Christopher Leong, Managing Partner, Chooi & Company, on recent legal developments

In Malaysia the legal services sector is responding to the challenges posed by the Economic Transformation Programme (ETP) and the onset of the ASEAN Economic Community (AEC). The judiciary has taken steps to improve the delivery systems of the courts in terms of administrative efficiency and the quality of judicial pronouncements. Among recent initiatives by the judiciary to diminish the backlog in the courts are the introduction of new civil and commercial courts with the aim to dispose of cases within nine months of a claim being filed, an electronic filing system and a digital recording system used for trial matters.

Steps have also been taken to promote Malaysia as an alternative dispute resolution (ADR) destination. Amendments made in 2011 to the Arbitration Act 2005 have clarified that the courts shall not interfere with arbitration rulings and have extended the powers of the courts to provide interim relief during the arbitration process by securing the subject of dispute. The Kuala Lumpur Regional Centre for Arbitration – at the forefront of promoting ADR in Malaysia – introduced fast-track rules in 2010 (revised in 2012) to enable the swift resolution of arbitration matters. Mediation is also gaining ground with separate initiatives through the Mediation Act 2012 and by the judiciary to provide for an environment that is more responsive to business concerns and promotes investor confidence.

The Construction Industry Payment and Adjudication (CIPA) bill, which will come into force on a date to be announced, introduces mandatory statutory interim adjudication in the construction industry. This is aimed at reducing cash flow problems and delays in the industry by ensuring that projects’ pending interim decisions are to be made within 45 days from completion of the reference to the adjudicator. The adjudicators will be industry experts and their decisions are binding for the time being, although those decisions may be questioned during later litigation or arbitration proceedings.

The legal profession, which complements and facilitates business, is being liberalised to permit the entry of foreign legal professionals. The Legal Profession Act 1976 was amended in June 2012 to allow for this. With this development, expected to come into effect in 2013, businesses will have increased access to legal expertise. This presents challenges as well as opportunities for Malaysian lawyers. There will be more competition, especially for high-end and sophisticated commercial work, and the costs of law firms will increase. Malaysian lawyers will have to develop the ability to practise beyond the shores of Malaysia in order to succeed.

In tandem with this economic transformation, the government has been seeking to pave the way for a more progressive and inclusive democracy. In many ways, the general elections of March 2008 played a role in this when the ruling coalition lost its two-thirds majority in Parliament. Malaysians have realised civil society’s capacity to bring about change, and elections are no longer a foregone conclusion. Whether or not there will actually be a change in the federal government, the very idea of change has transformed mindsets.

The prime minister, in recognising this awakening, delivered his now famous speech on the eve of the 2011 Malaysia Day celebrations, announcing the abolition of long-standing draconian laws: the Internal Security Act 1960, three emergency proclamations and related ordinances, and provisions restricting freedom of assembly in the Police Act. He also spoke of amendments to the Printing Presses and Publications Act to abolish the need for yearly renewal of licences. These, he said, were among “early initiatives of an organised and graceful political transformation” and stood as a “crucial and much needed complement to the initiatives of economic transformation”. Apart from the promised repeals and amendments, 2012 saw the introduction of the Peaceful Assembly Act 2012, intended to regulate the constitutionally guaranteed freedom of assembly. While in contrast to earlier legislation, it is nevertheless lacking in terms of giving meaning to the right to freedom of assembly. The push for economic, political and social transformations makes for interesting times for Malaysia.