News and developments

The Law of Confidence in Malaysia

Every employee owes a duty of good faith or fidelity to his employer which requires that he does not use or disclose any confidential information gained in the course of his employment without the employer's consent.The company’s confidential information is important as it allows the company to compete with its competitors. If the said confidential information is exposed to a third party, it will weaken the company’s competing powers against its competitors and subsequently cause huge loss to the company.1 It has to be noted that the duty of confidentiality extends even after the employment contract ends.2 The courts have held that what makes the information confidential is the fact that the maker of the document has used his brain and thus produced a result which can only be produced by somebody who goes through the same process. Hence, when the recipient of the information makes use of the information, he avoids from doing the work and saves himself the time and trouble of having to do the work notwithstanding the fact that he is capable of doing it.3 An employee's obligation of confidence applies to his employer's trade secrets4 such as manufacturing processes, secret formula, cost prices, quoted prices, specific needs and requirements of the customers and suppliers, status of all on-going negotiations with the customers, and price list.5 However, it has to be borne in mind that not all information will be classified as confidential. A former employee is not prevented from using the skill and knowledge in his trade of profession which he has acquired in the course of his employment.6 On termination of employment, only information that qualifies as a trade secret or its equivalent would be protected. Elements to Prove Breach of Duty of Confidentiality Duty of confidentiality can be traced back to the case of Coco v AN Clark (Engineers) Ltd [1969] RPC 41 wherein the court held that that there are three elements essential to a cause of action for breach of confidence namely:- that the information was of a confidential nature; that it was communicated in circumstances importing an obligation of confidence; and that there was an unauthorised use of the information. In deciding whether or not there is a breach of confidentiality committed by an employee, our courts have applied the principle formulated in the abovementioned case. The High Court in the case of Rotta Research Laboratorium SPA & Anor v Ho Tack Sien & Ors (Chai Yuet Ying, third party) [2015] 4 MLJevi 222, applied the three elements cited above in deciding that the Defendants had breached their duty of confidentiality as all three elements in the case of Coco v AN Clark (Engineers) Ltd were fulfilled. In this case, the court found that the Plaintiff’s information was of a confidential nature as the information includes detailed pharmaceutical data of a type of drug called Viartril-S and its manufacturing process. The Defendants too had access to the Plaintiff’s database of its distribution network, lists of customers and marketing information concerning the sale of Viartril-S. The confidential information was communicated in circumstances importing an obligation of confidence as the Second Plaintiff trusted the Defendants and made available their trade secrets to the Defendants so that they could perform their job as an employee and consultant of the Second Plaintiff respectively. The court found that the Defendants within a year after becoming involved with the registration of Viartril-S manufactured a similar type of drug, Artril 250. The Defendants then had successfully registered the product with unusual speed which indicated that the Defendants must have put into use the confidential information obtained in the course of their employment with the Second Plaintiff into the manufacturing of Artril 250 to their benefit. Remedies In the event that an employee or a former employee breaches his duty of confidentiality, the employer concerned may seek legal recourse by claiming for damages and/or seeking for injunction. Generally, for cases involving breach of duty of confidentiality, damages will not be an adequate remedy as it is difficult to quantify the loss suffered by the employer. To be able to claim for damages, the employer has to furnish evidence to show that the employer's trade secrets have been utilised by the employee to the detriment of the employer.7 It is sufficient for the employer to prove that there is a likelihood of damage such as proving that the goodwill of a business or its reputation is injured. On the other hand, if the employer could demonstrate that there exists a real risk of future injury, the employer would be granted a permanent injunction.8 When seeking for an injunction, the employers have to first properly identify the confidential information or else it may be difficult to enforce the said injunction.9 In view of the above, the duty of good faith or fidelity may be expressly or impliedly provided in the employment contract which not only requires the employee to observe his duty of confidentiality during the course of his employment but also requires the employee to refrain from disclosing the confidential information even after his employment ends. As such, an employee has to be cautious so as to not use, divulge and/or disclose to whomsoever, any confidential information and/or trade secrets obtained during the course of their employment with the former employer after the employment had ceased. Authors: Melinda Marie DÁngelus and Vanessa Iskandar Ng Footnotes Publicis (M) Sdn Bhd Dan Satu Lagi Lwnadele Wee Kay Ren Dan Satu Lagi [2007] 2 MLJ 395. Schmidt Scientific Sdn Bhd v Ong Han Suan [1997] 5 MLJ 632. Saltman Engineering Co Ltd & Ors v Campbell Engineering Co Ltd [1963] 3 All Er 413 At P 415 (Ca); Schmidt Scientific Sdn Bhd v Ong Han Suan [1997] 5 MLJ 632. Dato' Vijay Kumar Natarajan v Choy Kok Mun [2010] 7 MLJ 215. Schmidt Scientific Sdn Bhd V Ong Han Suan [1997] 5 MLJ 632. Vsl Prestressing (Australia) Pty Ltd V Dj Mulholland [1971] 2 MLJ 89. Worldwide Rota Dies Sdn Bhd v Ronald Ong Cheow Joon [2010] 8 MLJ 297. Ibid. Ocular Sciences Ltd v Aspect Vision Care Ltd [1997] RPC 289; China Road & Bridge Corporation v Dcx Technologies Sdn Bhd [2014] MLJU 406.  
