Malaysia

A Game-Changing Decision for International Arbitration On 13 August 2025, Malaysia’s Federal Court delivered a watershed judgment that fundamentally clarifies how foreign arbitral awards can be enforced in Malaysia. The case of ING Bank N.V. & O.W. Bunker Far East (Singapore) Pte Ltd v Tumpuan Megah Development Sdn Bhd resolves a long-standing debate about whether award creditors have a choice between two enforcement routes, marking a significant victory for Malaysia’s pro-arbitration stance. The Journey from London to Kuala Lumpur: A Complex Cross-Border Dispute The Original Dispute The dispute concerned marine fuel supply contracts allegedly worth USD 937,353.24. ING Bank N.V. (Netherlands) and O.W. Bunker Far East (Singapore) claimed that Malaysian company Tumpuan Megah Development Sdn Bhd, based in Johor Bahru, failed to pay for fuel allegedly delivered to two vessels, Straits 1 and Dolphin 1. Tumpuan Megah denied any such contracts or deliveries, alleging fraud. From London Arbitration to English Courts The matter went to London Maritime Arbitrators Association (LMAA) arbitration in 2017, under contracts governed by English law and seated in London. On 4 February 2020, the tribunal ruled in favour of ING and O.W. Bunker, finding the contracts genuine and rejecting Tumpuan Megah’s fraud and set-off claims. On 22 December 2020, the English High Court converted the award into a judgment under section 66 of the UK Arbitration Act 1996. This judgment was obtained with Malaysian enforcement in mind. The Malaysian Enforcement Battle In March 2021, the creditors sought to enforce the English High Court judgment in Malaysia under the Reciprocal Enforcement of Judgments Act 1958 (REJA), rather than directly using the Malaysian Arbitration Act 2005 (MAA). Tumpuan Megah opposed, arguing this deprived it of defenses under the MAA and amounted to “judgment laundering.” The Federal Court’s Groundbreaking Holdings Dual Enforcement Routes Confirmed The Federal Court held that creditors may enforce foreign arbitral awards either: (a) directly under the MAA, or (b) through REJA if an award has been converted to a judgment in a reciprocal jurisdiction. The Federal Court held that it is not for an award debtor to dictate to an award creditor precisely how it is to enforce the arbitral award, particularly when there are two or more alternative modes of enforcement available. The Principle of Reciprocity Upheld The Federal Court affirmed that REJA preserves special enforcement relationships with Commonwealth nations such as the UK, which cannot be displaced by the general provisions of the MAA. Minimal Curial Review, Not Re-Trials The Court rejected full re-hearings in Malaysia. Fraud allegations going to the merits (intrinsic fraud) cannot be re-litigated; only jurisdictional (extrinsic fraud) challenges may be raised. Limited-in-Scope Merger Doctrine The Court adopted the “limited-in-scope merger” approach: within the UK, the award merges into the judgment, but internationally, the award and judgment remain separate. This allows enforcement under either regime. No “Judgment Laundering” Unlike cases where parties use third-country judgments as intermediaries, the London-to-Malaysia enforcement route was held legitimate, given the direct seat-to-reciprocal-jurisdiction link. REJA and the First Schedule Advantage A significant practical impact of the decision lies in the application of the First Schedule of REJA. This Schedule sets out the reciprocating countries whose judgments may be enforced in Malaysia, making enforcement faster, more efficient, and subject to narrower grounds of challenge compared to the MAA. The Federal Court’s endorsement makes clear that REJA is not only available but also encouraged where applicable, offering award creditors a more straightforward pathway to recognition and execution. Countries listed in the First Schedule of REJA include: United Kingdom (High Court in England; Court of Session in Scotland; High Court in Northern Ireland; Court of Chancery of the County Palatine of Lancaster; Court of Chancery of the County Palatine of Durham) Hong Kong SAR (The High Court) Singapore (The High Court) New Zealand (The High Court) Republic of Sri Lanka (High Court and District Courts) India (High Courts, excluding certain states and territories) Brunei Darussalam (The High Court) This list demonstrates the breadth of Malaysia’s reciprocal enforcement framework, particularly benefiting cross-border trade and investment with Commonwealth and regional partners. Key Takeaways for Arbitration Practice For Award Creditors: Strategic choice between MAA and REJA Faster, narrower challenge grounds under REJA Commonwealth reciprocity offers unique advantages For Award Debtors: Must challenge at the seat (London) within statutory deadlines Cannot seek a second full trial in Malaysia Limited defenses remain under REJA For the Arbitration Ecosystem: Reinforces finality of arbitral awards Strengthens Malaysia’s status as enforcement-friendly Creates predictability and alignment with international norms What This Means for Malaysia as an Arbitration Hub The decision strengthens Malaysia’s position in global arbitration: Pro-Arbitration Commitment – Demonstrates