Legal Herald

MAY 2015

1. The Syariah Court: Its Position Under the Malaysian Legal System 11. Wavering on Waivers 18. GST Rules or Ruins?
From a Ship Financiers Perspective 24. The Law on Trade Secrets 28. Partner Profile 29. Senior Associate Profiles
in this issue

The Syariah Court: Its Position Under the

Malaysian Legal System
2015. LEE HISHAMMUDDIN
ALLEN & GLEDHILL. ALL
RIGHTS RESERVED
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|by Rosli Dahlan and Fawza Sabila Faudzi|

t has been said that Islamic law and the civil law exist as parallel systems in Malaysia.
The proposition, while attractive, is grossly inaccurate in law. As it stands today, the
administration of Islamic law is confined to personal law for Muslims and the Syariah court
is subordinate to the courts established by the Federal Constitution and under federal law,
as this article will show.
The Syariah court has in recent years become a prominent subject in public discussion,
not least of all with the constitutional provision that Islam is the religion of the Federation.1

It is vital that the history of how religion came to be inserted in the Federal Constitution
be first examined, objectively and dispassionately, given that the subject is fraught with
difficulty.

Federation of Malaya

The Federal Constitution has its roots in the Federation of Malaya Agreement 1948
(the FMA 1948) which established a federation known as the Federation of Malaya
or Persekutuan Tanah Melayu comprising the nine Malay states2 and the Settlements3

KDN PP 12853/07/2012 (030901)

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Article 3, Federal Constitution

The Federated Malay States of Selangor, Pahang, Perak and Negeri Sembilan and the States of Perlis,
Kedah, Kelantan, Terengganu and Johor
Previously part of the Straits Settlements

Printed by One2Print Sdn Bhd

Suite 163-1-7, Wisma Mah Sing, 163, Jalan Sungei Besi, 57100 Kuala Lumpur, Malaysia

of Penang and Malacca.4 It was envisaged that the

Federation, while remaining under British rule for the time
being, would progress towards eventual self-government.5
Historically, British rule in the Malay States eschewed
interference with the powers of the Malay Rulers on
matters relating to Islam and Malay customs. This position
was maintained in the FMA 1948,6 with a proviso that
federal legislation could be made for enabling the courts
to ascertain Islamic law or Malay customs concerning
matters brought before them for adjudication.7
As for legislation, each Malay State had the power to
pass laws on Islam and Malay customs to the extent not
repugnant to any law passed by the legislative council
of the Federation.8 This distribution of legislative powers
between the Federation and the Malay States remains
unchanged to this day. Islam as the religion of the
Federation was to come later.

The Reid Commission

In 1956, as one of the final steps taken in the direction

of self-government for the Federation, an independent
commission headed by Lord Reid9 was appointed by
the British Crown and the Conference of Rulers to make
recommendations for a constitution for an independent
Federation of Malaya.
The draft constitution and the report submitted by the
Reid Commission was passed with amendments and
approved by the Federal Legislative Council in July 1957.

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15

In the course of the deliberations of the Reid Commission,

the then-dominant political party called the Alliance
submitted a proposal that Islam be made the official
religion.10
The Reid Commission decided to not make any provision
for an official religion, preferring to maintain the status
quo by retaining religion as a State matter11 as they were
concerned over the apparent contradiction between the
Alliance declaration that Malaya would be a secular state
and the proposed provision for Islam to be the official
religion of the Federation.12
This omission led to the formation of a Working Party
comprising representatives of the British Government,
the Malay Rulers and the Alliance coalition to review the
Reid Report.13 Tunku Abdul Rahman argued strongly
for an article declaring Islam as the official religion of
the Federation.14 The component parties in the Alliance
agreed that the proposed provisions should include two
provisos first, that it would not affect the position of
the Rulers as head of religion in their respective States,
and second, that the practice and propagation of other
religions in the Federation would be assured under the
Constitution.15
Justice Sheik Abdul Hamid, the member of the Reid
Commission from Pakistan who initially agreed with the
other members to omit any provision for an official religion
in the draft constitution, later proposed in his Notes of
Dissent that the Alliance proposal be adopted as it was

Clause 3, Federation of Malaya Agreement 1948 (FMA 1948)

Recital, FMA 1948
Clause 5, FMA 1948
Proviso, Clause 5, FMA 1948
Clause 100, FMA 1948
Hence, the Reid Commission
Joseph M Fernando, The Making of the Malayan Constitution (MBRAS, 2002) [Fernando] at 129
Citing the request of the Rulers to retain religion as a State matter on the grounds that the provision would infringe their position as the head of the
Muslim religion in their respective States; Fernando, supra n 10
Fernando, supra n 10
Ibid, at 149
Ibid, at 161
Ibid, at 162

L e g a l H e r a l d . M AY 2 0 1 5

innocuous, pointing out that at least 15 other countries

had similar provisions in their constitutions.16
The Federation of Malaya government, in a White
Paper published in 1957, explaining the changes to the
recommendations of the Reid Commission, stated:
There has been included in the proposed Federation
Constitution a declaration that Islam is the religion
of the Federation. This will in no way affect the
present position of the Federation as a secular State,
and every person will have the right to profess and
practise his own religion and the right to propagate
his religion, though this last right is subject to any
restrictions imposed by State law relating to the
propagation of any religious doctrine or belief among
persons professing the Muslim religion.17
In the event, an express provision was made in Article
3(1), the terms of which have remained unchanged since:
Islam is the religion of the Federation but other
religions may be practised in peace and harmony in
any part of the Federation.
The Malay States and the Settlements comprised in
the Federation of Malaya became independent as from
31 August 1957 by virtue of the Federation of Malaya
Agreement 1957, given force of law by the Federal
Constitution Ordinance 1957.18

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20
21
22

23

That the Federation was to be a secular nation was

reiterated by Tunku Abdul Rahman in a speech before
the legislative council:
I would like to make it clear that this country is not an
Islamic state as it is generally understood, we merely
provided that Islam shall be the official religion of the
State.19

Malaysia

Prior to the formation of Malaysia, a commission of

inquiry chaired by Lord Cobbold20 was appointed to
ascertain the views of the people of North Borneo and
Sarawak, and upon assessment of those views, to make
recommendations on the inclusion of North Borneo and
Sarawak in the proposed Federation of Malaysia and
issued a report in 1962.21 Although the British member of
the Cobbold Commission recommended that the Federal
provision on religion should not be extended to Borneo
territories which have a non-Muslim majority, the Malayan
members recommended22 otherwise:
... we are agreed that Islam should be the national
religion for the Federation. We are satisfied that the
proposal in no way jeopardises freedom of religion
in the Federation, which in effect would be secular.
In 1963, the Federal Constitution was amended upon the
admission of Singapore and the North Borneo states of
Sabah and Sarawak to the Federation.23

Supra, n 10 at 130
Ibid, at 163
FM Ordinance No 55 of 1957
Tunku Abdul Rahman (Hansard, 1 May 1957)
Hence, the Cobbold Commission
Report of the Commission of Inquiry, North Borneo and Sarawak
Ibid, at 53-54; Or see
<http://en.wikisource.org/wiki/Report_of_the_Commission_of_Enquiry,_North_Borneo_and_Sarawak,_1962/CHAPTER_4/general_matters>
Malaysia Act (Act No 26 of 1963)

L e g a l H e r a l d . M AY 2 0 1 5

Article 3 of the Federal Constitution remained unchanged.

Public and private aspects of Islam in Malaysia

In 1988, a full bench of five in the Supreme Court (as

the Federal Court was then known) had occasion to
consider Article 3 in an appeal against a mandatory death
sentence for drug trafficking and possession of firearms.
It was contended on behalf of the accused that Islam
being the religion of the Federation, as declared in the
Federal Constitution, and the Federal Constitution being
the supreme law of the Federation, the imposition of the
death penalty was unconstitutional, being contrary to
Islamic injunction.24
Although the Supreme Court acknowledged that Islam
was not just a mere collection of dogmas and rituals but a
complete way of life covering all fields of human activities,
be they private or public, legal, political, economic, social,
cultural, moral or judicial,25 it held that this was not the
meaning intended by the framers of the Constitution. So
far as Islam was concerned, the result of the development
of law by the British in Malaya had the effect of turning
the legal system into a secular institution. Thus, all laws,
including the administration of Islamic law, had to be
validated through a secular fiat.26
The court also observed that during the British colonial
period, through their system of indirect rule and
establishment of secular institutions, Islamic law was
rendered isolated in the narrow confines of the law
of marriage, divorce and inheritance the sphere of
personal law. This private aspect of Islamic law is only
applicable to Muslims as their personal law.27

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30
31
32

Islam being the religion of the Federation did not mean

that laws passed by Parliament must be imbued with
Islamic religious principles; nor did the existence of
Syariah law prior to independence require that laws of
general application must conform to the Syariah, for to
hold otherwise would be contrary to the constitutional
and legal history of the Federation and also to the Civil
Law Act 1956, which provides for the reception of English
common law in this country.28
It is in this sense of the dichotomy that the framers of the
Constitution understood the meaning of the word Islam
in the context of Article 3. Religion being often described
as a sensitive matter in Malaysia, the concluding words of
Salleh Abbas LP are noteworthy:
... we have to set aside our personal feelings
because the law in this country is still what it is today,
secular law, where morality not accepted by the law
is not enjoying the status of law.29

Jurisdictional controversies

This dichotomy between the public and private aspects

of Islamic law, when ignored, has given rise to difficulties.
In recent years, the bitter custody and childs religious
rights battles in Subashini Rajasingam,30 Indira Gandhi31
and Deepa Subramaniam32 sparked new conflicts
between the Syariah court and the civil court. In these
three cases, all involving Hindu married couples with
children, the husband had converted to Islam, taken
the children away from their mothers and in two cases,
converted the children also to Islam. Controversy also

Che Omar bin Che Soh v Public Prosecutor [1988] 2 MLJ 55

Ibid, at 56C
Ibid, at 56C-D
Ibid, at 56E
Supra, n 24 at 56A-C
Ibid, at 57E-F
Subashini a/p Rajasingam v Saravanan a/l Thangathoray and other appeals [2008] 2 MLJ 147
Indira Gandhi a/p Mutho v Pengarah Jabatan Agama Islam Perak & Ors [2013] 5 MLJ 552; Ketua Polis Negara v Indira Gandhi a/p Mutho [2015] 2 MLJ
149 (CA)
Viran Nagapan v Deepa Subramaniam [2015] 3 CLJ 537 (CA)