30 October 2024

Process of Getting Work Permits for Expatriates in Malaysia

Expatriates and Work Permits The Malaysian government encourages employers in Malaysia to train and employ more locals in tandemwith the government’s policy and vision to have more locals trained and employed at all levels within various organizations to reflect the multi-racial composition of the country. Nevertheless, the current shortage in the amount of employees or lack in the availability of trained locals has resulted in employers bringing in expatriate individuals to fill in the respective posts, i.e. “Key Post”, “Time Post”, “Executive Post” and “Non-Executive Post”. For expatriates wishing to work in Malaysia, they are required to have work permits. These work permits are generally valid for between 6 months and 5 years, depending on the respective durations and salary ranges of the employment contracts and the types of visas according to the requirements set out by the Expatriate Services Division (ESD)1, a division under the Immigration Department of Malaysia of the Ministry of Home Affairs of Malaysia. ESD is responsible for the processing of applications and the issuance of work permits for expatriates here in Malaysia. In short, there are 3 types of work permits available to expatriate workers which are issued by the government. The 3 types of work permits available are the: Employment Pass, the Professional Visit Pass and the Residence-Pass Talent.2 This article seeks to discuss the process of getting the commonly sought and most suitable work permit type for expatriates – the Employment Pass. Additionally, those who fail to have work permits while working or rendering services in Malaysia can be liable to be fined up to RM10,000 or imprisoned for not more than 5 years or both.3 As such, it is vital for an expatriate to possess and for the employer to ensure that the expatriate possesses a valid work permit prior to working or rendering services in Malaysia. Process: Step-by-Step Procedures & Requirements In Malaysia, the Employment Pass will be applied by the person wishing to employ the expatriate (i.e., the employer). The application for the Employment Pass and related applications are done online mostly through the ESD portal. This potential employer must already have an account or register for one with ESD prior to the application process.4 When a potential employer wishes and is ready to employ expatriate, either of the following two (2) circumstances applies: - First-Time Hiring Subsequent Hiring For first-time hiring i.e. a potential employer who is employing an expatriate as the first instance exercise, the employer will first needs to be registered with ESD. The registration is a ‘one-time’ process and employers will not be required by ESD to re-register for each subsequent expatriate hire, unless the employer ceases to be registered with ESD or becomes de-registered with ESD (*in this situation, the employer needs to register with ESD afresh). This registration is necessary as the employer would not be able to proceed further to apply for the Employment Pass without first being registered. However, the registration is not automatic: the employer needs to apply to be registered. In order to become registered, the employer needs to undergo the following step-by-step procedures (brief): Create Login ID and Password. Insert Requisite Information and Upload Requisite Documents via ESD Portal. Evaluation of the Registration Application by ESD. Issuance of Registration Approval by ESD. Appoint Endorser, Company Login ID User, Submission Officer 1 and Submission Officer 2 via ESD Portal. Print Letter of Undertaking from ESD Portal. Set Face-to-Face Appointment with ESD via ESD Portal. Signing of the Letter of Undertaking at ESD’s Office and Submission of the signed Letter of Undertaking to ESD. Change Password via ESD Portal Per ESD’s client charter, the overall processing timeframe (from the initial step until the last step) is 14 working days upon ESD’s receipt of complete information and documents excluding the timeframe for various query stages (if any). For subsequent hiring i.e. existing employer of expatriate who is now employing subsequent expatriate(s), the employer can straightaway proceed with the application for the Employment Pass(es). The step-by-step procedures for the Employment Pass application are briefly as follows: - Application for Expatriate Post Approval (to the Approving Agency). Issuance of Expatriate Post Approval (by the Approving Agency). Application for Employment Pass (to ESD). Issuance of Employment Pass (by ESD). Per ESD’s client charter, the processing timeframe for the 1st Step and 2nd Step is 5 to 10 working days while the processing timeframe for the 3rd Step and 4th Step is 5 to 10 working days, leading the overall processing timeframe of 10 to 20 working days, upon ESD’s receipt of complete information and documents excluding the timeframe for various query stages (if any). Further, it should be noted that as a pre-condition, a potential employer is required to advertise for job vacancies to locals for the position requiring the expatriate via designated online platform before submitting the application for the Employment Pass5. The job vacancy needs to be advertised for a period of at least 30 days prior to the application for the Employment Pass6. During this period, the employer is required to conduct interviews of the locals7. This is a new requirement implemented by the Ministry of Human Resources (via one its agencies, the Social Security Organisation (SOCSO)) and adopted by ESD, quite recently on 1 January 2021 onwards8. Be that as it may, there are several exceptions to this requirement, as follows:-9 automatic exemption. important roles (C-Suite & Key Posts). expatriates with monthly income of RM15,000 and above. Representative Office/Regional Office (RERO). investors/ shareholders/owners. corporate transfers/secondments/trade agreements. international organization. sports sectors. conditional exemption (i.e. requiring exemption letter from SOCSO by way of formal application). specialized skilled positions. This is to say that in respect of any of these situations, the employer does not have to advertise the job vacancy, as normally required. This means that the employer can skip this step and straightaway apply for the Employment Pass. In summary, the brief process of obtaining Employment Pass is as per Table 1:10 STEP DESCRIPTION ACTING PARTY 1st Step* Application for Employer ESD Registration Employer 2nd Step* Registration of Employer with ESD ESD 3rd Step# Application for Expatriate Post Approval Employer 4th Step Issuance of Expatriate Post Approval Approving Agency 5th Step Application for Employment Pass Employer 6th Step Issuance of Employment Pass ESD TABLE 1 All in all, the overall processing timeframe ranges from 10 to 20 working days to 24 to 34 working days depending on the status of the potential employer (i.e. whether first-time expatriate hiring or subsequent expatriate hiring). However, in practice, the timeframe is typically longer due to various other factors. [Note: *This step is not relevant and no longer required upon the employer for subsequent expatriate hiring exercise (unless the employer has ceased to be registered or has becoming de-registered with ESD as explained above). The employer may straightaway proceed with the subsequent steps. #As pre-condition to the application for expatriate post approval, the employer needs to satisfy both the Approving Agency and ESD that an advertisement for job vacancy to the locals in respect of the position requiring an expatriate has been posted and interviews of the locals vis-à-vis the advertisement has been conducted, as mentioned above.] Conclusion It is important to note that the process of getting work permit for expatriate in Malaysia is quite long and arduous. The process involves filling in and completing some forms, preparing the requisite supporting documents and on frequent basis liaising with the relevant authorities (for example the Approving Agency and ESD) both via online and offline platforms, whereby the application for the work permit is done from within the country. Thus, it is highly recommended for potential employers of expatriates in Malaysia to engage professionals to help going through with the process in terms of procedures, formalities and requirements. Authors: Mohammad Ashraf Mohamed Sopiee and Fatin Razanah Redzuan Footnotes ESD ONLINE GUIDEBOOK V3.1 2017. https://esd.imi.gov.my/portal/about-us/esd/. IMMIGRATION ACT 1959/63 [ACT 155]. https://esd.imi.gov.my/portal/employers/#. FREQUENTLY ASKED QUESTIONS (FAQ): ADVERTISEMENT OF VACANCIES ON MYFUTUREJOBS FOR THE HIRING OF EXPATRIATES NO. 2/2020 | 29 DECEMBER 2020. Ibid. Ibid. Ibid. Ibid. https://esd.imi.gov.my/portal/employers/#.