judicial restraint and respect for foreign awards. Multiple Gateways – Dual enforcement routes make Malaysia flexible and attractive. Commonwealth Advantage – REJA reinforces Malaysia’s reciprocal enforcement ties with the UK and other Commonwealth nations. Predictability and Certainty – Businesses now have clear expectations for enforcement outcomes. Wider Implications: Malaysia as ASEAN Chair As Malaysia assumes the Chairmanship of ASEAN in 2025, this ruling has timely significance beyond national borders: Boosts Regional Confidence – By clarifying enforcement rules, Malaysia assures ASEAN investors that cross-border arbitral awards will be respected and enforced efficiently. Strengthens ASEAN Integration – Predictable dispute resolution supports the ASEAN Economic Community (AEC), promoting smoother trade and investment flows. Positions Malaysia as Leader – The Federal Court’s approach balances international obligations under the New York Convention with Commonwealth reciprocity, offering a model for other ASEAN states navigating overlapping enforcement regimes. Signals to Global Investors – As ASEAN Chair, Malaysia can champion arbitration reform and enforcement certainty across the region, enhancing ASEAN’s attractiveness as a unified investment destination. Conclusion: A Milestone for Malaysia and the Region The Tumpuan Megah decision is more than a domestic legal development. It positions Malaysia as a mature, arbitration-friendly jurisdiction that offers dual enforcement pathways, safeguards against abuse of process, and judicial restraint in reviewing foreign arbitral awards. As Malaysia leads ASEAN in 2025, this judgment sends a strong signal: the country is not only open for business but ready to anchor regional confidence in international arbitration, a key pillar for ASEAN’s economic growth and integration. Our Managing Partner and Head of Dispute Resolution, Kho Sze Jia, together with Aleeya Elyana, Partner of Dispute Resolution, regularly act as counsel in arbitration proceedings and the enforcement of arbitral awards. Sze Jia also serves as an Arbitrator. Sze Jia can be contacted at [email protected] and Aleeya can be contacted at [email protected].

Zaid Ibrahim & Co is pleased to announce the promotion of its deputy managing partner, Amin Abdul Majid as its new managing partner, effective 14 July 2025. Amin succeeds Gilbert Gan who will assume the role of Senior Partner of the firm. Amin joined the firm in 2011 and co-leads its Infrastructure, Energy and Utilities practice. He has a strong track record as an energy and corporate lawyer, most recently advising on the introduction of innovative technologies in the electricity supply industry, the regulation of new upstream oil and gas activities and the sale of the production arm of a large international engineering company. He also advised in the drafting of the Renewable Energy Act 2011, the Energy Efficiency and Conservation Act 2024 as well as the recent Carbon Capture, Utilization and Storage Bill 2025. Amin is recognized by leading legal journals including Legal 500 Asia Pacific 2025 (Leading Partner), Chambers and Partners 2025 (Top ranked Lawyer for Projects, Infrastructure and Energy), IFLR 2024 (Highly Regarded), and Asialaw Leading Lawyers 2024 (Distinguished Practitioner). Amin obtained his Bachelor of Laws (Honours) from the London School of Economics and Political Science, University of London, and Master of Jurisprudence in Energy Law from the College of Law, Tulsa University, U.S.A. Tan Sri Dr Nik Norzrul Thani Nhassan Thani, the firm’s Executive Chairman, says, “As one of Malaysia’s top homegrown firms, we know that the key to maintaining high quality and innovative services for our clients is cultivating a dynamic ecosystem for talent, leadership growth and proper succession planning.” Gilbert Gan adds, “Having worked closely with Amin, I know him to be an exceptional lawyer and a great colleague who inspires and brings people together. We are very pleased to have Amin as managing partner. He represents our next generation of leadership to take our firm forward into new realms of opportunity in the changing legal and business environment.” Amin says, “I am honoured and energised by the confidence of my colleagues in this opportunity to lead Zaid Ibrahim & Co. This firm’s unwavering commitment to delivering exceptional value, empowering our people, embracing technology and making a meaningful impact is what drew me here, and will remain my guiding principles as I spearhead the firm forward. I want to express my sincere gratitude to Tan Sri Dr Nik, Gilbert and the partnership for their trust and for the strong foundation they have built.” About Zaid Ibrahim & Co Zaid Ibrahim & Co is one of the largest law firms in Malaysia, with international links built through our unique experience in having a strong ASEAN footprint and global networks. The firm has built up a reputation for its commitment to high quality and innovative services to its clients since its establishment in 1987. Its reputation is widely recognized and acknowledged by clients and consistent top rankings in established regional and international legal publications and numerous awards received over the years.