L e g a l H e r a l d . M AY 2 0 1 5

arose when State religious authorities and the Syariah

court purported to subject the non-Muslim spouse to
the jurisdiction of the Syariah court, although state
Syariah laws clearly provided that the Syariah court had
jurisdiction only over Muslims. Another issue was the
reluctance of the police to act on the complaints made by
the non-Muslim spouse.
In the now infamous Borders case,33 in 2012, officers of
JAWI,34 accompanied by the media, raided the Borders
Bookstore at The Gardens, Mid Valley City in Kuala
Lumpur. During the raid, the JAWI officers seized several
books by international author Irshad Manji, titled Allah,
Kebebasan dan Cinta, a Malay translation of Allah,
Liberty and Love which was also seized, on the grounds
that the books were prohibited.35
At the material time, the publications were, in fact, not
subject to any prohibition order by the Minister of Home
Affairs. The JAWI officers proceeded to examine the
Muslim and non-Muslim employees of Borders, and
issued orders compelling them to be subject to further
investigation and examination.
The next day, a similar raid was conducted at another
Borders store. Notwithstanding the full co-operation
given by Borders and its employees, the JAWI officers
arrested one Nik Raina Nik Abdul Aziz, who was the
store manager, and charged her for disseminating or
distributing publications deemed contrary to Islamic law.
Both the High Court36 and the Court of Appeal37 held that

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34
35
36
37
38
39
40
41
42
43
44

the act of enforcement by JAWI was unlawful and illegal,

primarily on the grounds that the books were in fact not
subject to any prohibition order at the material time. The
Court of Appeal was of the view that any law, be it Federal
or State, that breached the Federal Constitution must be
struck down and any Federal or any State Government
and its agencies that apply the law wrongfully must be
corrected.38
In June 2014, enforcement officers of JHEAINS39
arrested 17 people at a wedding reception. Those
arrested were transgender persons, nicknamed mak
andam, present at the wedding in service as wedding
planners and beauticians. They were charged for crossdressing against the Syariah law in Negeri Sembilan.40
These mak andam applied to the High Court for judicial
review, which was refused. In the Court of Appeal,41 it
was declared that the Negeri Sembilan Islamic religious
enactment barring cross-dressing was contrary to the
Federal Constitution.42
The Director-General of JAKIM43 publicly criticised the
Court of Appeal for interfering with the administration
of lslamic law by the Syariah court in contravention of
Article 121(1A) of the Federal Constitution. The Minister
for Religious Affairs then issued a statement to the effect
that the Government was planning to establish a Syariah
Federal Court in order to prevent any further interference
by the civil court.44 This reignited the debate whether
Malaysia had a dual legal system of civil law and Syariah
law.

Berjaya Books Sdn Bhd v Jabatan Agama Islam Wilayah Persekutuan Wilayah Persekutuan & Ors [2014] 1 MLJ 138
Jabatan Agama Islam Wilayah Persekutuan (Department of Federal Territory Islamic Affairs)
By virtue of s 13 of the Syariah Criminal Offences (Federal Territories) Act 1997
Supra, n 33
Jabatan Agama Islam Wilayah Persekutuan & Ors v Berjaya Books Sdn Bhd & Ors [2015] 1 AMR 739
Ibid, at 761(53)
Jabatan Hal Ehwal Agama Islam Negeri Sembilan (Department of Negeri Sembilan Islamic Affairs)
Syariah Criminal (Negeri Sembilan) Enactment 1992, s 66
Muhamad Juzaili Mohd Khamis & Anor v State Government of Negeri Sembilan & Ors [2015] 1 AMR 673; [2015] 1 CLJ 954
Decided by Mohd Hishamudin Yunus, Aziah Ali and Lim Yee Lan JJCA
Jabatan Kemajuan Islam Malaysia (Department of Islamic Development Malaysia)
<http://www.themalaymailonline.com/malaysia/article/jakim-confirms-putrajayas-plan-for-shariah-equivalent-to-federal-court>; <http://www.thestar.com.
my/News/Nation/2014/11/15/civil-court-syariah-court-jakim/>

L e g a l H e r a l d . M AY 2 0 1 5

By far, the most divisive of these controversial cases

have been the ban on the use of Allah by non-Muslims
including the ruling that the weekly Herald Malaysia
newspaper of the Roman Catholic Church could not
refer to God in that way in its Malay-language edition;45
the seizure of an Indonesian publication that used Allah
for Sunday school materials,46 and the seizure of 300
copies of the Bible in Bahasa Melayu and Bahasa Iban
that contained the word.47 The High Court in the Herald
case held that the church had a constitutional right to
use Allah,48 a decision that was set aside by the Court
of Appeal.49 Unfortunately, the constitutionality of the
prohibition remains unclear as the Federal Court refused
leave to appeal.50
The jurisdictional controversies referred to above remain
unsettled as these circumscriptions on the legislative
power of the State and the jurisdiction of the Syariah
court have yet to be closely examined before the courts.
It is moot that some of the actions taken by the religious
authorities and the orders issued by the Syariah court in
the above cases may have exceeded their power and
jurisdiction.

The Syariah court

Unlike the High Court which is established by the Federal

Constitution, the Syariah court is a creature of State law.51
Article 74 of the Federal Constitution, read together with
the State List,52 prescribes that Islamic law and Islamic
matters including the establishment of Syariah courts
fall under the jurisdiction of the State. According to the
State List, the legislative power of the State assembly to
legislate on Islamic law and Malay customs is confined to
26 matters:
(a) Succession, testate and intestate, betrothal,

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48
49
50
51
52
53

(b)

(c)
(d)
(e)
(f)

(g)

marriage, divorce, dower, maintenance, adoption,

legitimacy, guardianship, gifts, partitions and
non-charitable trusts;
Wakafs and the definition and regulation of
charitable and religious trusts, the appointment
of trustees and the incorporation of persons
in respect of Islamic religious and charitable
endowments, institutions, trusts, charities and
charitable institutions operating wholly within the
State;
Malay customs;
Zakat, Fitrah and Baitulmal or similar Islamic
religious revenue;
Mosques or any Islamic public places of worship;
Creation and punishment of offences by persons
professing the religion of Islam against precepts
of that religion; and
Constitution, organisation and procedure of the
Syariah courts.

The State List stipulates that the Syariah court is to have

jurisdiction only over persons professing the religion
of Islam and in respect only of the above matters. It is
also provided that the Syariah court shall not have any
jurisdiction in respect of offences unless conferred by
federal law.

Jurisdiction cannot be implied

It is a common misconception that once established, a

Syariah court has, ipso facto, jurisdiction over all matters
relating to Islamic law and Malay customs set out in the
State List.
In a case where a widow sought a declaration that her
deceased husband was a Buddhist during his lifetime
and at the time of his death,53 the High Court held that

Titular Roman Catholic Archbishop of Kuala Lumpur v Menteri Dalam Negeri & Ors [2014] 4 MLJ 765
Jerry WA Dusing @ Jerry W Patel & Anor v Menteri Keselamatan Dalam Negeri Malaysia & Anor [2015] 1 MLJ 675
<http://english.astroawani.com/malaysia-news/jais-returns-seized-bible-azmin-ali-48402>
Supra, n 45 at 782(12)
Ibid, at 782(18)
Supra, n 45
Article 74 (2) of the Federal Constitution
Read with the Ninth Schedule of the Federal Constitution, Item 1 of List II (State List)
Ng Wan Chan v Majlis Ugama Islam Wilayah Persekutuan & Anor (No 2) [1991] 3 MLJ 487

L e g a l H e r a l d . M AY 2 0 1 5

the jurisdiction of the Syariah court cannot be derived by

implication and that if State law did not confer jurisdiction
to deal with a particular matter in the State List, the Syariah
court would be precluded from dealing with that matter.54
As State law did not confer jurisdiction to determine the
issue whether a person is a Muslim or not at the time of
his death, the High Court was not precluded from hearing
and determining that issue.55
Similarly, in a dispute over wakaf land,56 it was held that
when there is a challenge to the jurisdiction of the High
Court, the test was not whether the court had jurisdiction
but whether jurisdiction had been conferred on the
Syariah court. Only if such jurisdiction were conferred on
the Syariah court would the High Court be precluded from
considering the matter before it.57
However, there is dicta to the contrary in Soon Singh
a/l Bikar Singh v Pertubuhan Kebajikan Islam Malaysia
(Perkim) Kedah & Anor,58 a case before the Federal
Court, that the jurisdiction of the Syariah court to deal
with the issue conversion out of Islam, although not
expressly provided in State law, could be implied from
the express provisions conferring jurisdiction on the issue
of conversion into Islam.59 The Syariah court in that case
had held that the deceased convert had not renounced
the religion of Islam and therefore was a Muslim at the
time of his death.
The rationale of the Federal Court appears to be as
follows:
As in the case of conversion to Islam, certain
requirements must be complied with under hukum

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56
57
58
59
60
61
62
63
64
65

syarak for a conversion out of Islam to be valid,

which only the Syariah courts are the experts and
appropriate to adjudicate. In short, it does seem
inevitable that since matters on conversion to Islam
come under the jurisdiction of the Syariah courts, by
implication conversion out of Islam should also fall
under the jurisdiction of the same courts.60
The Federal Court was much persuaded by statements
in the authorities61 that the question of conversion out of
Islam involves issues requiring substantial consideration
of the Islamic law by relevant jurists qualified to do so and
that therefore the only forum to qualified to do so is the
Syariah court.62
It is submitted that although the fact that the determination
of a Muslims conversion out of Islam may involve inquiry
into the issue of renunciation of Islam under Islamic law, it
did not follow that it would be inevitable that the Syariah
court should have jurisdiction.63
With the greatest respect, the Federal Court decision
also appears to contradict two authorities cited in the
judgment:
... express and unambiguous language appears to
be absolutely indispensable in statutes passed for
the following purposes: imposing tax; conferring or
taking away legal rights; excepting from the operation
of or altering clear principles of law; altering the
jurisdiction of courts of law64... the general rule
undoubtedly is, that the jurisdiction of the superior
courts is not taken away, except by express words or
necessary implication.65

Ibid, at 489C-F
Ibid, at 490D
Shaik Zolkaffily bin Shaik Natar & Ors v Majlis Agama Islam Pulau Pinang dan Seberang Perai [1997] 3 MLJ 281 (see also Barkath Ali bin Abu Backer
v Anwar Kabir bin Abu Backer [1997] 4 MLJ 389)
Shaik Zolkaffily; supra, n 56 at 293F
[1999] 1 MLJ 489
Ibid, at 502A
Ibid, at 502G
Dalip Kaur v Pegawai Polis Daerah, Balai Polis Daerah, Bukit Mertajam & Anor [1992] 1 MLJ 1; Md Hakim Lee v Majlis Agama Islam Wilayah Persekutuan,
Kuala Lumpur [1998] 1 MLJ 681
Dalip Kaur; supra, n 61 at 10A
Supra, n 58 at 502G
Ibid, at 502B
Ibid, at 502C