30 October 2024

The Laws Relating to Zero Emissions in Malaysia

In December 2021, Malaysia experienced three (3) consecutive days of heavy downpour, constant rain on an unprecedented scale affecting eight states. The country suffered an estimated loss of Ringgit Malaysia Fifteen Billion (RM 15,000,000,000.00) to the Malaysian economy,1 close to seventy thousand (70,000) victims affected2 and most unfortunately, a total of fifty-four (54) deaths and two (2) people missing.3 Described as a one in 100-year weather event,4 was this catastrophe a result of nature running its course, an act of God? Or was it caused by the acts and omissions of mankind? Experts believe that one of the main causes of the flood is due to climate change. Environmentalist, Dr Renard Siew claims that the flood “is a clear example of an unpredictable weather event as a result of high carbon emissions”.5 It is clear that climate change (more specifically, global warming due to carbon emissions) has contributed to this disaster, and many others throughout the globe. Thus, it is imperative that the necessary remedial action, including the enactment of laws regulating climate change, is taken by those responsible to combat this ever-growing global issue. This article seeks to explore the laws governing carbon emissions in Malaysia. In Malaysia, the Environmental Quality Act 1974 (“EQA 1974”) is the main legislation which governs the protection and conservation of the environment. Section 21 and 51 of the EQA 1974 provides the Minister charged with the responsibility for environment protection, the power to create regulations which specify the acceptable conditions for the emission of environmentally hazardous substances and pollutants as well as regulations prohibiting the emission into the environment of any gaseous matters. In exercising the powers conferred to it under Section 21 and 51 of the EQA 1974, the Minister has created several regulations which govern carbon emissions in Malaysia, most notably the Environmental Quality (Clean Air) Regulations 2014 (“Clean Air Regulations”) which provides that an owner or occupier of a premise involved in any activity or industry listed in the First Schedule of the Clean Air Regulations, including power plants, waste fuel plants, asphalt mixing plants and others, shall incorporate measures to reduce the emission of air pollutants into the atmosphere in accordance with the Best Available Techniques Economically Achievable. The Clean Air Regulations further make provisions for the equipping and monitoring of an air pollution control system, offences, penalties and others. The Clean Air Regulations ensures that owners of premises involved in the relevant activities and industries must now be prudent in its operations so as to ensure that it complies with the Clean Air Regulations which in effect, shall reduce the emission of air pollutants (including carbon) into the atmosphere. Further to the above, the Minister has also created regulations governing the emission of pollutants from different type of vehicles such as motorcycles and vehicles equipped with petrol and diesel engines. The said regulations provide that the engine of such vehicles must not emit pollutants in excess of the prescribed limit provided under the regulations. Compliance by vehicle manufacturers of these regulations will in effect, reduce the amount of vehicles on Malaysian roads which emit harmful levels of pollutants that shall translate to the reduction of carbon emissions by Malaysian vehicles. In 2011, the Renewable Energy Act 2011 (“REA 2011”) was passed by Parliament which aimed at increasing the production of green energy. The REA 2011 provides incentive for the generation of electricity from renewable resources by introducing a feed-in tariff scheme which gives feed-in holders a premium for each unit of electricity that is generated using renewable resources. Those who wish to participate in this scheme must firstly obtain a feed-in approval from the Sustainable Energy Development Authority (“SEDA”), the administrator and implementing agency of the scheme. The REA 2011 is one of the notable efforts by the Government to encourage companies to invest in the production of renewable energy, moving away from the unsustainable fossil fuels which is undoubtedly one of the highest contributors of carbon emission and global warming. On an international scale, Malaysia is a signatory of the Paris Agreement. The Paris Agreement is an international treaty on climate change. It was adopted by one hundred and ninety-six (196) parties at COP 21 in Paris, on 12 December 2015 and entered into force on 4 November 2016.6 Under the Paris Agreement, Malaysia is committed to reduce the emission of greenhouse gases by forty-five percent (45%) by 2030, in which thirty-five percent (35%) is unconditional and the remaining ten percent (10%) is conditional upon the receipt of climate finance, technology transfer and capacity building from developed countries.7 In respect of the Paris Agreement, Malaysia has showed its further commitment in saving the environment by updating its Nationally Determined Contribution (“NDC”), as follows: increase the unconditional reduction intensity by ten percent (10%); and expand the greenhouse gases coverage to include, Carbon Dioxide (CO2), Methane (CH4), Nitrous Oxide (N2O), Hydrofluorocarbons (HFCs), Perfluorocarbon (PFCs), Sulphur Hexafluoride (SF6) and Nitrogen Trifluoride (NF3). Such show of commitment would mean more efforts, policies and principles to be formed by Malaysia in the effort to cut down carbon emissions. Following this direction, the stakeholders, which includes the Ministry of Environment and Water, the Ministry of Finance8 and Bursa Malaysia are working on the development of a Voluntary Carbon Markets (“VCM”). VCM is a platform that conducts carbon credit trading between green asset owners and others with the sole-objective to move towards low-carbon practices.9 Malaysia is also in the initial stages of the development of Long-Term Low Emission Development Strategy (“LT-LEDS”). LT-LEDS primary role is to formulate strategies and actions for the mitigation of greenhouse gas emissions in Malaysia’s key economic sectors which include the manufacturing and processing industry sector, agricultural sector and waste sectors.10 The Minister of Environment and Water of Datuk Seri Tuan Ibrahim Tuan Man in a statement stated that the economic instruments such as carbon pricing including carbon taxes and domestic carbon trading schemes will be introduced under the LT-LEDS.11 Additionally, pursuant to the Paris Agreement, industry leaders such as PETRONAS and Shell Malaysia have shown its commitment towards achieving the net zero carbon emissions goal by among others: improve energy efficiency; provide low carbon energy; develop emission reduction technologies; and reduction of hydrocarbon flaring and venting.12 13 The initiatives by PETRONAS and Shell Malaysia shall hopefully serve as an example for other companies, especially companies in the oil and gas industry to take action on the issue of climate change. Given the seriousness of the environmental issues and setbacks detailed in the IPCC Sixth Assessment Report, the international parties together with Malaysia must work more efficiently to ensure the sustainability of the environment for our future generation. World renowned astrophysicist, Neil deGrasse Tyson once said “Every disaster movie begins with a scientist being ignored”.14 Environmentalists have warned us time and time again that appropriate measures must be taken now to combat climate change. We can no longer ignore these messages and we must act on it to prevent climate change related disasters, such as the 2021 Malaysian floods from reoccurring. The authors of this article hope that Malaysia shall take the issue of climate change more seriously by enacting more efficient laws to reduce carbon emissions and adopt proper enforcement of such laws. Authors: Nafis Zain Safwan Majid Zain and Umar Izat Nubli Footnotes https://www.bharian.com.my/berita/nasional/2021/12 /903555/negara-dianggar-rugi-rm15-bilion-akibat-banjir. https://www.utusan.com.my/nasional/tragedi/2021/12 /jumlah-mangsa-banjir-menghampiri-70000/. https://www.bernama.com/en/general/news_disaster .php?id=2040627. https://www.thestar.com.my/news/nation/2021/12/20 /24-hour-downpour-is-a-one-in-100-year-weather-event. https://www.channelnewsasia.com/asia/malaysia- once-100-years-flooding-climate-change-disaster -planning-2391316. https://unfccc.int/process-and-meetings/the-paris- agreement/the-paris-agreement. https://mydclimate.org/2021/10/04/7886/. https://www.theedgemarkets.com/article/mysay- carbon-pricing-and-its-future-malaysia. https://www.malaymail.com/news/malaysia/2021/12 /01/carbon-trading-already-a-complex-mechanism -to-be-made-shariah-compliant-par/2025078. https://themalaysianreserve.com/2021/09/28/kasa-to -announce-net-zero-emissions-measures/. https://themalaysianreserve.com/2021/09/28/kasa-to -announce-net-zero-emissions-measures/. https://www.petronas.com/sustainability/net-zero- carbon-emissions. https://www.shell.com.my/about-us/powering-progress/ achieving-net-zero-emissions.html#:~:text=Shell's%20s trategy%20to%20achieve%20net%2Dzero%20emissions &text=This%20includes%20short%2Dterm%20targets, 2050%20(compared%20to%202016). https://twitter.com/neiltyson/status/1254048358366416896 ?lang=en.