Introduction In trademark litigation, where a claimant elects not to pursue an account of profits, the usual course is to seek an inquiry into damages, aimed at compensating the claimant for the actual loss suffered as a result of the defendant’s acts of infringement and/or passing off. These damages typically fall under two principal heads: (i) loss of business profits; and (ii) loss of goodwill and reputation. The assessment of such damages is governed by the foundational principle of restoring the injured party to the position they would have been in had the wrongful acts not occurred. Loss of business profits lends itself, at least to a degree, to a mathematical and evidentiary exercise. Courts typically examine historical earnings, projected growth trajectories, diversion of customers and reduction in sales attributable to infringing activities. Financial records, sales data and, where appropriate, expert evidence, often form the basis for quantifying the claimant’s lost profits. In contrast, quantifying the damages for loss of goodwill and reputation presents a far more elusive and complex challenge. Goodwill is an intangible asset, reflecting the value of a brand or trade name, and customer loyalty and market recognition cultivated over time. While goodwill is generally presumed to have been harmed once infringement or passing off is established[1], the difficulty lies in assigning a monetary value to that loss. Unlike the assessment of loss of business profits, there is no settled mathematical formula or precise methodology to measure the erosion of goodwill and reputation, which may manifest subtly over a period of time. This article explores the principles in assessing damages for loss of goodwill and reputation, with a particular focus on how courts navigate this intangible head of loss in cases of trademark infringement and passing off. Valuing Loss of Goodwill and Reputation: From Principles to Practice            The UK courts have consistently recognised that there is no precise or mathematical method for assessing the loss of goodwill and reputation. In Draper v Trist & Ors [1939] 3 All ER 513, the UK Court of Appeal observed that courts are entitled to rely on ordinary business knowledge and common sense to infer that substantial deceptive trading will almost inevitably result in some degree of damage to goodwill, even where the exact extent or duration of that harm cannot be definitively quantified[2]. In such cases, the court must often resort to forming a reasonable and rough estimate, much like a jury would, based on the circumstances presented. Similarly, in Aktiebolaget Manus v R. J. Fullwood & Bland Ltd (1954) 71 RPC 243, the UK High Court followed the position that the appropriate approach was to form a rough but reasonable estimate, akin to that which a jury might make, and to assess, as best as possible, a fair and moderate sum to compensate the plaintiff for the injury suffered. Given that goodwill and reputation cannot be quantified with mathematical precision, damages under this head are awarded as general damages[3], which do not require the same specific proof as is required for special damages. Guidance on the relevant factors to be taken into account when assessing the loss of goodwill and reputation may be found in the decision of the Hong Kong High Court in Tam Wing Lun Alan & Ors v Tam Kwok Hung t/a Hang Mei Record Co & Anor [1991] 2 HKC 384. The Court identified several considerations, including: (i) the extent of the plaintiff’s reputation or goodwill in the relevant market; (ii) the conduct of the defendant’s acts, whether, for example, the acts of infringement or passing off was fraudulent or deliberate; (iii) the circulation and scale of the infringing goods; (iv) the degree of publicity or exposure given to the infringing goods by the defendant; (v) whether the defendant derived any benefit or profit from the wrongful conduct; and (vi) the impact of the wrongful conduct on the plaintiff’s business or goodwill. In the fairly recent decision of Perusahaan Otomobil Kedua Sdn Bhd & Anor v Lee Lap Kee [2024] MLJU 2797, the Malaysian High Court awarded RM500,000 as a fair and reasonable sum for the plaintiffs’ loss of goodwill and reputation, taking into account the following key considerations: (i) The plaintiffs had built up substantial goodwill and reputation in Malaysia in connection with their PERODUA automotive lubricants; (ii) Significant investments in advertising and promotional activities had been made over the years to strengthen the market presence of the PERODUA automotive lubricants; (iii) The plaintiffs recorded sales figures ranging from RM100 million to RM240 million between 2016 and 2022, evidencing strong market penetration; (iv) The commercial value of the PERODUA brand and trademarks is regarded as substantial owing to the plaintiffs’ position as Malaysia’s second national car manufacturer; (v) The PERODUA brand had received numerous prestigious awards and accolades, further enhancing its reputation and market standing; and (vi) The defendant, in a Consent Judgment, had acknowledged that the PERODUA trademarks were well-known marks, entitled to protection under Article 6bis of the Paris Convention and Article 16 of the TRIPS Agreement. The price tag of half a million ringgit, in the Court’s view, reflects the gravity of the infringement and the hard-earned