L e g a l H e r a l d . M AY 2 0 1 5

Unfortunately, Soon Singh was not discussed, but by

implication not followed, in Latifah Mat Zain,66 where the
Federal Court held that:
What it means is that, the Legislature of a State, in
making law to constitute and organize the Syariah
courts shall also provide for the jurisdictions of such
courts within the limits allowed by item 1 of the
State List, for example, it is limited only to persons
professing the religion of Islam. The use of the word
any between the words in respect only of and of
the matters means that the State Legislature may
choose one or some or all of the matters allowed
therein to be included within the jurisdiction of the
Syariah courts. It can never be that once the Syariah
courts are established the courts are seized with
jurisdiction over all the matters mentioned in item 1
automatically. It has to be provided for.67

The Syariah court an inferior court

Unlike the High Court, the Court of Appeal and the Federal
Court, which are established by the Federal Constitution,68
the Syariah court has been equated to the Sessions Court
and Magistrates Court which, in the Federal Constitution,
are called inferior courts.69 The Syariah courts are mere
State courts and do not enjoy the same status and
powers as the High Court.70
It follows that the High Court has supervisory powers over
the Syariah court just as it has supervisory powers over
other inferior tribunals, such as the Industrial Court.71
Quite clearly, the Syariah court cannot be considered any
greater than the inferior courts.72

66
67
68
69
70
71
72
73
74
75
76

(a) The Sessions Courts and Magistrates Courts

are established by the Subordinate Courts Act
1948, which is a federal law, whereas the Syariah
court is established by State law, Article 121(1A)
notwithstanding;
(b) In exercising its criminal jurisidiction,73 the
Magistrates Court can impose a sentence of an
imprisonment up to 5 years, a maximum fine of
RM10,000 and whipping up to twelve strokes,
or a combination thereof, the so-called 5:10:12
Rule; and
(c) the Syariah court in its criminal jurisdiction is
subject to limits imposed by Federal law74 of a
maximum sentence of three years imprisonment,
maximum fine of RM5,000 and whipping up to six
strokes, the so-called 3:5:6 Rule.
It is therefore clear that under no circumstances can
the Syariah court be considered equivalent to the High
Court. It follows in principle that, where there is an issue
of competing jurisdiction between the High Court and the
Syariah court, the proceedings before the High Court
must take precedence over the Syariah court.75

No exclusive jurisdiction on Islamic law

It is also inaccurate to hold that the Syariah court has

exclusive jurisdiction on all matters related to Islamic law.
Given that the Syariah court is a creature of State law, it
has no power of interpretation on any matter which is the
province of the High Court and the subordinate courts,
including issues on the interpretation of federal law and
State law.76

[2007] 5 MLJ 101

Ibid, at 116(43)
Article 121, Federal Constitution
Latifah Mat Zin v Rosmawati bte Sharibun & Anor [2007] 5 MLJ 101 at 114G
Dato Kadar Shah Tun Sulaiman v Datin Fauziah Haron [2008] 7 MLJ 779 at 785E
Ibid, at 785F
Article 121(1), Federal Constitution
Subordinate Courts Act 1948; s 87
Syariah Court (Criminal Jurisdiction) Act 1965, Act No. 355 (Rev 1988); s 2
Supra, n 70; para 14 at 785
Zaina Abidin bin Hamid @ S Maniam & Ors v Kerajaan Malaysia & Ors [2009] 6 MLJ 863

L e g a l H e r a l d . M AY 2 0 1 5

In 2008, one Abdul Kahar77 was charged in the the

Syariah court for several offences for deviant teaching
contrary to a State Enactment.78 He challenged the
constitutionality of the State Enactment on the grounds
that the subject matter of the offences fell outside the
term precepts of Islam in the State List circumscribing
the legislative power of the State. The issue then arose
as to whether the Syariah court had jurisdiction to enter
upon the interpretation of the term precepts of Islam and
thereby determine whether the provisions in the State
Enactment creating the offences were in accordance with
the provisions of the Federal Constitution.79
The Federal Court held that the Syariah court had no
such power and that State law could not possibly confer
such power because:
(a) the ascertainment of Islamic law and other
personal laws for purposes of federal law is a
federal matter;80
(b) any question whether a law made by a State is
within the power of a state;81 and the interpretation
of the Federal Constitution is a matter for the
High Court.82
In 2012, one Siti Hasnah applied to the High Court to
declare her conversion to Islam when she was a year old
to be invalid. The Court of Appeal held that the jurisdiction
of the civil court was not ousted merely because the
subject matter of a claim or complaint has an Islamic law
element in it.83

77
78
79
80
81
82
83
84
85
86

No overlapping jurisdiction

Another common misunderstanding is that the Syariah

court is a parallel system established under Article
121(1A) of the Federal Constitution.
Article 121 establishes the High Court, the Court of Appeal
and the Federal Court and recognised such inferior courts
as may be prescribed by law. Article 121(1A), however,
merely excludes the jurisdiction of the High Court in
respect of any matter within the jurisdiction of the Syariah
court.
Quite clearly, Article 121(1A) neither establishes nor
confers jurisdiction on the Syariah court.84 It is only when
some jurisdiction is expressly conferred by State law
on the Syariah court that Article 121(1A) would apply
to exclude the jurisidiction of the High Court and the
subordinate courts on that matter.
It has been stated above that the Syariah court can only
have jurisdiction if expressly conferred by State law within
the constraints of the Islamic law matters mentioned in
the State List.
In the absence of jurisdiction being conferred on the
Syariah court in respect of any matter, such matter
would fall within the jurisdiction of the High Court and the
subordinate courts, unfettered by the operation of Article
121(1A).85
In any case, Article 121(1A) does not take away the
jurisdiction of the High Court to interpret any State law
enacted for the administration of Islamic law,86 such

Abdul Kahar bin Ahmad v Kerajaan Negeri Selangor (Kerajaan Malaysia, intervener) & Anor [2008] 3 MLJ 617
Charged with five offences under various provisions of the Syariah Criminal Offences (Selangor) Enactment No 9 of 1995
Supra, n 75 at 622H-I
Ibid, at 623C
Ibid, at 623G
Ibid, at 622
Siti Hasnah Vangarama Abdullah v Tun Dr Mahathir Mohamad & Ors [2012] 7 CLJ 845 at 854(14)
Shaik Zolkaffily supra, n 56 at 293F
Ibid
Dalip Kaur v Pegawai Polis Daerah, Balai Polis Daerah, Bukit Mertajam & Anor [1992] 1 MLJ 1 at 7F

L e g a l H e r a l d . M AY 2 0 1 5

jurisdiction being outside the scope of State law, although

concerning Islamic law.
Article 121(1A) was introduced to prevent conflict of
jurisdiction between the civil court and the Syariah court.87
If federal laws and State laws are made in strict compliance
with the Federal List and State List, there should not be a
situation where both the civil court and the Syariah court
have jurisdiction over the same matter or issue.88
If an issue were to arise on whether State law infringes on
the Federal List, Article 121(1A) cannot be an argument
for ousting the jurisdiction of the civil court.89 In such a
situation the question to be asked is whether such State
law is constitutional in the first place, which is a matter for
the Federal Court to decide.90
Although there may be distinct issues falling within the
jurisdiction of the civil court and the Syariah court at the
same time as in Latifah Mat Zain,91 it does not follow that
there is an overlapping jurisdiction or assisting jurisdiction
between the two nor are they considered double
proceedings.92

Conclusion

Quite clearly, the idea of a dual legal system in Malaysia

of civil law and Syariah law is misconceived. Syariah law
is only applicable to Muslims and only as personal law,
with provision for certain offences against the precepts
of Islam. Nothing in the Federal Constitution suggests
that the Syariah court is to compete with or be parallel
to the civil court on the same subject matter, and this is
supported by judicial authority.

87
88
89
90
91
92

10

This issue is of vital importance to the peoples of

Malaysia, with their multicultural, multi-ethnic and multireligious history.
The nation called Malaysia has no existence outside of
the Federal Constitution, which is the supreme law of the
country. A united and functional Malaysia can only exist
when legal issues are determined in accordance with
principle, in well-reasoned judgments by the courts, with a
willingness to grapple with difficult issues without glossing
over or avoidance or oversimplification or a giving way to
sentiment.
The authorities reviewed in this article have in the main
avoided these dangers and provided guidance and a path
to the future, although with some anomalies that need in
due course to be resolved.
LH-AG

About the authors

Rosli Dahlan (rd@lh-ag.com) heads the
Corporate & Commercial Disputes Practice
Group at Lee Hishammuddin Allen & Gledhill
and regularly appears at the High Court and
appellate courts on public law issues.
Fawza Sabila Faudzi (fawza@lh-ag.com)
graduated from the Ahmad Ibrahim Kuliyyah
of Laws, International Islamic University
Malaysia, and is currently a pupil-inchambers with the firm

Mohamed Habibullah bin Mahmood v Faridah Bte Dato Talib [1992] 2 MLJ 793 at 804A (see also Professor Ahmad Ibrahim, The Amendment of art. 121
of the Federal Constitution: Its effect on the Administration of Islamic Law [1989] 2 MLJ xvii; cited in Latifah Mat Zin, supra, n 69 at 117I
Latifah Mat Zin; supra, n 69 at 118C-E
Ibid, at 118F
Ibid, at 118G; Article 128 of the Federal Constitution
Supra, n 88
Ismail bin Mohamad v Wan Khairani bt Wan Mahmood and another appeal [2011] 1 MLJ 743 at 750G

L e g a l H e r a l d . M AY 2 0 1 5

Wavering on Waivers
|by Chng Keng Lung|
The law of variation, waiver and estoppel, it has been
said, is a difficult subject. Perhaps the following passage
explains it best:
The law is still in a state of development and neither
the boundaries nor the requirements of the two
doctrines (waiver and estoppel) are as yet clearly
marked out. The area is further confused by the
inconsistent use of terminology. Different judges
and writers use different words to mean the same
thing and the same words to mean different things.
Waiver, total waiver, waiver of remedy, waiver
of rights, election, abandonment, equitable
estoppel, quasi estoppel and waiver estoppel are
among the expressions which have been used. It
is clear that several of these expressions mean the
same thing.1
This article examines the doctrine of waiver and its
application in this jurisdiction.

Waiver at common law

The word waiver should apply strictly to forgiving

non-performance, either before or after the time for
performance has arisen. However, the word has also been
used with reference not only to a waiver of performance,
but also to a waiver of a breach of contract; that is to say,
a waiver of the rights of an innocent party arising out of
the breach by the other party.