30 October 2024

Laws Relating to the Management of Scheduled Waste in Malaysia

Listed as the 25th most competitive economy in the world1, Malaysia engages in an exceedingly wide variety of industrial activities such as construction,mining, quarrying, and manufacturing, and these activities may lead to the production of hazardous waste. These hazardous wastes are classed as ‘scheduled waste’, scheduled waste refers to any wastes that possess hazardous characteristics and have the potential to adversely affect public health and the environment2. Scheduled wastes in Malaysia come from a variety of different sources. These include hospitals, dry cleaners, factories, agriculture, paint manufacturers, petrol storage facilities, automotive servicing, and other industries. Scheduled wastes are unavoidable as it is a by-product of several industries, as such the treatment and disposal of scheduled wastes must be properly managed to avoid the risk of these hazardous materials seeping into our daily lives and contaminating the soil or water supplies. In 2020 it was recorded that the amount of scheduled wastes produced by industries were 7,185.2 thousand metric tonnes, a 79% increase compared to 2019 where the amount of scheduled wastes recorded was 4,013.2 thousand metric tonnes3. A contributing factor to this could be the COVID-19 Pandemic, the quantity of clinical waste generated in 2020 rose 18.1% to 39.9 thousand metric tonnes as compared to 33.8 thousand metric tonnes in 2019. Three states in Malaysia recorded the highest amount of scheduled waste production, namely:4 Selangor at 28.5%; Johor at 16.8%; and Negeri Sembilan at 16.2%. The Environmental Quality Act of 1974 (“EQA”) is one of the primary pieces of legislation governing scheduled waste, the Act was administered by the Department of Environment under the Ministry of Natural Resources and it is a provision relating to the prevention, abatement, control of pollution and enhancement of the environment. The relevant sections which refer to the management of scheduled wastes include: Section 34B (the control of scheduled wastes); Section 22 (air pollution control); Section 24 (soil pollution control); Section 25 (water pollution control); and Section 29 (the control of wastes disposal to Malaysian waters). Following the amendment of the EQA in 1996 section 34B provides strict provisions which cover the control of exporting and importing scheduled waste, which include a penalty of RM500,000.00 or 5 years imprisonment or both for the illegal trafficking of scheduled wastes. Sections 22, 24, 25, and 29 all state that no person-shall, unless licenced, has the permission or authority to pollute or contaminate the air, soil, or water sources with scheduled waste, unless the Minister, after consultation with the Council, specifies that it is acceptable as outlined in Section 21 of the EQA. Other relevant regulations include: Environmental Quality (Prescribed Activities) (Environmental Impact Assessment) Order 2015; Environmental Quality (Prescribed Premises) (Scheduled Wastes Treatment & Disposal Facilities) Regulations, 1989; Environmental Quality (Prescribed Premises) (Scheduled Wastes Treatment & Disposal Facilities) Orders, 1989; and Environmental Quality (Prescribed Premises) (Scheduled Wastes) Regulations, 2005. In Malaysia, the EQR interprets ‘scheduled waste’ as any type of waste falling within the categories of waste listed in the First Schedule of the Environment Quality (Scheduled Wastes) Regulation 2005. There are 77 types of scheduled wastes listed within the First Schedule of the Environment Quality (Scheduled Wastes) Regulation 2005, which are compartmentalised into 5 categories, namely: SW 1 - metal and metal-bearing wastes; SW 2 - wastes containing principally inorganic constituents which may contain metals and organic materials; SW 3 - wastes containing principally organic constituents which may contain metals and inorganic materials; SW 4 -wastes which may contain either inorganic or organic constituents; and SW 5 - other wastes. The lack of technical knowledge of handling scheduled waste may be a hindrance to solving this problem, and could be a reason as to why some industries do not dispose their scheduled waste in the proper mandated manner as prescribed in the Environmental Quality (Scheduled Wastes) Regulations 2005 (“EQR”). Section 8 of the EQR clearly puts the onus on the individual/entity who generates the scheduled waste (“waste generator”) to ensure that the scheduled waste produced by them must not only be disposed of correctly but also stored and treated in the prescribed manner as outlined in Section 9 and 10 of the EQA. (1) Every waste generator shall ensure that scheduled wastes generated by him are properly stored, treated on-site, recovered on-site for material or product from such scheduled wastes or delivered to and received at prescribed premises for treatment, disposal or recovery of material or product from scheduled wastes.  (2) Every waste generator shall ensure that scheduled wastes that are subjected to movement or transfer be packaged, labelled and transported in accordance with the guidelines prescribed by the Director General. Section 9 of the EQR outlines the proper method of storage which waste generators must abide by, Section 9(5) states that scheduled wastes can be stored for 180 days or less depending on the amount of scheduled waste generated, so long as it does not exceed 20 metric tonnes. If the waste generator would like to store more than 20 metric tonnes of scheduled waste, Section 9(6) states that the waste generator may make an application to the Director General of Department of Environment Malaysia to ask for permission to do so – and if the application is deemed acceptable the Director General may grant a written approval either with or without condition, as outlined in Section 9(7) of the EQR. As scheduled waste comprises of various hazardous waste products, the management of scheduled waste must be meticulous to ensure it is treated and disposed of correctly, as such in addition to Section 9, Section 10 of the EQR goes on to provide the manner in which scheduled waste must be labelled for proper storage. Section 10(1) provides that the storage container must be labelled with the following details: the date of waste generated; the name of the waste generator; the address of the waste generator; and the contact number. Furthermore, not only must the container contain the 4 criterion above but also should be clearly labelled in accordance with the type(s) of scheduled waste it holds, as stated in section 10(2) of the EQR. If the waste generator would like treat or manage their scheduled waste beyond the confines of Section 9 above, Section 7(1) of the EQR allows for the waste generator to make a written application for ‘special waste management of scheduled waste’ and upon acceptance the Director General may grant an approval, with or without specified conditions for the actions: (1) A waste generator may apply to the Director General in writing to have the scheduled wastes generated from their particular facility or process excluded from being treated, disposed of or recovered in premises or facilities other than at the prescribed premises or on-site treatment or recovery facilities.  (3) If the Director General is satisfied with the application made under subregulation (1), the Director General may grant a written approval either with or without conditions. Malaysia established a waste management centre in compliance with the EQA and EQR to appropriately handle scheduled waste and counteract improper dumping practices and combat contamination which could lead to pollution and result in harming our quality of life. Kualiti Alam was established in 1991 and it owns and runs Malaysia's only fully integrated hazardous waste handling facility. Kualiti Alam is authorised to handle 76 of the 77 scheduled wastes mentioned in the EQR – except for radioactive waste, pathological waste, and explosive waste. Kualiti Alam offers a diverse range of waste management solutions such as: incineration facilities, physical and chemical treatment plants, solidification treatment plants, secure landfills, and clinical waste treatment centres. The regulations for the control of scheduled waste in Malaysia are reflective of the ‘cradle-to-grave’ principle5 where generation, storage, transportation, treatment and disposal are regulated. This concept focuses on the disposal component and as such creates a linear cycle of waste management. The cradle-to-grave concept neglects resource recovery, and minimizing waste generation, in this case scheduled waste to be specific. However, in recent years there has been a focus on zero waste emissions, as such there has been a movement to a ‘cradle-to-cradle’ principle. The ‘cradle-to-cradle’ principle was coined by Professor Dr. Michael Braungart6, and it is a principle which depicts the continuous and presumably limitless cycling of materials – creating closed-loop cycle as opposed to the liner cycle of the cradle-to-grave principle. In the cradle-to-cradle principle, materials which are chemically inert and recyclable can be repurposed once they are properly treated. Thus minimising the scheduled waste products in landfills. To encourage effective waste management, Malaysia has provided incentives for the storage, treatment and disposal of scheduled waste. The incentives include pioneer status incentive for five years to companies which are principally engaged in an integrated operation for the storage, treatment and disposal of scheduled wastes7. Although Malaysia has a comprehensive legislative framework and government assistance for proper waste management for scheduled waste, concerns of improper dumping, contamination, and pollution persist. Malaysia must continue to pursue a ‘closed loop cycle’ approach when it comes to waste management, reusing and recycling scheduled waste rather than filling landfills and perpetuating a linear cycle of scheduled waste disposal. Waste generators within the various industries in Malaysia must commit to disposing of and processing their scheduled waste in accordance with statutory regulations, as well as upcycling/recycling their waste products when possible. Authors: Siti Fitrah Mohamed Jamal and Loni Lee Footnotes https://www.imd.org/centers/world-competitiveness- center/rankings/world-competitiveness/ https://notionconsortium.com/schedule-waste- management/ Compendium of Environment Statistics, Malaysia 2021 (https://www.dosm.gov.my/v1/index.php? r=column/cthemeByCat&cat=162&bul_id =VFRCSEtSRlRWWmxoNlRLTTYrb1FVdz09&menu_id =NWVEZGhEVlNMeitaMHNzK2htRU05dz09) ibid. https://www.remondis-sustainability.com/en/inspiring /cradle-to-cradle/ https://epea.com/en/about-us/cradle-to-cradle#: ~:text=Cradle%20to%20Cradle%C2%AE%20is, innovation%2C%20quality%20and%20beneficial %20design. https://mida.gov.my/wp-content/uploads/2020/ 12/20200914160203_BOOKLET-7-ENVIRONMENTAL- MANAGEMENT-SERVICES.pdf.