reputation the plaintiffs had cultivated. Conclusion What is the moral of the story? In business terms, it is essential for business owners to maintain meticulous records. The advertising receipts gathering dust in your drawer could serve as a proof of your efforts in enhancing your brand’s goodwill; the footfall data buried in your laptop may showcase the local popularity of your store; and the sales records stacking up on your desk may demonstrate the broad impact of your products in the market. As Lord MacNaghten aptly put: “Goodwill is the very sap and life of the business without which it would yield little or no fruit”[4]. Goodwill encompasses the entire advantage derived from a business’ reputation and relationships, built by years of honest work, or gained by lavish expenditure. For the customer, goodwill may be a label to represent a favourable disposition for which he possesses towards a place, but for the owner, goodwill is a manifestation of the strength and influence his business wields in the marketplace. This article is authored by our Partner, Ms Lee Lin Li, Senior Associate, Ms Lim Jing Xian and Associate, Mr Goh Jing Xuan. The information in this article is intended only to provide general information and does not constitute any legal opinion or professional advice. Written by: LEE LIN LI, Partner, Head of IP & Technology Practice Group, [email protected] LIM JING XIAN, Senior Associate [email protected] GOH JING XUAN, Associate [email protected] [1] Draper v Trist & Ors [1939] 3 All ER 513; Taiping Poly (M) Sdn Bhd v Wong Fook Toh (t/a Kong Wah Trading Co) & Ors [2011] 3 CLJ 837. [2] Followed by the Malaysian High Court in Schwan-Stabilo Marketing Sdn Bhd & Anor v S&Y Stationery & Ors [2018] 9 CLJ 384, Sykt Faiza Sdn Bhd & Anor v Faiz Rice Sdn Bhd & Anor (and Another Suit) [2019] 1 AMR 180 and Perusahaan Otomobil Kedua Sdn Bhd & Anor v Lee Lap Kee [2024] MLJU 2797. [3] Tommy Hilfiger Europe v McGarry & others [2008] IESC 36. [4] Trego v Hunt [1896] AC 7.

Introduction In Malaysia’s evolving business landscape, environmental, social and governance (“ESG”) is gradually attaining more traction, and it is no longer a mere buzzword. While there is no universal definition of ESG, ESG is generally understood as a framework to measure sustainability, ethical impact and governance. While ESG practices are commonly adopted by listed companies and government-linked companies, the relevance of ESG to small and medium-sized enterprises (“SMEs”) in Malaysia have been growing. SMEs can benefit in the following ways by embracing ESG practices: (a) Investors are more likely to invest in businesses with strong ESG performance due to lower risk exposure and enhanced operational efficiency of these companies. As a result of this, SMEs that adopt ESG practices may find it easier to secure funding and business opportunities. (b) SMEs may be eligible for government incentives aimed at promoting ESG compliance and sustainability incentives such as Green Investment Tax Allowance available for companies seeking to acquire qualifying green technology assets or those undertaking qualifying green technology projects for business or own consumption or Green Investment Tax Exemption for qualifying green technology service provider companies. (c) Implementation of recycling and waste reduction programmes can lead to cost savings. (d) ESG adoption helps SMEs avoid fines and regulatory penalties. This article aims to explore how ESG supports business and growth of SMEs from the aspect of mergers and acquisitions (“M&A”) and initial public offerings (“IPO”). ESG in M&A Expansion of ESG in Due Diligence Exercise Generally, the scope of due diligence exercise during M&A transactions encompasses legal, tax and financial matters. However, with the growing influence of ESG practices, ESG due diligence has become integral to investment evaluation and strategies in M&A transactions. ESG due diligence can reveal a company’s sustainability practices and environmental impact, treatment to employees, stakeholders and communities, and compliance with relevant laws, regulations and guidelines relating to ESG matters. ESG due diligence enables SMEs to discover opportunities that can strengthen their efficiency and competitiveness as well as advocate sustainable development which will benefit the broader well-being of the society and the environment in the long run. Inclusion of Conditions Precedent Pertaining to ESG in the Share Sale and Purchase Agreement (“SPA”) A condition precedent in an SPA is a condition which is required to be fulfilled before a SPA can be rendered unconditional and for transactions to proceed further. Potential investors or buyers may require target companies to resolve issues discovered during due diligence for M&A transactions before they complete the transactions. ESG-related condition precedents may include the taking steps to address regulatory non-compliance or implementation of an anti-bribery and corruption policy. By integrating ESG-related conditions precedent, it signifies to the investors that SMEs value sustainability which would enhance SMEs’ reputation and credibility to investors and stakeholders. Inclusion of Representations and Warranties Relating to ESG in the SPA In an SPA, sellers typically provide representations and warranties for the benefit of purchasers. Representations are assertions of fact, while