It appears from the literature that there are at least four

types of waiver to consider:
(a) A waiver of breach which may be in the form of:
(i) a waiver by election; or
(ii) a total waiver.
(b) A waiver of performance which can take the form
of:
(i) a forbearance waiver;
(ii) a unilateral waiver.
The distinction between the two categories is premised
on whether there is an accrual of a right.
In situations involving a breach of contract, the application
of either category of waiver would depend on the
seriousness of the breach. Where there has been a
serious breach which goes to the root of the contract,
a right accrues to the innocent party to terminate the
contract and it is in that situation that a waiver of breach
could operate.
If, however, the breach does not entitle the innocent party
to terminate the contract, his remedy lies only in damages
and it is in such a situation that a waiver of performance
could arise.
Further, there can be a waiver of performance without a
breach of contract.

M Furmston, The Law of Contract (4th Ed, 2010), at 359-360 [Furmston]

L e g a l H e r a l d . M AY 2 0 1 5

11

Common elements

There are several common elements in all four types of

waivers. Firstly, a waiver in principle does not require
consideration.2 This is what differentiates a waiver from
a variation, where the presence of consideration is vital:
A waiver is distinguishable from a variation of a
contract in that there is no consideration for the
forbearance moving from the party to whom it is
given Although consideration need not be proved,
certain other requirements must be satisfied for such
an estoppel to be effective.3
(Emphasis added)
Even where performance is varied, it only amounts to a
waiver if there is no consideration:
Where an agreement to vary a contract is not itself
contractually enforceable for want of consideration it
will only take effect, if at all, as a waiver or on the
basis of the doctrine of promissory estoppel.4
Secondly, in order for a waiver to be effective, the waivor
needs to make a clear and unequivocal representation to
that effect, either by words or by conduct:5
A party can represent that he will not enforce a
specific legal right by words or conduct. He can
say so expressly this of course he can only do if
he is aware of the right. Alternatively he can adopt
a course of conduct which is inconsistent with the
exercise of that right. Such a course of conduct
will only constitute a representation that he will not

2
3
4
5
6
7
8
9
10
11
12
13

12

exercise the right if the circumstances are such to

suggest either that he was aware of the right when
he embarked on the course of conduct inconsistent
with it or that he was content to abandon any rights
that he might enjoy which were inconsistent with that
course of conduct.6
For conduct to amount to an unequivocal representation,
it must be unequivocal in the true sense of the word it
must be capable of one construction only, namely, that the
waivor has chosen to forgo his rights.7 Although silence
alone cannot constitute a waiver, it may give rise to an
unequivocal representation of a waiver when viewed in
its context.8
Finally, it is necessary for the waivor to be aware of the
facts that gave rise to the rights being forgone, the right to
forgo those rights and the connection between the two.9
Waiver by election
This form of a waiver of breach arises:
when a state of affairs comes into existence in
which one party becomes entitled, either under
the terms of the contract or by the general law, to
exercise a right and the party has to decide whether
or not to do so.11
In other words, waiver by election arises as a reaction
to a non-contractual or defective performance by the
other party,12 and therefore occurs only when a right to
terminate has arisen.13

Furmston, supra n 1 at 366-367; Chitty on Contracts (29th Ed, Sweet & Maxwell, 2004), Vol 1, at 1303, para 22-044 [Chitty]
Chitty, supra n 2
Furmston, supra n 1, para 2.103
Ibid, at 369, para 2.107
Youell & Ors v Bland Welch & Co Ltd (The Superhulls Cover case) (No 2) [1990] 2 Lloyds Rep 431 at 450
Sean Wilken and Karim Ghaly, The Law of Waiver, Variation and Estoppel (3rd Ed, 2012) at 43, para 4.08 [Wilken and Ghaly]
Furmston, supra n 1 at 369, para 2.107; Plasticmoda Societa Per Azioni v Davidsons (Manchester) Ltd [1952] 1 Lloyds Rep 527
Wilken and Ghaly, supra n 7 at 59, para 4.45
Chitty, supra n 2 at 1304, para 2-406
Furmston, supra n 1 at 364, para 2.101
Wilken and Ghaly, supra n 7 at 40, para 4.01
Furmston, supra n 1 at 365, para 2.101

L e g a l H e r a l d . M AY 2 0 1 5

The circumstances that would lead to the accrual of a

right to terminate include those where the waivor suffers
a repudiatory breach of a contract by the other party, or
where the waivor is prejudiced by a misrepresentation of
the other party.14

him; but so soon as he has not only determined to

follow one of his remedies but has communicated it
to the other side in such a way as to lead the opposite
party to believe that he has made that choice, he
has completed his election and can go no further;
and whether he intended it or not, if he has done an
unequivocal act I mean an act which would be
justifiable if he had elected one way and would not
be justifiable if he had elected another way the
fact of his having done that unequivocal act to the
knowledge of the persons concerned is an election.20

In the case of a repudiatory breach, the waivor as the

innocent party can accept the repudiation and treat himself
as discharged from the contract and claim damages or,
alternatively, to affirm the contract and reserve the right to
claim damages.15 In the case of a misrepresentation, the
waivor as the representee is faced with a similar choice,
either to rescind or to affirm the contract.16

Total waiver

Faced with a choice of two alternative and inconsistent

courses of action,17 once the waivor chooses one over
the other, he will be taken to have waived the rights to the
course so abandoned.18

As with waiver by election, total waiver is also a response

to a repudiatory breach of contract.21 A total waiver,
similarly, does not require reliance on the part of the
waivee, and is irrevocable once exercised.

Because of the need for certainty and finality in contract

dealings, once a waivor has elected one course of
action over the alternative, the election is irrevocable,
irrespective of whether there has been any reliance on
such election by the waivee.19

However, unlike a waiver by election, in the case of a total

waiver, the waivor forgoes all his rights. In other words,
the waivor waives not only his rights to treat himself as
discharged from further performance, but also his right to
damages.22

The nature of a waiver by election has been described in

the following terms:

The drastic nature of a total waiver makes it a rarity:

Where a party in his own mind has thought that he

would choose one of two remedies, even though
he has written it down in a memorandum or has
indicated it in some other way, that alone will not bind

14
15
16
17
18
19
20
21
22
23

Court will generally be slow to construe such a

situation as involving a total waiver and clear evidence
will be needed to show that the waivor intended to
abandon all rights in respect of the breach and not
merely to forgot the right to terminate the contract.23

Ibid, at 364, para 2.101

Ibid
Ibid
Ibid
Ibid
Furmston, supra n 1 at 364, para 2.101; at 370, para 2.108
Wilken and Ghaly, supra n 7 at 39, para 4.01; Kammins Ballroom Co v Zenith Investments [1971] AC 850
Wilken and Ghaly, supra n 7 at 53, para 4.31
Chitty, supra n 2 at 1304, para 2-046
Furmston, supra n 1 at 371, para 2.109; Wilken and Ghaly, supra n 7 at 55, para 4.37

L e g a l H e r a l d . M AY 2 0 1 5

13

Forbearance waiver
This form of a waiver may be described as:
The abandonment of a right in such a way that the
other party is entitled to plead the abandonment
by way of confession and avoidance if the right is
thereafter asserted.24
Forbearance waiver may arise before or after a
contractual term falls due for performance.25 The effect
of a forbearance waiver in the context of a breach of
contract is that the waivor is prevented from complaining
of any breach of the term, the performance of which has
been waived.26
Unlike a waiver by election, in the case of a forbearance
waiver, the waivor is not put to any election of alternative
remedies and can expressly or by its conduct suggest that
the waivee need no longer perform its future obligations
under the contract.27
A forbearance waiver is only binding if it is relied on by the
waivee.28 However, a forbearance waiver is suspensory
in nature in that it is revocable, and only becomes
irrevocable after the waivee alters his position in reliance
on it:29
It has been suggested that reliance is necessary
in such a case because the waiver operates in
effect as an alternative to a variation of the contract;
reliance is therefore necessary to take the place of

24
25
26
27
28
29
30
31
32
33
34
35

14

Banning v Wright [1972] 1 WLR 972

Furmston, supra n 1 at 365, para 2.101
Furmston, supra n 1 at 364, para 2.101
Wilken and Ghaly, supra n 7 at 52, para 4.28
Supra n 26 at 364
Ibid
Supra n 26 at 371
Wilken and Ghaly, supra n 7 at 52, para 4.28; at 40, para 4.02 appendix 9
Ibid, at 52 para 4.28
Ibid, at 55 para 4.36
Ibid
Ibid

L e g a l H e r a l d . M AY 2 0 1 5

consideration. Election waiver, on the other hand, is

justified by reference to the need for certainty and
finality in contact dealings.30
A further distinction between a waiver by election and
a forbearance waiver is that the former is retrospective
while the latter is prospective which waives the future
performance of a particular obligation.31 Forbearance
waiver has therefore been said to:
amount to a dissolution pro tanto of the
[particular] contractual tie between the parties with
both parties retaining their accrued obligations but
being discharged from the future performance of
particular obligations under the contract.32
Unilateral waiver
This form of a waiver of performance arise where the
waivor, having the sole benefit of a provision in the
contract, decides unilaterally to forgo the benefit of
such provision.33 The exercise of a unilateral waiver is
wholly for the benefit of the waivor and does not affect
the waivees performance of the contract.34 Naturally,
there need be no breach of contract by the waivee for
the waivor to exercise a unilateral waiver.35

Waiver under Malaysian law

The courts in Malaysia do not appear to have considered

the subject of waiver with the same degree of distinction
similar to what has been presented in the above.