30 October 2024

The Legal Aspects of The Importation and Distribution of Foreign Produced Generic Pharmaceutical Drugs

Introduction To ensure the safety, quality and efficacy of marketed pharmaceuticals products in Malaysia, Drug Control Authority (“DCA”) is responsible for the registration and monitoring of the quality of pharmaceutical products.1 Being one of the DCA Secretariat, National Pharmaceutical Regulatory Agency (“NPRA”) plays a role in implementing regulatory scheme on quality of pharmaceutical products in the market through random sampling and analytical tests. It also administers the licensing scheme for pharmaceutical manufacturers, importers and wholesalers. Registration is imposed on companies intending to manufacture, sell, supply, import or possess or administer any drugs products, including generic drugs products.2 Generic Drugs Generic drug is a drug product that is essentially similar to a currently registered product in Malaysia. The term generic drug does not apply to Biologics.3 It is one of the categories of medicinal products under Control of Drugs and Cosmetics Regulations 1984 (“CDCR 1984”) apart from new drugs product, biologics, natural products and health supplements. The role of generic drugs is to provide high quality but affordable essential medicines, as it is proven to be cheaper than innovator brands (research-based) brands.4 Generic drugs may be classified into 2 groups5: Scheduled Poison (known as Controlled Medicine/Controlled Poison) – Products containing poisons as listed in the First Schedule under Poisons Act 1952; and Non-scheduled Poison (known as Non-Poison or Over-the-Counter/OTC) – Products containing active ingredients which are not listed in the First Schedule under Poisons Act 1952 and excluding active ingredient which is categorised under health supplements or natural products or cosmetics. Both categories of generic drugs above require registration with DCA.6 Procedures for Registration of Generic Drugs Similar to other medicinal products, the procedures for registration of generic drugs generally will be as follows: Preparation for Submission of Application Screening or Evaluation of Application. Outcome of Application. Inspection & Licensing. PART A: PREPARATION FOR SUBMISSION OF APPLICATION Submission of Registration with DCA Registration with DCA shall be done by the Product Registration Holder (“PRH”), a locally incorporated company, corporate or legal entity, with permanent address and registered with the Companies Commission Malaysia. For foreign company, it needs to appoint a local agent (a company incorporated in Malaysia) to be the PRH. The appointed PRH would then be responsible for all matters pertaining to the registration of the products.7 Registration is made via an online platform, Quest. A first-time PRH applicant shall first apply for Quest membership and purchase USB Token for submission of registration. Regulatory Requirements Prior to the submission, the PRH should make sure it complies with the regulatory requirements for generic drugs, including the following: (a) Bioequivalence (“BE”) Requirements The purpose of establishing BE is to demonstrate equivalence in biopharmaceutics quality between the generic medicinal product and a comparator medicinal product. This is to allow bridging of preclinical tests and clinical trials associated with the comparator medicinal product.8 During submission of registration, PRH of generic drugs shall submit a complete BE report with all the appendices and comparative dissolution profile data/report according to the relevant guidelines. The complete BE report should consist of BE study protocol, clinical study report, method validation report, bioanalytical report and pharmacokinetic and statistical report.9 (b) Other Requirements & Conditions (Labelling, Packing, Educational Materials) Apart from the above, the PRH and the foreign company (as the case may be) shall be aware of the other requirements, restrictions and conditions, as per Table 1. Items Details Guidelines Product Names Not Permitted to Be Registered Examples of non-permissible product names are: ·     Use of superlatives (kuasa – power, sihat – healthy, sembuh – heal, syurga – paradise) ·     20 disease names as stated in the Medicines (Advertisement and Sale) Act 1956 (e.g., diabetes, asthma, cancer) ·     Use of offensive or indecent names (Xenxual to symbolize sensual) ·     Use of product names similar to existing approved product names Further details are provided in Appendix 17 of the Drug Registration Guidance Document Third Edition, issued January 2022 (“DRGD 2022”). List of Permitted, Prohibited and Restricted Substances The PRH shall be aware of the following substances: ·     List of Prohibited Active Ingredients and its Combinations (such as Astemizole, and combination of Ampicillin + Cloxacillin, respectively) ·     List of Restricted Active Ingredients and its Combinations (such as Acetic Acid in Expectorant) ·     List of Prohibited and Restricted Excipients (such as Amaranth and Tartrazine, respectively) ·     List of Permitted and Restricted Colouring Agents (such as Calcium Carbonate and Guanine, respectively) Further details are provided in Appendix 18 of DRGD 2022. General Labelling Requirements The labelling shall include important information at respective positions such as at the packaging outer carton, immediate labels, or blister/strips.   The information includes the product name, dosage form, name of active substance(s), strength of active substance(s), batch number, manufacturing date etc. Further details are provided in Appendix 19 of DRGD 2022 Specific Labelling Requirements There are specific labelling requirements on all 207 specific substances, such as abiraterone, ace inhibitors, benzoyl peroxide, ginseng, methyl salicylate, opioid, paracetamol, tramadol, vitamin K etc. Further details are provided in Appendix 20 of DRGD 2022. Special Conditions for Registration of a Particular Product or Group of Products Special conditions are imposed on the registration of all 9 particular product or group of products, such as blood products, midazolam, paracetamol in combination with caffeine, vaccines (including COVID-19 vaccines) etc. Further details are provided in Appendix 21, DRGD 2022. Educational Materials For risk minimisation measures, the PRH shall provide educational materials to healthcare professionals and patients in reducing risk(s) for a particular product.   This applies to products containing active ingredient such as, sodium valproate and retinoids. Further details are provided in Appendix 22 of DRGD 2022. TABLE 1   Certificate Compliance with Good Manufacturing Practice (“GMP”) and Good Distribution Practice (“GDP”) are prerequisites for application for product registration.10 The PRH shall ensure the following: a) Good Manufacturing Practice (GMP)  GMP is imposed on foreign companies that manufacture medicinal products outside Malaysia.11 Those foreign manufacturers are subjected to GMP conformity assessments through acceptable GMP evidences. The valid GMP evidences differ according to the location of pharmaceutical manufacturer, as per Table 2. Location of Pharmaceutical Manufacturers Valid GMP Evidence in Malaysia Pharmaceutical manufacturer located on a site within jurisdiction of a Pharmaceutical Inspection Co-operation Scheme (“PIC/S”) Participating Authority. GMP evidence issued by its local National Drug Regulatory Agency (“NDRA”) Pharmaceutical manufacturer located in an ASEAN member country. GMP evidence issued by its local NDRA is accepted if the NDRA is included as a Listed Inspection Service under the ASEAN Sectoral Mutual Recognition Arrangement (“MRA”) for GMP Inspection of Manufacturers on