Government (and not the Controller of Housing). This position was endorsed by the Court of Appeal in Bludream City Development Sdn Bhd, and the purchasers’ leave to appeal to the Federal Court was dismissed.

Another hotbed issue in the housing industry – whether the calculation of liquidated damages for the late delivery of vacant possession begins from the date the purchaser paid the booking fee or the date of the sales and purchase agreement – was decided by the apex court in the case of PJD Regency Sdn Bhd. The Federal Court ruled in favour of the homebuyers by deciding that the starting date to calculate liquidated damages was the date when the purchasers paid the booking fee, and emphasised that the HDA is a piece of social legislation, the provisions of which ought to be interpreted most favourably to the homebuyers. The Federal Court’s decisions in Ang Ming Lee and PJD Regency Sdn Bhd then resulted in homebuyers filing a slew of cases to claim for liquidated damages against housing developers.

Intellectual Property 

Turning to the realm of intellectual property, there was also no shortage of cases making their way to the doors of the apex court. In the case of Mohammad Hafiz bin Hamidun, the Federal Court gave much-needed clarity on the meaning of “goodwill” and to whom “goodwill” resides in by holding, among others, that “goodwill” is a flexible and malleable asset in that it can manifest and be generated in a myriad of ways, depending on the nature of the trade or business.

In Ortus Expert White Sdn Bhd, the Court restated the trite principles on comparison of trade marks in infringement proceedings, and further held that where disclaimers were included in a trade mark to be compared, the proper course was to look at the trade mark as a whole and not to disregard the parts that were disclaimed.

On the issue of parallel imports, the Federal Court’s decision in Guangzhou Light Industry & Trade Group Ltd gave a narrower approach toward the applicability of the defence of parallel importation and held that goods meant for sale/circulation in a particular jurisdiction (outside Malaysia) may amount to trade mark infringement if brought into Malaysia.

In patent and copyright litigation, the landmark decision of YKL Engineering Sdn Bhd gave much-needed guidance on patent invalidation and the requirements for the subsistence of a copyright in a work. With regards to patent invalidation, this case dealt with not just substantive issues but also practical aspects of patent invalidation – namely, what needs to be specifically pleaded (ie, the prior arts relied on by the party seeking to invalidate a patent). On copyright, the Federal Court held that copyright law does not require that a work should be unprecedented or new in comparison with already existing works. What the Federal Court concluded upon perusing considerable foreign and domestic case law is that the concept of “newness” or “novelty” in patent law is not a relevant consideration for copyright to subsist. Of utmost importance is that sufficient effort has been expended to render the work original in copyright law.

With regards to intellectual property legislation, it is noteworthy that a new trade mark regime was introduced in Malaysia via the Trademarks Act 2019 (TMA 2019). The TMA 2019 repealed the Trade Marks Act 1976 and now permits registration of non-conventional trade marks such as sound, scent and colour. It also paves the way for the application and utilisation of the Madrid Protocol.

The Patents Act 1983 (PA) and the Copyrights Act 1987 (CA) were amended in 2022. The PA saw a major overhaul, due in part to the attempt to bring Malaysia’s patent regime into compliance with the Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure. TheCA was amended to give effect to Malaysia’s eventual participation in the Marrakesh Treaty to Facilitate Access to Published Works for Persons Who Are Blind, Visually Impaired or Otherwise Print Disabled.

In 2022, Malaysia set the foundation for its eventual accession to two international treaties, arguably reflecting the mindset of Malaysian legislators and policymakers, who are more aware of the country's international obligations towards the international community, with hopes that this will garner confidence for further foreign investments. In fact, this appreciation for Malaysia's co-operation with its international comrades may be seen in the recent signing of a memorandum of understanding between Malaysia and Singapore in the field of personal data protection, cybersecurity and digital economy.

As Malaysia welcomes its unity government, helmed by the 10th Prime Minister, the prospects for Malaysia to expand as a hub for foreign investors seems promising.