It has been suggested in the leading case on the subject,

Associated Pan Malaysia Cement Sdn Bhd v Syarikat
Teknikal & Kejuruteraan Sdn Bhd36 (APMC), that our law,
which is founded on s 64 of the Contracts Act 1950 (the
Act), represents a departure from English law.
Section 64 of the Act reads as follows:
Every promisee may dispense with or remit, wholly
or in part, the performance of the promise made to
him, or may extend the time for such performance,
or may accept instead of it any satisfaction which he
thinks fit.
In delivering the judgment of the court, Gunn Chit Tuan
SCJ (as he then was) held:37
The word waiver is used in the English common law
in a variety of different senses. As pointed out by the
respondent, it was unfortunate that the appellant, as
the defendant, had not submitted to the trial judge in
what sense the word was pleaded and used. But we
agreed with Mr Sri Ram [counsel for the appellant]
that s 64 of our Contracts Act 1950, which was also
not brought to the attention of the learned judge,
represents a departure from the common law in
England. Our law on waiver in s 64 of the Contracts
Act 1950 is similar to the Indian law on the general
principles of waiver under which it is open to a
promisee to dispense with or remit wholly or in part
the performance of the promise made to him or he
can accept any promise which he thinks fit. Under
our law neither consideration nor an agreement
will be necessary. But in this case we also agreed

36
37

with the respondent that it had not been shown

to the trial judge or to us that the respondent
had intentionally forgone its claims. On the other
hand the learned judge who saw and heard Mr Ong
in the witness box accepted his evidence that the
respondent did not intend to abandon its claims
under the various contracts. We therefore agreed
with the learned judge that as a matter of fact waiver
did not apply in this case.
. In any case there was no evidence of any
clear and unequivocal representation by the
respondent in the correspondence or orally that it
was abandoning its claims for damages. Nor was
there evidence that the appellant had believed and
relied on such representation and had acted to his
damage upon such belief thus created. The learned
judge had also expressly found on the evidence that
there was no such reliance. The appellant could not
have relied on estoppel or any such issues not raised
in the lower court and could not now therefore raise
them at the appellate stage.
(Emphasis added)
The Supreme Courts decision on the issue of waiver may
be summarised as follows:
(a) The law in Malaysia on waiver represents a
departure from English law in that our law does
not require consideration or an agreement by
virtue of s 64 of the Act, both of which are needed
in English law;

[1990] 3 MLJ 287 (SC)

Ibid, at 295-296

L e g a l H e r a l d . M AY 2 0 1 5

15

(b) There was no evidence to show that the

respondent intended to abandon its claims under
the various contracts;38
(c) There must exist an unambiguous and
unequivocal representation on the part of the
waivor;39 and

Therefore, the innocent party when faced with such a

repudiatory breach has three options:
(a) to terminate the contract and claim damages,
which is a waiver by election;
(b) to affirm the contract while also reserving its
rights to damages, also a waiver by election; or

(d) There is a need for reliance on part of the waivee.

Section 40 of the Act

It is submitted that the decision of the Supreme Court is

per incuriam for the reasons below.
As a start, the court failed to take into account s 40, which
reads:
When a party to a contract has refused to perform,
or disabled himself from performing, his promise in
its entirety, the promisee may put an end to the
contract, unless he has signified, by words or
conduct, his acquiescence in its continuance.

(c) to affirm the contract but waive the rights to

damages, a total waiver.40
Section 64, which makes no reference to a breach of
contract, was therefore inapplicable to the facts of the
case. Had the Supreme Court been referred to s 40, it
would not have been compelled to force fit s 64 to the
facts of the case or to hold that it was a departure from
English law.
Although the Supreme Court was correct in stating that
an unambiguous and unequivocal representation on part
of the waivor was required, the court was, with respect,
incorrect in requiring reliance on the part of the waivee.

(Emphasis added)
If we apply the distinctions in English law as described
above, it can be seen that s 40 of the Act deals with waiver
of breach, while s 64 provides for waiver of performance.
Since the Supreme Court in APMC held that there was a
breach of a condition that went to the root of the contract,
the type of waiver relevant to the case must be a waiver
of breach in the face of the accrual of a right to terminate.

38
39
40

16

In so far as the court was considering s 64, it was correct

in holding as a matter of law that reliance is required,
since the context of that section is a forbearance waiver.
Had the court taken the opportunity to apply s 40, the
question of reliance would not have arisen but rather the
question of an election which, in the words of s 40, allows
the promisee to put an end to the contract, unless he
has signified, by words or conduct, his acquiescence in
its continuance.

Agreed with counsel for the respondent (Syarikat Teknikal Kejuruteraan) that a waiver requires an intention to forego a claim and the judge had accepted
the evidence of Mr Ong (CEO of the respondent) that there was no intention on the part of the company to abandon its claims
The court found no clear and unequivocal representation by the respondent that it was abandoning its claims for damages
All three options fall under the category of waiver of breach

L e g a l H e r a l d . M AY 2 0 1 5

This again illustrates the failure on the part of the Supreme

Court in appreciating the existence of the different types
of waiver.

Waiver and promissory estoppel are sometimes

treated as the same thing, sometimes as different
aspects of the same broad principle.43

It is respectfully submitted that s 64 does not in any

way represent a departure from English law, but instead
represents a statutory reaffirmation41 of what is considered
under English law as a forbearance waiver.

It is hoped that there will be an opportunity for the

doctrine of waiver to be reconsidered in future
cases.
LH-AG

Waiver by election under English law, it is submitted, is

encapsulated in s 40, which unfortunately the Supreme
Court had no opportunity to examine.
As with the Supreme Court in APMC, subsequent cases42
made no attempt to identify the different types of waiver
and to distinguish a waiver of breach from that of waiver
of performance.

Conclusion

It is therefore suggested that the law of contract on waiver

in Malaysia has not departed from English law and can be
reconciled in the following equivalents:
(a) Section 64 Waiver of performance
(b) Section 40 Waiver of breach.
Waiver, however, is by no means a simple subject; in fact,
the opposite is true.
The confusion is not merely terminological. The
relationships between the doctrines or waiver and
promissory estoppel, and the situations of waiver,
estoppel and contractual variation are often not clear.

41
42
43

About the author

Chng Keng Lung (ckl@lh-ag.com) is
an associate with the Corporate Disputes
Practice Group at Lee Hishammuddin Allen
& Gledhill, who is part of a team headed by
SM Shanmugam (ssm@lh-ag.com) that
regularly appears at the High Court and
appellate courts for various matters.
They also advise on and act in various litigious
matters such as shareholders disputes,
breaches of directors duties, minority
oppression actions, contractual and property
disputes. Shan has been credited by Legal
500 Asia Pacific 2014 for his intelligence,
practicality and expertise and has also been
described by Asialaw Profiles 2014 as an
up-and-coming corporate disputes partner.
Shan has also garnered praise from clients,
with one saying, He is the complete package
and I cant say enough good things about him
and his firm.

In relation to a waiver of performance

Norsechem Resin Sdn Bhd v Seal Incorporated Bhd [1999] MLJU 390; Sime Securities Sdn Bhd (formerly known as UMBC Securities Sdn Bhd) v
Anthony Lee Sin Choy [2003] 1 MLJ 204; Majlis Perbandaran Seberang Perai v Four Winds Freight Logistics Sdn Bhd [2012] 9 MLJ 627; Muniandy a/l
Thamba Kaundan Anor v D & C Bank & Anor [1996] 1 MLJ 374; and Sarawak Electricity Supply Corp v Celcom (M) Sdn Bhd [2002] 5 MJ 490
Furmston, supra n 1 at 359-360, para 2.99

L e g a l H e r a l d . M AY 2 0 1 5

17

GST Rules or Ruins?

From a Ship Financiers
Perspective
|by Datuk D P Naban and Jennifer James Ilango|
The hype is over! The long-debated goods and services
tax (GST) was implemented on 1 April 2015 by virtue of
the Goods and Services Tax Act 2014 [Act 762] (the GST
Act). Introduced as part of the governments tax reform
programme to enhance the efficiency and efficacy of the
taxation system, the rationale for GST is to eliminate
inherent weaknesses in the now-abolished sales and
service tax, which had a cascading effect due to what is
known as double taxation.1 That said, like many other
sensational political issues in Malaysia, there are several
differing schools of thought on its economic implications
on a larger scale.
The key objective of this article is to provide an overview
on the mechanics and dynamics of GST that a financier
in Malaysia may face in connection with ship financing.

Inconsistency in definition of ship

In accordance with s 2 of the Merchant Shipping Ordinance

1952 (MSO), the meaning of a ship includes every
description of vessel used in navigation not propelled by
oars. For the purposes of GST, however, the GST Act does
not provide any definition as to what constitutes a ship.
In this regard, the Zero-Rated Supply Order 2014 comes
to its rescue. Despite incorporating the interpretation of

1
2
3

18

a ship as reflected in the MSO, the Zero-Rated Supply

Order 2014 goes a step further to exclude vessels that
are designed or adapted for recreation, pleasure or other
than freight or passenger transportation.2 The GST Guide
on Shipping Industries, on the other hand, provides a list
of vessels that do not constitute a ship for the purposes
of GST. Among the excluded vessels are powerboats and
yachts, although passenger liners are accepted as ship.
Why a distinction has been drawn between these vessels
is unclear.
Notwithstanding the distinction drawn by the Zero-Rated
Supply Order 2014 and the Guide on Shipping Industries,
there is a string of established authorities that show
pleasure crafts, motor boats and yachts come within the
definition of ship.3 One may argue that powerboats and
yachts are expressly excluded from the definition for GST
purposes due their private nature primarily designed for
recreation or pleasure. We are unable to agree with this
reasoning. It will be nave to ignore the fact that powerboats
or yachts can also be utilised to transport passengers in
international waters for commercial purposes.
In this context, we took the liberty to consider the definition
of ship under s 21(4)(a) of the Singapore Goods and
Services Tax Act 1993. Prior to July 2010, a ship for the
purposes of the Singapore GST Act was defined as one
that is not designed or adapted for use for recreation
or pleasure. Consequently, prescribed services did not
enjoy zero rating. We can see the similarity between the
Malaysian and Singapore GST Acts in this regard.
However, that definition was subsequently amended on 1
July 2010 to include ships used or adapted for recreation

<http://gst.customs.gov.my/en/gst/Pages/gst_wy.aspx>
Section 17 of the GST Act, read with item 2 of the Goods and Services Tax (Zero-Rated Supply) Order 2014 (PU(A) 272/2014)
For example, in The Winnie Rig (1998) 2 Lloyds Rep 675, a motor yacht was held to be a ship

L e g a l H e r a l d . M AY 2 0 1 5

or pleasure, provided that they are wholly internationally

bound.4 This means any services by ship used or adapted
for recreation or pleasure that is used within international
waters is now zero-rated in Singapore.
With respect, the haphazard distinction in regards to the
definition of a ship provided in the Zero-Rated Supply
Order 2014 and the Guide on Shipping Industries causes
difficulty within the shipping industry. Our view is that
the Zero-Rated Supply Order 2014 should be rectified
to reflect established authorities. Alternatively, it will be
worthwhile to explore the expansion of the definition
of a ship as has been done in Singapore to maintain
competitiveness within the shipping industry.

Overview of GST within shipping industry

A ship will fall within the ambit of movable property under

the definition of goods provided by s 2 of the GST Act,
following which any service within the shipping industry
is subjected to GST at either the standard rate which is
at 6%,5 or zero rate.6 The latter was introduced with the
intention of boosting Malaysias competitiveness abroad
where GST registrants in such circumstances can claim
input tax credit from the government for the production of
taxable supplies.
To break it down into perspective, goods such as ship
store supplies and spare parts purchased for the purposes
of international voyages are zero-rated.7 These rates,
however, do not extend to domestic travel. Similarly,
services provided by intermediaries such as navigation
and ship handling services,8 shipping agents or ship
managers are zero-rated supplies.9 Further, services
rendered by classification society, salvors and the supply

4
5
6
7
8
9
10
11
12
13
14

of containers, whether by way of sale or leased, are also

zero-rated. As most Malaysian shipping companies ply
international routes, it can be surmised that most of their
activities will be zero-rated 10 as they involve exportation
of services.