Medicinal Products. Pharmaceutical manufacturer not located on a site within jurisdiction of a PIC/S Participating Authority. GMP evidence issued either by any PIC/S Participating Authority, or any NDRA that has a cooperation agreement such as MRA with PIC/S. TABLE 2 The absence of any valid GMP evidence as above would require the foreign companies to apply for Foreign GMP Inspection by NPRA, which shall be made by a Malaysian registered company acting on its behalf. b)Good Distribution Practice (GDP) GDP is required to ensure that foreign companies adopt proper distribution and store management procedures according to GDP, in relation to the premise, facilities, stock handling and control, disposal of materials or products, vehicles and transportation of products.12   PART B: SCREENING OR EVALUATION OF APPLICATION After the online submission of product registration application via Quest, the application shall undergo an initial evaluation (screening process), to ensure the submitted application is complete with the required data/information. Payment & Hard Copy Documents Only a complete application shall be accepted and approved for payment. Upon screening approval, the applicant is requested to proceed with: (a) payment as in table below; and (b) submission of hard copy documents (if applicable). For generic drugs, all documents can be submitted online, unless the files size are too large which require hard copy submission.13 The applicable fee for registration of generic drugs, are as per Table 314. Product Classification Processing Fee Analysis fee Total Fees Pharmaceutical ·       Generic (Scheduled Poison) ·       Generic (Non-scheduled Poison) RM1,000.00 Single Active Ingredient: RM1,200.00 RM2,200.00 Two/ more Active Ingredient: RM2,000.00 RM3,000.00 TABLE 3 Upon confirmation of payment, the application with the submitted data shall be evaluated. Review of applications shall follow a queue system. Evaluation for Product Registration For registration of generic drugs, 2 methods of evaluations are applicable, namely Full Evaluation and Abridge Evaluation, which are as per Table 4.15 Product Category Full Evaluation Abridge Evaluation Generics (Scheduled Poison) Applicable [Evaluation Timeline: 210 working days]16 Not Applicable Generics (Non-Scheduled Poison) (or known as OTC) Applicable to all products of this category, unless stated in Abridge Evaluation.   [Evaluation Timeline: 210 working days] Generics (non-scheduled poison) that are evaluated under abridged evaluation include, but are not limited, to the following: ·    Antiseptics/skin disinfectants: ·    Locally acting lozenges/pastilles ·    Topical analgesic/counterirritants. ·    Topical nasal decongestants ·    Emollient/demulcent/skin protectants. ·    Keratolytic. ·    Anti-dandruff. ·    Oral care. ·    Anti-acne. ·  Medicated plasters/patch/pad ·  Topical antibacterial   [Evaluation Timeline: 116 -136 working days] TABLE 4 In respect of Full Evaluation, the PRH needs to provide the information on 2 parts namely17: Part I - Administrative data and product information such as Product Particulars, Product Formula, Particulars of Packing, Label (Mock-up) For Immediate Container, Outer Carton, Proposed Package Insert, Consumer Medication Information Leaflet (RiMUP), and Supplementary Documentation. Part II - Data to support product quality (Quality Document) (such as Drug Product (Finished Product), Quality Overall Summary, and Drug Substance) Meanwhile, for Abridge Evaluation, the PRH needs to provide information on product such as Product Particulars, Product Formula, Particulars of Packing, Label (Mock-up) For Immediate Container, Outer Carton, Proposed Package Insert, Consumer Medication Information Leaflet (RiMUP), Particulars of Product Owner, Manufacturer, Importer and Other Manufacturer(s) Involved and Store address.   PART C: OUTCOME OF APPLICATION Decisions An application may be approved or rejected by DCA, and the decision shall be sent via email/official letter to the PRH. DCA has the power to at any time reject, as well as cancel or suspend the registration of any product if there are deficiencies in safety, quality or efficacy of the product or failure to comply with conditions of registration. Re-submission of product registration for a rejected application due to safety and efficacy reasons shall not be accepted within 2 years after the rejection.18 Product Registration Number For successful registration, the PRH shall be notified by DCA and a product registration number (i.e. MAL number) shall be assigned to the registered product via QUEST system. The registration number is specific for the product registered with the name, identity, composition, characteristics, origin (manufacturer) and PRH, as specified in the registration documents.19 The applicant shall refer to the product registration approval notification sent by DCA or the Approved Product Registration List in the NPRA website. The registration status of a product shall be valid for 5 years or such period as specified in DCA database (unless the registration is suspended or cancelled by DCA). PART D: INSPECTION & LICENSING Inspection Inspection of GMP and GDP are conducted to ensure the compliance of manufacturers, importers and wholesalers with the current GMP and GDP requirements.20 Licenses Once the product is registered, the applicant should apply for the applicable licenses as required in CDCR 1984 in the respective prescribed forms to NPRA.21 The applicable licenses, its prescribed forms and the processing fees can be summarised as per Table 5.22 Type of Licenses Prescribed Form in CDCR 1984 Processing Fees Manufacturer’s License (PRH that manufactures the registered products in the premises specified in the licence and sells by wholesale or supplies the products) Form 2 RM1000.00 Wholesaler’s License (PRH that sells by wholesale or supplies the registered products from the address of the business premises specified in the licence) Form 3 RM500.00 Clinical Trial Import License (PRH that imports any product for purposes of clinical trials, notwithstanding that the product is not a registered product) Form 4 RM500.00 Import License (PRH that imports and sells by wholesale or supplies the registered products from the address of the premises specified in the licence) Form 5 RM500.00 TABLE 5 Authors: Nur Izzatie Azlan and Zhilal Adnan Footnotes https://www.npra.gov.my/index.php/en/about /drug-control-authority-dca/about-the-dca. Regulation 7, CDCR 1984 https://www.npra.gov .my/index.php/en/prescription-main-page.html. National Pharmacy Call Center, What Prescribers Should Know About Generic Medicines, First Edition, 2013, pg.2. https://www.npra.gov.my/index.php/en/ prescription-main-page.html. https://www.npra.gov.my/index.php/en/component/content/article/37-english/faq/623 -product-registration.html?Itemid=1391. Drug Registration Guidance Document (DRGD) Third Edition, Second Revision January 2022, Appendix 16. Drug Registration Guidance Document (DRGD) Third Edition, Second Revision January 2022, page 49. National Pharmaceutical Regulatory Agency Foreign GMP Inspection Guidance Document, 8th Edition (September 2021) retrieved from https://www.npra.gov.my/easyarticles/images/users/1133/Guidance-Document-Foreign-GMP-Inspection- _Sep-2021_8th-Ed.pdf. Good Distribution Practice 2nd Edition 2013 retrieved from https://www.npra.gov.my/images/Guidelines_Central/Guidelines_on_Regulatory/Good%20Distribution%20Practice%202nd%20 Edition%202013.pdf. Drug Registration Guidance Document (DRGD) Third Edition, Second Revision January 2022, page 40. Ibid, Appendix 9. Ibid, Appendix 14. Ibid, Appendix 5. Ibid, Appendix 15. Ibid. Ibid. Ibid, page 49. Regulation 12, CDCR 1984. Regulation 13, CDCR 1984.
