Malaysian Civil Litigation Series. Volume 1: What and when? – Civil right
In this modern era, more and more individuals and companies have started making their mark in other countries. Whether for professional or personal reasons, navigating the social system that makes the target country work is paramount to making that mark. One such system is the dispute resolution system which parties use to enforce their rights.
Having a good idea of how such a system works in a country will enable stakeholders to make sound and informed decisions. Thus, the purpose of this series is to answer the following questions:
- What is a legal action in Malaysia?
- When should you take legal action?
- Who can pursue such an action and against whom can it be sued?
- Where should we pursue them?
- How do I file a lawsuit?
In an attempt to provide a basis for this discussion, we will examine “what”, “when”, “who”, and “where”. In an attempt to make things concise and easy to read, the remaining questions and their specific points will be elaborated on in other parts of the series.
2. What is a lawsuit based on?
This series will provide simple yet comprehensive discussions of how the Malaysian dispute resolution system works, which typically revolves around local courts. However, before looking at this, it is important to look at the causes that lead the parties to go to court in the first place, which is the cause of action.
As the words suggest, a cause of action literally means the origin of a legal action that is to take place. Specifically, a cause of action is normally when there is one person who can sue 2 and another who can be sued, and when all the facts have occurred and it is important to prove that the plaintiff has the right to win the case.1 . The party suing is called a plaintiff and who can be sued is a defendant. The facts that occurred would then be considered as evidence.
As a practical example, a supplier who manufactures pipes will be considered a defendant if their customers have obtained defective pipes. The purchase order and the invoices will then prevail. The cause of action will then be based on a breach of contract due to the supply of defective products. It should be noted that causes of action can take a variety of forms, although the most common are due to claims in contract or tort.
3. When can legal action take place?
A potential plaintiff should always be aware of the deadlines for their civil action. In other words, if the case is filed in court too soon or too late? A situation where the cause of action is judged too soon would be to sue the manufacturer for defective pipes before placing an order. This is an obvious example of where things happen too soon, where the cause of action has not yet run. However, there may be instances where a potential outcome by one party is not so clear, such as a potential hostile takeover. However, these cases are unique in themselves and will be investigated in the near future.
When it comes to being too late, it will be due to the limitation period of the particular case. Most businesses will be involved in contract or tort disputes, which must generally be filed within 6 years from the date of the cause of action.2. In the event that the aggrieved customer obtains the defective hoses in 2022, they have up to 6 years (i.e. no later than 2028) to file such claim for the hoses. A new acknowledgment could help reset the statute of limitations3. For example, if the supplier recognizes the defect in 2023 and promises to supply functional pipes, then the limitation period is pushed back to 2029 (6 years from 2023). It should be noted that if a potential defendant is the Malaysian government, the statute of limitations for such a case will be 3 years instead.4.
4. Who can sue?
As mentioned earlier, the party that sues is called a plaintiff and a party that is sued is called a defendant. Specifically, a cause of action exists if there is a plaintiff who can sue, a defendant who can be sued, and if there are material facts that allow the plaintiff to succeed.5. In principle, plaintiffs and defendants must be appropriate legal persons. The most common will be living people and businesses. If multiple parties were injured and/or an event was caused by the actions (or otherwise) of multiple parties, multiple plaintiffs and/or multiple defendants may be involved. It is common for multiple plaintiffs to be called a class action.
It should be noted that there are exceptions to this. One of them is a sole proprietorship. A sole proprietorship is a type of business owned and operated by one person. A person who operates a sole proprietorship must bring an action against others in his own name6. However, the owner may be sued in his name or in his business name.
Another exception is a conventional partnership. A partnership is defined as a business carried on by two or more persons for the purpose of obtaining a profit from that business.7. Thus, in civil matters, they must bring an action on behalf of the company, and any action against them must also be brought against them8. This should not be confused with the recently introduced limited liability partnership, in which such a partnership is treated as a separate legal entity.9, and should sue and be sued as an ordinary business.
5. Where should a party bring an action?
Once the parties and the cause of action have been determined, the next step is to determine which court is the correct forum for the proceeding to begin. If a claim is between MYR 0 and MYR 100,000.0010, the claim must be made in the Magistrates’ Court. If the value of the claim is between MYR 100,000.00 and MYR 1 million, then the procedure must start in the Magistrate Court11. If the claim exceeds the value of MYR 1 million, it must be filed in the High Court.
The Malaysian legal system has a two-tier appeal system in which, if a case is heard by the Magistrates’ or Sessions Court, the appeal will first be heard by the High Court and a second appeal, if it is filed, will be heard by the Court. call. If proceedings commenced in the High Court, the appeal will be heard first in the Court of Appeal and finally in the Federal Court if appealed a second time. The Federal Court is the supreme court of the land.
It should be noted that there is a range of non-judicial dispute resolution avenues such as courts and arbitration. There are also other types of legal proceedings such as interlocutory actions and judicial review. However, for the sake of consistency and brevity, they will not be discussed at this stage and may be revisited in the future.
Before a party can take legal action, it is relevant whether there is justifiable cause to do so. In addition, precautionary measures should be taken to prevent the claim from being hampered by factors such as time, place and the legal status of a counterparty. We hope the above has given you an idea of how the Malaysian judicial system works. In the next installment of this series, we’ll dive deeper into the actual litigation process. It should be noted that the above is only an overview of a broad topic and we may revisit topics that have been shared in more detail in the future as the occasion permits.
1 Lim Kean vs. Choo Koon  1MLJ 158
2 Section 6 Limitation Act 1953
3 Section 27 of the Limitation Act 1953
4 Section 2, Protection of Public Authorities Act 1948
5 Lim Kean vs. Choo Koon  1MLJ 158
6 Order 77 Rule 9 Rules of Court 2012
7 Section 3(1), Partnership Act 1961
8 Order 77 Rule 1, Rules of Court 2012
9 Sections 3 and 4, Limited Liability Companies Act 2012
10 Section 90 of the Subordinate Courts Act 1948
11 Section 65(1) of the Subordinate Courts Act 1948 4
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.