Effect of GST on facilities over vessel

It is settled that financial services specific to loan,

advances or similar facilities are exempted from GST.11
This also extends to bonds, debentures or other similar
financial instruments representing or evidencing debt,
whether secured or otherwise.12
In short, apart from other considerations that may become
payable for the usage of the facility, financiers shall
not charge GST over the actual loan sum itself. Other
considerations in this context will include fees relating to
arranging, broking, advisory services, legal services and
so on wherein the service provider shall charge GST at
their respective GST rate.13 On a related note, it seems
that supply of insurance coverage pertaining to the facility
for the purchase of a vessel or the construction of a new
ship is taxable supply at standard rate. However, based
on item 14 of the Zero-Rated Supply Order 2014, if the
insurance policy is meant to cover risks directly related
to the export of a ship out of Malaysia, GST will then be
zero-rated.14

Enforcement of mortgage over vessel

A mortgagee may wish to enforce his mortgage over a

vessel when the shipowner is in default under the terms
of the mortgage. The mortgagee has two possibilities in
doing so. He may use self-help or seek the assistance
of the court.

Item 6 of the Singapore Goods and Services Tax (Amendment) Act 2010
Goods and Services Tax (Rate of Tax) Order 2014 (PU(A) 184/2014)
Royal Malaysian Customs Department, Goods and Services Tax (Guide on Shipping Industry), 24 March 2014
First Schedule of Goods and Services Tax (Zero-Rated Supply) Order 2014 (PU(A) 272/2014)
For example, pilotage, towage, berthing, wharfage and so on
Supra, n 7
Paragraph 3 of the Second Schedule of the Goods and Services Tax (Zero-Rated Supply) Order 2014 (PU(A) 272/2014)
Section 18(2) of the GST Act 2014, read with item 2 of Second Schedule of the Federal Government Gazette Goods and Services Tax (Exempt Supply)
Order 2014 (PU(A) 271/2014). See also Royal Malaysian Customs Department, Goods and Services Tax (Guide on Commercial Banking), 19 November
2013
Ibid, item 7 of the Second Schedule of the Exempt Supply Order 2014
Ibid, item 12 of the Second Schedule of the Exempt Supply Order 2014
Ibid, item 14(a) of the Second Schedule of the Exempt Supply Order 2014

L e g a l H e r a l d . M AY 2 0 1 5

19

As for the first option, the mortgagee can exercise his

right under the mortgage deed to take possession of
the ship and appoint a receiver and manager to manage
earnings from the vessel or, alternatively, to sell the ship.15
In practice, however, this may pose some difficulty since
shipowners will not co-operate with the mortgagee who
wishes to dispossess them of their vessel. Therefore, the
mortgagee, more often than not, will choose to enforce
his security through an in rem action and have the vessel
arrested and subsequently sold by way of judicial sale to
recover the debts under the facility.

Effect of GST on the sale of a ship

The sale of a ship is treated as a supply of goods.

Accordingly, the supply of a ship, whether or not an
onward trading of a whole ship or the construction of a
new ship, is subject to GST at the standard rate.16 This
also applies to the importation of foreign vessels into
Malaysia to be registered under the Malaysian flag.17
However, the supply becomes zero-rated if the ship is
built by a local business but eventually exported out of
Malaysia. The key word here is export. Therefore, if a
vessel is built by a local business, then sold to a foreign
registered company (and foreign flagged) but operates
within Malaysian waters, the sale will not amount to
export of goods. In such instances, GST at standard
rate will apply.
In a straightforward sale of a vessel, it is plain that the
seller is liable to pay GST at standard rate but he is
entitled, if the contract so allows, to require the purchaser

15
16
17

20

to pay the GST. However, circumstances differ in the case

of enforcement of mortgage. In this regard, we will have
to consider sub-paragraph 5(7) of the First Schedule that
ought to be read conjunctively with s 65(5) of the GST Act.
Sub-paragraph 5(7) of the First Schedule of the GST Act
provides that:
Where any goods, forming part of the business
assets of a taxable person, are sold by any other
person who has the power to do so to recover any
debt owed by the taxable person, the goods shall
be deemed to be supplied by the taxable person in
the course or furtherance of his business. (Emphasis
added)
In this instance, it can be surmised that the borrower,
in the event of default, will be deemed to be the person
supplying the goods if the mortgagee chooses to enforce
his right of sale over the vessel to recover the debt under
the facility. However, this matter does not end here. In
furtherance to the above sub-paragraph 5(7), one must
also consider s 65(5) of the GST Act which provides as
follows:
Where goods are deemed to be supplied by a
taxable person pursuant to subparagraph 5(7) of the
First Schedule, any person, whether or not he is a
taxable person, who sells the goods in satisfaction
of any debt owed by that taxable person, shall be
liable for any tax due and payable on the supply.
(Emphasis added)

Goldrein, Ian S, Ship Sale and Purchase (2nd Ed, Lloyds of London Press Ltd (1993) at 211
Supra, n 2
Sections 9 and 13 of the GST Act

L e g a l H e r a l d . M AY 2 0 1 5

This section addresses the question of liability. In short,

although the borrower is deemed as the taxable person
in a mortgage scenario, according to s 65(5) of the GST
Act, the party selling the vessel is the one ultimately
accountable for GST arising out of the sale. In other words,
the burden to account for GST shifts from the taxable
person to the person carrying out the sale. Ordinarily, this
consideration turns on the manner in which the sale is
done, either through the enforcement of the mortgagees
debenture by a receiver and manager, or pursuant to a
power of attorney or by virtue of a court order.

Sale of a ship by way of judicial sale

There are two main modes of judicial sale: sale by

private treaty and sale by public auction. In normal
circumstances, upon the execution of a warrant of arrest
on the res (which is usually a ship), unless the owner of
the res furnishes security for the claim, the res is likely to
be subjected to judicial sale.18 In such case, the vessel
will be sold by the sheriff free of all encumbrances by
virtue of a court order.19 Once the vessel has successfully
undergone the sale process, the proceeds of judicial sale
will then be utilised to satisfy the plaintiffs claim and the
claims of other parties, if any, according to an established
order of priorities.
The authority to carry out a judicial sale is vested in the
sheriff by virtue of a court order to sell the vessel. It is worth
noting at this juncture that when the vessel is arrested, it
enters into the care and custody of the sheriff, although
possession of it is not thereby transferred.20 The question
then is: Who is the actual vendor in a judicial sale of a

18
19
20
21

vessel? This question plays a crucial role in determining

who is in fact liable for GST in this regard.
There is no clear authority to suggest that the sheriff,
in reality, carries out the judicial sale on behalf of the
vendor in an enforcement of mortgage scenario, i.e. the
mortgagee in this case. In light of this, we considered how
the courts have interpreted the term vendor in a judicial
sale in foreclosure proceedings, which is similar to the
enforcement of mortgage deeds. The Malaysian courts
have on several occasions held that the chargee must
be regarded as the vendor in judicial sale for foreclosure
proceedings.21 If the same rationale applies, regardless
whether the judicial sale of a ship is by way of public
auction or private treaty, although the sale of the vessel
takes place in the name of the sheriff, the mortgagee of
the ship remains the actual vendor in the judicial sale.
This proposition is consistent with the GST Act. The term
any person who sells in sub-paragraph 5(7) ought to
reflect the person who has the power to recover any debt
as provided in s 65 of the GST Act. Reference to the word
power in this instance certainly must be the mortgagee.
Therefore, we take the view that the obligation to pay
GST ultimately lies with the mortgagee in a judicial sale
of a vessel.
(i) By way of private treaty sale
Principally, the implication of GST in judicial sale or
rather known as a court sale is no different from an
ordinary private tender exercise, i.e. GST at standard rate

Order 29 of the Rules of Court 2012

A ship, in this instance, includes her apparel, tackle and stores on board the ship
Kian Sing, Toh, Admiralty Law and Practice (2nd Ed, LexisNexis (2007) at 180
Kimlin Housing Development Sdn Bhd (Appointed Receiver & Manager) (In Liquidation) v Bank Bumiputra (M) Bhd [1997] 2 MLJ 805 (SC); Public Bank
Bhd v Phan Seng Kee [1991] 3 CLJ Rep 491; M & J Frozen Food Sdn Bhd v Siland Sdn Bhd [1994] 1 MLJ 294 (SC)

L e g a l H e r a l d . M AY 2 0 1 5

21

is applicable. As for potential bidders who place a deposit

to register their interest in the tender exercise, there is no
obligation to pay GST on the receipt of the deposit until
the said deposit forms part of the full payment made by
the successful bidder towards the purchase of the vessel.
Accordingly, if their bid becomes unsuccessful, their
deposit will be returned without any additional charges.

to account for GST in so far as it concerns the services

rendered by him to assist the court as an auctioneer.
He will not be liable to pay for GST on the sale of the
vessel, which will be the duty of the mortgagee instead as
discussed earlier. It is nonetheless imperative that before
the vessel is auctioned, the auctioneer must first inform
bidders that the vessel is subject to the payment of GST.

One may also wish to take note that although court-related

services are exempted supply,22 GST at standard rate is still
chargeable for the additional services rendered towards
the sale. For instance, this may include advertisement of
the sale and/or expenses incurred by the sheriff during
the arrest period.23 In order to ensure GST is claimable at
the conclusion of the sale from the purchaser, solicitors
acting for the mortgagee (who usually assists the sheriff
in the preparation of the proclamation of sale) must be
minded to specifically include conditions with respect
to the payment of GST in addition to the contract price,
example of which is set out below.

Suggested solutions

(ii) By way of auction process

In our opinion, the blanket statement that an auctioneer
only acts as an agent for the owner or financier as
provided in the GST Guide on Auctioneer24 is inaccurate.
More often than not, an auctioneer is called to assist the
sheriff, the receiver and manager or persons executing the
power of attorney to sell a ship by way of public auction.
The auctioneer is engaged to merely carry out the auction
exercises while the mortgagee remains the selling party.
Therefore, the auctioneers liability is limited to his duty

22
23
24

22

We know that the essence of GST is based on a valueadded concept. From our understanding, the solution to
s 65(5) of the GST Act is relatively simple. The person
selling the vessel must ensure that the conditions of sale,
whether in the form of a contract for sale or proclamation
of sale, provide for the payment of GST in addition to the
contract price.
A sample GST term would read as follows:
Goods and Services Tax (GST)
(a) Unless specified to the contrary in the Contract
Details, all prices are exclusive of Goods and
Services Tax (GST) on the Services and
Products and other supplies made under this
Contract to the extent that they are taxable
supplies within the meaning of the Goods and
Services Tax Act 2014 (the GST Act).
(b) In this clause, a word or expression defined in the
GST Act has the meaning given to it in that Act.