30 October 2024

Shipping and International Trade in an Age of Disruption

When 2020 began, the key challenge which faced the shipping industry was the implementation of the Fuel Standards of IMO 2020 mandating lower Sulphur Fuel Content. Looming ahead was the massive global tragedy which was the COVID-19 Pandemic, which spared no nation, no industry. The Pandemic ravaged lives, decimated businesses and forced a rethink of how much we can prepare. Shipping was badly affected in many ways. We are certainly in the middle of a perfect storm – we were just getting out of the Pandemic. China is still closing ports, grappling with increase in Oil prices, drastic rise in shipping costs and adapting to the effects of the Trade Wars, and now the war in Ukraine. Covid At the height of the Pandemic in 2020, the plight of the passengers and crew on board Cruise ships and the cruise industry came into stark focus. Cruise ships - with large numbers of passengers and crew and an emphasis on communal dining and group activities - became incubators of the COVID-19 virus. The crews on board merchant vessels could not sign off as ports did not allow. The closure of businesses and ports also created disruption to supply chains. Where ports close because of the pandemic or where the crew of the vessels are infected, this affects the contract of carriage. The effect depends on the terms of the Charter, whether the particular disrupting event is covered. A vessel with infected crew will mean that the vessel will not be granted free pratique or clean bill of health by the port authorities and this may prevent the readiness of the vessel, owners time for loading or discharge, and the consequent effects of running of laytime and demurrage. This disruption caused multi-fold increase in freight costs, shortage of containers, congestion in ports. In turn, this resulted in shortages of key components in the supply chain halting or delaying production of automobiles, smartphones. Even the ubiquitous McDonald’s was not spared, with shortages of fries. The multi-fold rise of freight costs had caused considerable price increases in all manner of consumables. Now the Pandemic in the form of the Omicron variant is once again resurgent and has caused a massive and comprehensive lockdown in Shanghai, more extensive than other ones in China. Shanghai is a key Trade and Manufacturing base for global supply chains. This effects of this lockdown reverberate as globalization has made key supply chains inter-connected and what happens in key locations affect the whole chain. Ever Given and the Suez Canal The Mega Containership Ever Given ran aground while transiting the Suez Canal on March 23, 2021, lodging herself against both banks of the waterway. The blockage caused vessels backed up in the Mediterranean to the north and the Red Sea to the south. It is estimated that the costs to global trade was about $400 million per hour. The fragility of trade routes were exposed when the incident caused knock-on effects on the movement of cargoes globally, as 12 percent of global trade is carried on board ships using the canal. For six days, the world watched as a multi-national team of salvors, tug operators and the Suez Canal Authority (SCA) coordinated a race against time to free the ship and unclog the canal. A year later, the sister ship of Ever Given, Ever Forward is in April 2022 now stuck in Chesapeake Bay near the port of Baltimore, USA. This incident exposes the navigation risks faced by large merchant vessels. Trade Wars President Donald Trump launched a Trade War with China resulting in tit for tat imposition of tariffs on each other countries exports. This caused traders to devise ways to overcome them by disguising the origins of the cargo. China and Australia also cooled its trade relations, after Australia pushed for an international probe into the origin of the coronavirus without diplomatic consultations beforehand. China has targeted Australian barley, beef, wine, lobsters and coal over the past year after Canberra called for an inquiry into the origins of the coronavirus pandemic. The acts included China calling Chinese parties not to import the products from Australia and imposing high duties. Ukraine Putin’s invasion of Ukraine in March 2022 is bringing the World to the brink. The world was not prepared for this conflict. Countries reacted by imposing trade sanctions, cutting off Russia from international financial system and trade globally. Russian vessels, and sanctions implemented by major trading nations and disruption of Agriculture products. Ukraine is a key producer of wheat, barley, sunflower, corn, soybeans. A force majeure clause typically excuses parties from the performance of the contract following the occurrence of certain events. A company affected by the Russian sanctions must determine whether its contracts include force majeure provisions and whether the Russian sanctions are an event that excuses full or delayed performance under the contract. If sanctions are not explicitly mentioned as a force majeure event, a broad definition of war, hostilities, or conflict or act of government could cover the consequences of sanctions. From record low prices of Crude Oil, the Ukraine War has made oil prices to climb to record levels. Legal Effects Parties to shipping and related contracts e.g. Charterparties, FOB, CIF Contracts, bills of ladings and contracts of affreightment, fix their agreed price, provide for price adjustment clauses, force majeure and defences in the event of specified events arising. The allocation of risks is essentially a contractual one. If the purchase or transaction has become more difficult or more costly to perform, then one party will have to bear the increased costs of the transaction. Force Majeure Clauses or the common law principle of frustration will apply only if the transaction becomes impossible to perform, not more difficult or costly. If parties rely on standard contracts, it is highly likely these contracts do not adequately provide for the shocks that had hit shipping post 2020. To enter into the contracts without adequately considering the contract terms in the light of known and potential risks would be indeed foolhardy. Likewise, Insurance can protect to a certain extent. Parties should also seek advice from their broker or insurance intermediary as to whether the existing coverage adequate covers their transactional risks in the light of the current situation. For instance, most forms of marine cargo insurance do not cover delay or the insolvency of the carrier. The insurance cover is for transit risks and not transactional default or failure. Author: Philip Teoh
30 October 2024

Civil Remedies for Economic Espionage

