MALAYSIA: An Introduction to Dispute Resolution

Recent Legal Developments 

In many aspects, 2023 has proven to be a polarising year affected by numerous high-profile cases. This year alone saw:

1. former premier Dato' Seri Najib Razak’s application to the Federal Court to review the earlier decision of the same court (which upheld his conviction and sentence) dismissed;
2. current Deputy Prime Minister, Dato' Seri Dr Ahmad Zahid Hamidi being granted a discharge not amounting to acquittal of 47 charges for the Malaysian Anti-Corruption Commission to conduct further investigations;
3. Malaysia’s eighth prime minister, Tan Sri Dato’ Haji Mahiaddin Yasin, charged with corruption and graft;
4. several opposition party’s leaders, namely Adam Radlan Adam Muhammad and Wan Saiful Wan Jan, charged with graft;
5. most recently, on 9 November 2023, lawmaker and former youth and sports minister Syed Saddiq Syed Abdul Rahman was convicted on all charges of abetting in criminal breach of trust, misappropriation of funds and money laundering.

Continuing in the realm of influential figures but shifting to civil litigation, the Court of Appeal recently dismissed an appeal by former Attorney General, Mohamed Apandi Ali (“Apandi”), against ex-Member of Parliament and opposition powerhouse, Lim Kit Siang (“Lim”), in a defamation case. Apandi alleged that Lim defamed him through a publication on an online news portal known as “Malaysiakini”, implicating him in the 1MDB scandal (“impugned publication”). Lim contended that the impugned publication when read in context conveyed a “lesser meaning” - that Apandi had assisted the perpetrators of the 1MDB scandal by lending himself to the cover up of wrongdoings, and had thereby abused his role as the Attorney General. The Court of Appeal ruled in favour of Lim, finding that Lim successfully proved all particulars of justification rendering the “lesser meaning” substantially true. Further, the court held that Lim as a Member of Parliament (at the time of the action) has a duty to raise matters of public interest, fulfilling the requirements of qualified privilege.

The Federal Court also delivered two landmark decisions, the first involving negligence and the second on moneylending transactions. With regards to negligence, the Federal Court overturned the decision of the Court of Appeal in Koperasi Sahabat Amanah Ikhtiar Bhd. This was a case where Lotfi bin Miskam (“Lotfi”) misrepresented that he was an agent of RHB and convinced Koperasi Sahabat Amanah Ikhtiar Berhad (“Koperasi”) to invest RM10 million with a promised 10.5% annual profit/dividend. Koperasi then issued a cheque of RM10 million payable to RHB and passed the same to Lotfi. Lotfi deposited the said cheque into RHB’s pool account which was subsequently transferred to the share trading account held by his company, Abhar Capital Holdings Sdn Bhd (“Abhar”). Eventually, it was discovered that it was all a sham and Abhar’s account was closed with funds therein withdrawn. Koperasi commenced an action against RHB, Lotfi and Abhar. Koperasi’s case against RHB was on negligence, ie, RHB was negligent in transferring RM10 million into Abhar’s trading account without further inquiring or seeking confirmation from Koperasi. The High Court found that Koperasi failed to establish a duty of care. The Court of Appeal overturned the decision of the High Court and held that a duty of care existed. The Federal Court set aside the decision of the Court of Appeal, reinstated the decision of the High Court and held that it would be unjust, unfair and unreasonable to impose a duty of care owed by RHB to Koperasi, a non-customer.