Section 64 of the GST Act 2014

Section 65(5) read with sub-paragraph 5(7) of the First Schedule of the GST Act 2014
By the Royal Malaysian Customs Department, 18 July 2013

L e g a l H e r a l d . M AY 2 0 1 5

(c) If a party (Supplier) makes a supply under or

in connection with this Contract in respect of
which GST is payable, the recipient of the supply
(Recipient) must pay to the Supplier, an additional
amount equal to the GST payable on the supply
(GST Amount).
In summary, the terms in the agreement leading to the
sale and purchase of a vessel and/or proclamation of sale
must specifically spell out that GST charges ought to be
borne by the purchaser, in addition to the purchase price.
Otherwise, the mortgagee could be held accountable for
those charges. Whether this is a fair burden placed on the
mortgagee, who is merely enforcing his rights under the
facility, warrants an article by itself.

Conclusion

It is undeniable that the GST will affect all individuals

and industries. However, the extent of its impact varies,
depending on the type of activity. Compared to other
industries, the GST is likely to have minimal impact on
the merchant shipping sector and maritime supply chain
as most international trade activities are zero-rated. The
rationale for this is to maintain competitiveness of the
seaborne trade in Malaysia.25

25

Apart from the million-dollar question as to whether

Malaysia is in fact ready for the GST, the implication of
GST should not be taken lightly as it has a proven track
record in countries that have implemented it thus far. With
proper understanding of and education on the impact of
GST, it may well be a way forward in tackling the nations
fiscal deficit.
LH-AG

About the authors

Datuk D P Naban (dpn@lh-ag.com) heads
the Tax, GST and Private Clients Practice
Group at Lee Hishammuddin Allen & Gledhill.
He regularly represents taxpayers in tax and
customs disputes in Malaysia. He also advises
taxpayers on various tax matters including
transfer pricing, tax audit & investigation and
international tax law. Naban also heads the
firms Shipping Practice Group.
Jennifer James Ilango (jji@lh-ag.com)
is an associate with the Shipping Practice
Group.

Margaret Ang Guat Hee and Laksme Khorana, An Assessment of the Introduction of Goods and Services Tax (GST) in Malaysia and its Implications on
the Merchant Shipping Sector and Maritime Supply Chain. See <http://www.mima.gov.my/mima/wp-content/uploads/gst%20-%20final%20report%20
20jul10.pdf>

L e g a l H e r a l d . M AY 2 0 1 5

23

The Law on Trade Secrets

|by Lim Zhi Jian|

requirements of certain customers which the business

has learned over time may also be regarded as
confidential to the business.4

When Colonel Harland Sanders opened the first Kentucky

Fried Chicken outlet in 1952, neither he nor anyone
else could have foreseen that it would grow into 18,875
locations generating US$23 billion in revenue a year, and
all due to one trade secret, the Original Recipe.

In the same vein, ongoing negotiations between

contracting parties have also been regarded as highly
confidential.5 Contracts, too, can be confidential in
nature.6 If such information were to fall into a competitors
hands, clients may be poached and prices undercut.7

Coca-Cola, the worlds most valuable brand for 13

consecutive years1 at US$80 billion and based on a
sugared beverage served 1.8 billion times a day, was built
on a 140-year-old trade secret that the label of ingredients
gives no hint of.

Information publicly available is not confidential as such.

However, it is perfectly possible to have confidential
information based on publicly available material, if it can
only be reproduced by a laborious compilation process.8
The fact that it consists partly of public information does
not mean it cannot be information confidential to a
business.9

A multi-billion dollar business empire can be built on trade

secrets.

Every business has its secrets

While the average business may not have a billion-dollargenerating secret, it may not realise the value in their
existing information. A business may have more trade
secrets than meets the eye (and these are not limited to
industrial or manufacturing processes).2

The list of what may be considered confidential is not

exhaustive.10

Protection

As important and valuable as trade secrets are, the

protection afforded by the law is not always adequate.
Protection of trade secrets may take the following forms:

While the name of the individual client is not confidential,

the list or database of clients on which a business has
expended time and effort to compile may be.3

(a) copyright;

Business information relating to cost prices, quoted prices

(which may vary depending on the particular supplier
and client), past transaction records, specific needs and

(c) duty of confidence.

1
2
3
4
5
6
7
8
9
10

24

(b) patent; and

Until it was dethroned by Apple <http://www.bloomberg.com/news/articles/2013-09-30/apple-overtakes-coca-cola-as-most-valuable-brand-study-finds>

Certact Pte Ltd v Tang Siew Choy [1991] 4 CLJ (Rep) 716 at 722; Faccenda Chicken Ltd v Fowler [1986] 1 All ER 617 at 628
Schmidt Scientific Sdn Bhd v Ong Han Suan [1997] 5 MLJ 632
Svenson Hair Centre Sdn Bhd v Irene Chin Zee Ling [2008] 8 CLJ 386 at 397-399; Schmidt Scientific Sdn Bhd, supra n 3 at 695; Worldwide Rota Dies
Sdn Bhd v Ronald Ong Cheow Joon [2010] 8 MLJ 297; [2010] 1 LNS 444; Certact Pte Ltd, supra n 2
Schmidt Scientific Sdn Bhd, supra n 3; Certact Pte Ltd, supra n 2
Certact Pte Ltd, supra n 2
Schmidt Scientific Sdn Bhd, supra n 3
Saltman Engineering Co Ltd v Campbell [1963] 3 All ER 413 at 415; Worldwide Rota Dies Sdn Bhd, supra n 3. The High Court grounds of judgment may
also be viewed here: <http://www.kehakiman.gov.my/directory/judgment/file/S5%2022%20404%201997%20%20-%20WORLDWIDE%20ROTA%20
DIES%20%20%20Ronald%20Ong.pdf> at 34-35
Seager v Copydex Ltd [1967] 2 All ER 416
Alfa Laval (M) Sdn Bhd v Ng Ah Hai & Ors [2008] 5 MLJ 344

L e g a l H e r a l d . M AY 2 0 1 5

Copyright
Copyright is the exclusive right granted for the exploitation
of an artistic works, literary works, musical works, films,
sound recordings and broadcasts. A customer database,
information on prices, contracts and individual preferences
of customers may qualify for copyright protection as
literary works.
However, copyright protection of trade secrets is
inadequate and often not feasible because:

ii) Protection is limited to only 20 years from the

date of filing, assuming patent granted;
b) the condition for grant has high thresholds,
which most trade secrets may not satisfy the
requirement that a patent must:
i) be novel;
ii) involve an inventive step; and
iii) be industrially applicable;

(a) Not every trade secret can satisfy the requirement

of originality for copyright to subsist;

c) the application process is costly and lengthy;

(b) copyright only subsists during the life of the

author plus 50 years;11 and

d) even if granted, a patent is still open to invalidation

actions.

(c) copyright protects works in tangible form and

does not protect ideas as such.

A duty of confidence protects information (neither publicly

available nor trivial) that is conveyed in confidence.

Patent
A patent is an exclusive right granted to exploit an invention.
While a patent grants absolute monopoly, protection of
trade secrets by means of a patent may be inadequate
(and, to an extent, counter-productive) because filing for
a patent requires publication of the invention.
a) By filing for a grant of patent:
i) even after publication, there is no guarantee
that the patent would even be granted;

11

Duty of confidence

The law imposes a duty of confidence over information

where the information:
a) is not publicly available or is trivial; and
b) is conveyed in confidence
The protection is available without:
a) the need to file any application or make any
disclosure; and
b) any time limit to the protection

Regardless to whom he may assign ownership of the copyright to

L e g a l H e r a l d . M AY 2 0 1 5

25

In the case of employees, there is an implied duty of good

faith and fidelity which encompasses an obligation on
employees not to divulge confidential information, or use
it in a way that is detrimental to their employer. It is a
breach of the implied duty even to memorise confidential
information with the intention of using it later, even if such
use or disclosure is post-employment.12
Legal protection of confidential information has the
following drawbacks:
a) if the recipient has no notice of its confidential
nature, he is not bound to keep it a secret;
b) therefore continuous effort is required to preserve
confidential nature of the information;
c) once disclosed outside of the duty of confidence,
it may enter into public domain and be available
to the whole world;
d) it does not prohibit an exploitation of a secret
manufacturing process discovered upon reverse
engineering of the same;13
e) the protection is somewhat amorphous, relying as
it does on common law and equitable principles
rather than legislation.

Keeping the cat in the bag

The manner in which secrets are guarded has been held

to be a material consideration in determining whether
a certain material is confidential in nature,14 because a
duty of confidence may only arise under circumstances
imparting an obligation of confidence; when the recipient
has notice.15

12
13
14
15
16
17

26

In an environment where confidential information needs

to be shared, the steps that a business should take to
retain confidentiality in information include:
a) plainly making it known that the information is
regarded as confidential;
b) giving notice that the sharing is by reason of
seniority or responsibility;16
c) demonstrably restricting/limiting access to the
information and guarding of the same;
d) employing technological measures to prevent
unauthorised copying and sharing of information
on devices of employees;
e) entering into non-disclosure or confidentiality
agreements (which may be specific for one-off
project partners or joint ventures, or wide and
general for employees); and
f) alternatively, incorporating confidentiality clauses
in employment agreements.

Feathers in the wind

In the event of a leak, seeking immediate advice from

your intellectual property legal adviser tops the list of
things to do. Once disclosed, a secret can no longer be
restored as one.17 Every legal remedy at your disposal
will be redundant once the information enters the public
domain.
The legal burden in an action
is discharged by establishing
information to the detriment of
the information of which has

for breach of confidence

unauthorised use of the
the communicating party,
the necessary quality of

Schmidt Scientific Sdn Bhd, supra n 3

Mars UK Limited v Teknowledge Ltd [2000] FSR 138
Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37 at 50; E Worsley & Co Ltd v Cooper [1939] 1 All ER 290 at 307
Coco v AN Clark (Engineers) Ltd [1969] RPC 41 at 47
Printers and Finishers Ltd v Holloway [1965] RPC 239 at 256; Faccenda Chicken Ltd, supra n 2
Dynacast (Melaka) Sdn Bhd & Ors v Vision Cast & Anor [2008] 10 CLJ 190 at 196

L e g a l H e r a l d . M AY 2 0 1 5

confidence and which was imparted to the recipient in

circumstances importing an obligation of confidence.18
The manner in which business is conducted and
information is treated may be the determining factor.
It is important to pair the action with an application for an
injunction restraining further disclosure of the confidential
information, thus reducing the risk of further disclosure.
An undertaking to pay any damages caused by the
injunction must be provided.

once withdrew from India the second-most populated

country in the world so as to avoid complying with a
local law that required it to divulge its formula.
The law on trade secrets is thus to take all the steps
so that you do not have to rely on the law on breach of
confidence, which basically is closing the stable door after
the horse has bolted.
LH-AG

About the author

When operating with the risk that the confidential

information taken or copied may be moved about,
disposed of quickly or further replicated, drastic orders
such as the intrusive Anton Piller order, which gives
the right to search premises and seize evidence without
warning may need to be resorted to.
In going to court for such orders, the business must act
with haste. Equity aids the vigilant, not those who slumber
on their rights.19
Other remedies include damages or an account of profits
arising from the unauthorised use of the confidential
information, and legal costs.