warranties are guarantees that these assertions are true, often accompanied by a contractual obligation to compensate the other party if they prove to be false. Typical ESG-related representation and warranty include compliance with environmental laws, no pending environmental investigations, compliance with employment laws and regulations, no use of forced, child, or trafficked labor and implementation of code of ethics or conduct for directors, officers and employees. The inclusion of ESG-related representations and warranties in SPAs provides assurance to investors, while encouraging SMEs to improve internal systems to enhance compliance and position themselves as responsible and sustainable businesses. ESG in IPO Pre-IPO Considerations Good ESG practices are important for SMEs intending to undertake an IPO and listing on the stock exchange in Malaysia, as they help investors assess the viability and risks associated with investing in these SMEs. Companies planning an IPO are required to issue a prospectus, the contents of which are prescribed by the Prospectus Guidelines issued by the Securities Commission Malaysia (“SC”). In particular, paragraph 5.02(j) of the Prospectus Guidelines sets out the following disclosure requirement in the prospectus: (i) the relevant laws or regulations governing the conduct of the group companies on business and environmental issue which may materially affect the group’s business or operations; and (ii) the information on the non-compliance. To facilitate disclosure in prospectus and to demonstrate good corporate governance, it would be prudent for SMEs which intend to be listed on the stock exchange in Malaysia to adopt ESG practices as earlier as possible. Non-compliance with laws and regulations may delay an IPO and listing exercise as regulators may require an applicant to address its non-compliance before the regulators give their approvals for the IPO and listing. Bursa Malaysia Securities Berhad (“Bursa Malaysia”) has also issued the Sustainability Reporting Guide as a guidance for listed companies to prepare their sustainability statement. Sustainability statement (“Sustainability Statement”) is a narrative statement of the listed companies’ management of material economic, environmental and social risks and opportunities in the manner as prescribed by Bursa Malaysia. In preparation for IPO, SMEs may consider implementing the following practices advocated in the Sustainability Reporting Guide: carrying out materiality assessment; identifying and categorising sustainability issues in a list of sustainability matters; engaging with stakeholders; prioritising sustainability matters; and reviewing the materiality assessment on a yearly basis. Post-Listing Requirements Listed companies on the Main Market and ACE Market in Malaysia are required to comply with the Main Market Listing Requirements (“MMLR”) and the ACE Market Listing Requirements (“AMLR”) respectively. The MMLR and AMLR set out the requirements for listed companies to make sustainability-related disclosures in their annual reports by including narrative statement of the listed companies’ management of sustainability-related risks and opportunities, as prescribed by Bursa Malaysia. Listed companies on the Main Market and ACE Market must ensure that the Sustainability Statement is prepared in accordance with the IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures. The listed companies must include the metrics and targets that demonstrate their performance and progress in relation to their sustainability-related risks and opportunities for the last three financial years in the Sustainability Statement. Bursa Malaysia has issued the Sustainability Reporting Guide to assist listed companies in preparing the Sustainability Statement.  Simplified ESG Disclosure Guide (“SEDG”) for SMEs in Supply Chains The SEDG is developed by Capital Markets Malaysia, an affiliate of the SC with the objective providing guidance to SMEs in preparing ESG data for their stakeholders which align with international standards. The SEDG also provides SMEs with a simple and standard set of disclosures to track and report, and it covers indicators that can be tracked and disclosed to measure ESG progress. There are 35 disclosures divided into Basic, Intermediate and Advanced in the SEDG to cater for the different levels of sustainability maturity of each SME. The SEDG can be a useful starting point for SMEs to embrace ESG practices. Conclusion ESG is increasingly a key consideration for investors seeking to invest in SMEs, whether through M&As or IPOs. SMEs looking to bring themselves to the next level of growth should assess their business operations for gaps in ESG compliance. Engaging legal counsel to identify these gaps and develop a robust internal framework demonstrates a company’s commitment to responsible business practices. This strengthens the SME’s reputation as well as builds investor confidence, positioning the company as a credible and sustainable investment opportunity. This article is authored by our Partner, Ms Wong Mei Ying and Associate, Ms Lim Jia Wen (Trisha). The information in this article is intended only to provide general information and does not constitute any legal opinion or professional advice. Written by: WONG MEI YING, Partner, Corporate & Commercial [email protected] LIM JIA WEN (TRISHA), Associate [email protected]