The second case is Triple Zest Trading & Suppliers & Others. In this case, the first appellant sought a RM800,000 loan from the respondent. The respondent agreed, subject to the loan amount being repaid with another RM800,000 as agreed profit. Upon signing the loan agreement, the first appellant deposited with the respondent, as collateral, the title deeds to two parcels of land and four undated cheques in favour of the respondent, each in the sum of RM400,000 from the first appellant's current account, with a total value of RM1.6 million. Personal guarantees were also provided by the second and third appellants, who were the directors of the first appellant. Upon default by the first appellant in repaying the loan sum, the respondent commenced an action at the High Court. The High Court allowed the respondent’s claim and ordered the appellants to pay RM1.6 million to the respondent, RM800,000 being the principal loan sum and a further RM800,000 being the agreed profit. Upon appeal to the Court of Appeal, the Court of Appeal allowed the appeal in part and ordered for the appellants to only repay the principal loan sum. On appeal to the Federal Court, the Federal Court set aside the decision of the Court of Appeal. The Federal Court held that the respondent failed to discharge its legal burden to prove that it was not carrying on the business of "moneylending" when it lent RM800,000 to the appellants at a profit of RM800,000. As such, the loan transaction was illegal, and the respondent could not recoup the principal loan sum nor the agreed profit.

Developments in Personal Data Protection and Domain Name Disputes

In the case of Genting Malaysia Bhd, the Inland Revenue Board (“IRB”) requested from the applicant’s (“Genting”) customer data under its loyalty programme. The IRB stated that such information would assist the IRB to enlarge its tax base and increase tax collection. Genting rejected this request. The IRB forwarded a letter by the Deputy Commissioner of personal data protection (“Deputy Commissioner”) to the IRB containing a view that Genting may disclose the personal data to the IRB. Genting wrote to the Deputy Commissioner disagreeing with his views. The Deputy Commissioner replied and reiterated that Genting could disclose the personal data to IRB because IRB was empowered under provisions of the Income Tax Act 1967 (“ITA”). Genting filed a judicial review application seeking to quash the decision of the Deputy Commissioner. The High Court allowed Genting’s judicial review application and held that IRB could not be allowed to have access to Genting’s customers' database or any taxpayer for that matter until and unless IRB had demonstrated that there was reasonable suspicion that any specific, identified and/or identifiable customer had not complied with any material provision of the ITA so as to warrant a disclosure of the personal data of that particular customer.

In the case of Junzhi Wang & Another, the High Court was tasked to answer the novel question of whether the Malaysian High Court has jurisdiction to review and set aside a decision by an Administrative Panel that was formed by the Arbitration and Mediation Centre (“Centre”) of the World Intellectual Property Organization (WIPO). In this case, the defendant manufactures beverages under the Red Bull brand. The defendant and three other parties entered into a joint venture to produce and sell Red Bull vitamin energy drinks in China, with the second plaintiff as the joint venture company. Pursuant to the joint venture, licence agreements were entered into for the second plaintiff to use the Red Bull trade marks. None of the licence agreements permitted the plaintiffs to register or use the domain names using the Red Bull name. Nevertheless, multiple domain names (including 11 which are the subject matter of this case) (“Domain Names”) using the Red Bull name or mark were created and registered. Without the defendant’s knowledge, the first plaintiff (an employee of the second plaintiff) acquired the Domain Names by transfer. The defendant filed a complaint against the first plaintiff as registrant of the Domain Names at the Centre, to which the defendant was successful, and the first plaintiff was ordered to transfer the Domain Names to the defendant. The plaintiffs then filed an action premised on tort of unlawful interference of trade alleging that the defendant’s complaint against the plaintiffs’ use and registration of the Domain Names with WIPO was wrongful and with the intent to injure. The defendant counterclaimed for, among others, passing off and abuse of legal process. The High Court dismissed the plaintiffs’ action and allowed the defendant’s counterclaim for abuse of legal process. In so doing, the learned Judicial Commissioner held that the court had no jurisdiction to review or set aside an order made by WIPO.

The cases above represent just a glimpse into the many notable decisions handed down by the Malaysian courts. The coming year promises to be an equally eventful one with the Federal Court poised to render its decision on liquidated damages in the housing development industry brought upon by the Federal Court’s case of Ang Ming Lee. Further, with the surge in intellectual property litigation involving generative AI (most prominently in the West), it seems inevitable that the Malaysian courts will soon be confronted with similar legal issues.