Conclusion

Although the law recognises confidentiality, the greatest

value in a trade secret is that it stays that way: secret.
The Original Recipe is stored in a vault while Coca-Cola

18
19

Lim Zhi Jian (lzj@lh-ag.com) is an associate

with the Intellectual Property Practice Group
at Lee Hishammuddin Allen & Gledhill, who
is part of a team headed by Bahari Yeow
(yth@lh-ag.com) that regularly appears
at the High Court and appellate courts for
various matters.
They also advise on and act in various
litigious matters such as intellectual property
disputes, intellectual property protection,
intellectual
property
management,
domain
name
disputes,
franchising,
telecommunications and other regulatory and
compliance exercises, including exercises
conducted pursuant to data protection and
competition laws.

Coco, supra n 15; Electro Cad Australia Pty Ltd & Ors v Mejati RCS Sdn Bhd & Ors [1998] 3 AMR 2555
Haji Wan Habib Syed Mahmud v Datuk Patinggi Haji Abdul Taib Mahmud & Anor [1986] 2 MLJ 198 (SC); Malayan Banking Bhd v Foo See Moi [1981]
2 MLJ 17; Tan Swee Lan v Engku Nik Binti Engku Muda & Ors [1973] 2 MLJ 187 (FC)

L e g a l H e r a l d . M AY 2 0 1 5

27

Par tner Profile

Hoi Jack S'ng

LHAG is pleased to announce the admission to partnership
of Hoi Jack Sng with effect from 1 January 2015.
Jacks primary area of practice encompasses general civil
and commercial litigation, with a particular emphasis on
banking litigation and corporate insolvency. His clients are
typically financial institutions, liquidators, and receivers
and managers.
He also has experience in advising and defending clients
in regulatory and statutory compliance matters as well as
quasi-criminal prosecutions. Further, Jack is involved in
public interest litigation and legal profession disciplinary
matters.

28

L e g a l H e r a l d . M AY 2 0 1 5

Jack graduated from the University of the West of England,

Bristol in 2004, and was called to the Bar of England and
Wales in 2005. He was admitted as an advocate and
solicitor of the High Court of Malaya in 2006, and has
been with LHAG since.
LH-AG

Se n i o r A s s o c i a t e Pro f iles

Shariffullah bin Abdul

Majeed
Shariffullah graduated with an LLB (Hons) from the International
Islamic University of Malaysia in 2008 and was admitted as an
advocate and solicitor of the High Court of Malaya in April 2009.
While his primary areas of practice are industrial relations and
employment law, he has also defended claims arising from
employment contracts.
He has worked closely with several government-linked companies
and regularly advises them on employment-related issues.
Shariffullah was promoted to senior associate wef 1 January 2015. LH-AG

Nadiah bt Abd Majid

Nadiah is well-versed in both competition law and data protection
law. As a member of LHAGs Regulatory & Compliance Team, she
has conducted compliance exercises and rendered legal advice on
the Competition Act 2010 and the Personal Data Protection Act 2010.
She regularly provides general and legal advisory work for various
government agencies and government-linked companies in their
day-to-day and operational activities including contracts involving
government projects encompassing land matters, procurement,
consultancy, IT and IP as well as joint venture projects.
Nadiah was promoted to senior associate wef 1 January 2015. LH-AG

L e g a l H e r a l d . M AY 2 0 1 5

29

Senior Associate Profiles

Bella Chu Chai Yee

Bella graduated from the University of London in 2008 and was
called to the Malaysian Bar in 2010.
She was previously an associate with the firms Dispute Resolution
Practice Group focusing mainly on banking and insolvency disputes.
Since then, she has been involved in various aspects of corporate
and commercial work. These include mergers and acquisitions,
submissions to regulatory authorities, cross-border financing and
general advisory work.
Bella was promoted to senior associate wef 1 January 2015.LH-AG

Shanaz Azwin bt Muztaza

Shanazs primary area of practice is commercial dispute resolution focusing on international
and domestic arbitrations. She advises and acts for clients on matters relating to, among
others, shareholder disputes, construction, engineering and energy.
She has been involved in international and domestic arbitrations conducted under the
KLRCA, UNCITRAL, LCIA, ICC, ICSID, IBA, SCC, LMAA, UNCITRAL and AAA arbitration
rules. She has also been involved in mediations and adjudications conducted under
TeCSA & ORSA adjudication rules.
Shanaz works principally with Dato Nitin Nadkarni, who heads the Construction,
Engineering & Arbitration Practice Group at Lee Hishammuddin Allen & Gledhill.
Shanaz is a member of the Bar both in the UK and New York, and has been admitted as a
solicitor of the Senior Courts of England and Wales. She is also a member of the Chartered
Institute of Arbitrators (MCIArb), Arbitral Women and International Bar Association.
Shanaz joined LHAG as a senior associate in January 2015.

30

L e g a l H e r a l d . M AY 2 0 1 5

LH-AG

About Lee Hishammuddin Allen & Gledhill

The Firm has more than 100 lawyers in Kuala Lumpur, Penang and Johor Bahru. Our
areas of practice include the following specialist practice groups, each led by an
experienced partner:
Arbitration
Banking & Insolvency
Construction
Corporate & Commercial Disputes
Employment
Energy, Oil & Gas
Financial Services
Foreign Investment
Insurance
Intellectual Property & ICT
Islamic Finance
Mediation
Mergers & Acquisitions
Real Estate
Regulatory & Compliance
Shipping
Tax, GST & Private Clients

If we can be of service to you, please contact us at:

Lee Hishammuddin Allen & Gledhill
Level 16, Menara Tokio Marine Life
189, Jalan Tun Razak
50400 Kuala Lumpur, Malaysia
Tel : +603 2161 2330
Fax : +603 2161 3933, 2161 1661
E-mail : enquiry@lh-ag.com
Consultant
Senior Partners

: Dato K C Vohrah
: Dato Thomas M L Lee
Datuk D P Naban
Knowledge Partner : Koh Kek Hoe

Published by the Knowledge Department

Lee Hishammuddin Allen & Gledhill

kcv@lh-ag.com
tl@lh-ag.com
dpn@lh-ag.com
lr@lh-ag.com

+603 2170 5851

+603 2170 5855
+603 2170 5858
+603 2170 5859

For further information about the Legal Herald,

please contact knowledge@lh-ag.com or
the person whom you normally consult.
Opinion, comments and suggestions are welcome.

L e g a l H e r a l d . M AY 2 0 1 5

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PRACTICE AREAS
Corporate
FINANCIAL SERVICES
Tay Weng Hwee
Email: twh@lh-ag.com
Ong Eu Jin
Email: oej@lh-ag.com
Angeline Cheong May May
Email: cmm@lh-ag.com
Aniza Osman
Email: ao@lh-ag.com
Tan Gek Im
Email: tgi@lh-ag.com

ARBITRATION
Email: nn@lh-ag.com
Lambert Rasa-Ratnam
Email: lr@lh-ag.com
Ang Hean Leng
Email: ahl@lh-ag.com
BANKING & INSOLVENCY
Kumar Kanagasingam
Email: kk@lh-ag.com

FOREIGN INVESTMENT
Ooi Bee Hong
Email: obh@lh-ag.com
ISLAMIC FINANCE
Megat Hizaini Hassan
Email: mh@lh-ag.com
MERGERS & ACQUISITIONS
Tay Weng Hwee
Email: twh@lh-ag.com

Aaron Gerard Sankar

Email: ags@lh-ag.com
Ooi Bee Hong
Email: obh@lh-ag.com
ENERGY, OIL & GAS
Tay Weng Hwee
Email: twh@lh-ag.com
Ooi Bee Hong
Email: obh@lh-ag.com

Mong Chung Seng

Email: mcs@lh-ag.com

Lambert Rasa-Ratnam
Email: lr@lh-ag.com

Himahlini Ramalingam
Email: hmr@lh-ag.com

G Vijay Kumar
Email: vkg@lh-ag.com

Loh Chu Bian

Email: lcb@lh-ag.com

S M Shanmugam
Email: ssm@lh-ag.com

Hoi Jack Sng

Email: hjs@lh-ag.com

Ang Hean Leng

Email: ahl@lh-ag.com

CONSTRUCTION

Andrew Chiew Ean Vooi

Email: ac@lh-ag.com

Sean Yeow Huang-Meng

Email: yhm@lh-ag.com

Email: nn@lh-ag.com

Andrew Chiew Ean Vooi

Email: ac@lh-ag.com

CORPORATE & COMMERCIAL

DISPUTES
Rosli Dahlan
Email: rd@lh-ag.com

REAL ESTATE
Ooi Bee Hong
Email: obh@lh-ag.com
Chia Loong Thye
Email: clt@lh-ag.com
Tan Gek Im
Email: tgi@lh-ag.com
Aniza Osman
Email: ao@lh-ag.com

MEDIATION
Chia Loong Thye
Email: clt@lh-ag.com
ENERGY, OIL & GAS
Email: nn@lh-ag.com
Andrew Chiew Ean Vooi
Email: ac@lh-ag.com

INSURANCE
G Vijay Kumar
Email: vkg@lh-ag.com

SHIPPING
Datuk D P Naban
Andrew Chiew Ean Vooi
Mong Chung Seng
Email: shipping@lh-ag.com

Employment

Intellectual Property & ICT

Regulatory & Compliance

Lim Heng Seng

Email: lhs@lh-ag.com

Bahari Yeow
Email: yth@lh-ag.com

Adlin Abdul Majid

Email: aam@lh-ag.com

Dato Thavalingam C Thavarajah

Adlin Abdul Majid

Email: aam@lh-ag.com

Tax, GST & Private Clients

Datuk D P Naban
Email: dpn@lh-ag.com
S Saravana Kumar
Email: sks@lh-ag.com
Aznam Dato Mansor
Email: am@lh-ag.com
Tay Weng Hwee
Email: twh@lh-ag.com