Espionage is the practice of using covert means to obtain confidential information from non-public sources.1 Meanwhile, economic espionage is concerned with the unlawful targeting and theft of critical intelligence, such as trade secrets and intellectual properties.2 The value of such information lies in the ability of its owner to exclusively exploit the said information for economic gain. Because there is inherent economic value in such confidential information, a legal framework which protects against economic espionage is, therefore, a necessity. Once exposed, confidential information can also no longer be made secret, and the owner of such information loses the ability to exploit such information to the exclusion of others. Hence, civil remedies are also necessary to alleviate the losses which may be a consequence of economic espionage. This article will explore the concept of economic espionage and identifies how the laws of Malaysia have attempted to remedy economic espionage. Economic Espionage in Malaysia Unlike the United States of America (“the US”) and its Economic Espionage Act 1996, there is no specific law in Malaysia which governs economic espionage. However, as economic espionage often involves the use of technology, and is similar to the crime of theft, there are a few pieces of Malaysian legislation which may be referred to in cases of economic espionage.3 Firstly, when economic espionage involves cybersecurity breaches, provisions contained in the Communication and Multimedia Act 1998 and Computer Crimes Act 1997 are relevant.4 Secondly, when economic espionage is committed against Malaysia, laws such as the Security Offence (Special Measures) Act 2012 and Prevention of Terrorism Act 2015 may be relevant.5 Lastly, as the act of economic espionage is similar to the act of theft, the Penal Code may also be relevant in this case.6 However, the abovementioned laws have their weaknesses in that they are incapable of providing adequate protection for economic espionage.7 For example, section 378 of the Penal Code defines theft as “whoever, intending to take dishonestly any moveable property out of the possession of any person without the person’s consent, moves that property in order to such taking, is said to commit theft”. The “movable property” in question also includes the “corporeal property of every description”.8 Nonetheless, in view of the lack of a statutory definition of economic espionage and the definition of “moveable property” as defined above, it would appear that economic espionage may not necessarily be considered theft according to the Penal Code.9 Overall, Malaysia has yet to criminalise economic espionage and there is no well-founded legislation that governs and defines economic espionage. Civil Remedies While Malaysia has no legislation which specifically governs economic espionage, this does not necessarily mean there are no available remedies for the commission of such a wrong. Economic espionage involves the theft of confidential information by a person working for a particular entity. One way to protect against trade secret theft or economic espionage is through the use of non-disclosure agreements.10 The disclosure of confidential information to a third party can be a breach of the confidentiality requirement that an employee may be bound by during the course of his employment.11 Such disclosure of information may also involve the disclosure of trade secrets.12 To date, there are no reported cases with regards to economic espionage in Malaysia that have been committed against it. Nevertheless, the divulgence of trade secrets may be considered analogous to economic espionage. As such, cases involving the divulgence of the trade secrets of companies may serve as a reference for the types of civil remedies which could be available in cases of economic espionage. For instance, the case of Yukilon Manufacturing Sdn Bhd & Anor v Dato’ Wong Gek Meng & Ors (No 4),13 involved the first and second defendants utilising information gleaned from a joint venture with the first plaintiff to manufacture similar products with the fourth defendant.14 To prevent further losses to the first plaintiff, the court granted an injunction preventing the first and second defendants from continuing to manufacture and deal with products that closely resembled the plaintiffs’ product.15 A Mareva Injunction was also obtained to prevent the first and second defendant from removing from the jurisdiction, dissipating or dealing within the jurisdiction any assets of the fourth defendant.16 Lastly, an Anton Piller order was also granted for the plaintiffs to enter the premise of the fourth defendant to search for articles and/or documents for inspection and to remove them from the premises to the safe-keeping of the plaintiffs’ solicitors.17 As economic espionage is analogous to the theft of trade secrets, the remedies offered in the case of Yukilon may potentially be granted in cases of economic espionage as well. In cases of economic espionage and/or theft of trade secrets, the prevention of further damage should be prioritised. This would include preventing any further divulgence of trade secrets and/or obtaining damages for any losses suffered thus far. For example, in the case of Ganesh Raja A/L Nagaiah & Ors v NR Rubber Industries Sdn Bhd,18 the Court granted an injunction to prevent the defendants from using the plaintiff’s confidential information for their business to the detriment of the plaintiff.19 The Court in this case also granted an Order that damages be assessed by the Registrar.20 Economic Espionage in Other Jurisdictions As set out above, the US has specific legislation governing economic espionage. The ambit of such legislation was enlarged in year 2016 when the US Congress enacted the Defend Trade Secrets Act (“DTSA”) to provide for private civil actions including ex parte orders “providing for the seizure of property necessary to prevent the propagation or dissemination of trade secret”.21 DTSA is codified under 18 U.S.C: Crimes and Criminal Procedure. The civil remedies available under 18 U.S.C, section 1836 include the granting of injunctions22, the awarding of damages23, exemplary damages24, and the awarding of costs in cases where the claim of the misappropriation of the trade secret is made in bad faith.25 Additionally, Japan revised its Unfair Competition Prevention Act (“UCPA”) that provides civil and criminal remedies for trade secrets.26 Civil remedies provided in this act include injunctions against actual or likely infringement,27 damages of actual loss,28 and restoration of business reputation.29 The UCPA also aims to increase the effectiveness of civil remedies,30 which includes a reduction of the burden of proof for plaintiffs. The United Kingdom also has in place the Official Secrets Acts 1911-1989 that protects its country from espionage and unauthorised disclosures.31 In a civil context, English law, especially in cases of breach of confidence, provide for a wide variety of civil remedies which include search and seizure orders, injunctive relief, damages, accounting for profits, third party liability, constructive trusts over assets, and an order to reveal the source of disclosed information.32 Conclusion Ultimately, there is no specific law that provides for civil remedies for economic espionage in Malaysia. There is no reported case law in Malaysia regarding economic espionage as well. However, the characteristics of economic espionage resemble that of the theft of trade secrets. As such, case laws in relation to the divulgence of trade secrets can act as guidance to the type of civil remedies suitable in cases of economic espionage. In addition, remedies provided in other jurisdictions can also serve as a guideline for the civil remedies which may be available in cases of economic espionage. The above jurisdictions offer civil remedies such as damages, injunctions, and equitable remedies33 that are also available in Malaysia. Despite the lack of legislation specifically governing economic espionage in Malaysia, the civil remedies currently available in Malaysia are relevant to at least alleviate the losses caused by economic espionage or a similar wrong. Authors: Natalia Izra Dato’ Nasaruddin, Iris Tang Shu Ni and Gabrielle Lim Wai Yee Footnotes Centre for the Protection of National Insurance, “Espionage” (11 March 2021, CPNI), accessed 25 April 2022. Investopedia, “Economic Espionage”, (n.d., Investopedia), accessed 20 April 2022. Juriah Abd Jalil et al, ‘Business Under Threat: The Criminal Liability of Trade Secret Theft in Malaysia?’ (2020), International Journal of Business and Society, Vol. 21, 49-65, 58. Ibid. Ibid, Ibid. Ibid. Section 22 of Penal Code. Juriah Abd Jalil et al (n 5) 60. FindLaw, ‘Using Non-Disclosure Agreements to Protect Against Trade Secret Theft’, (19 May 2016, FindLaw), accessed 25 April 2022. Ashgar Ali Ali Mohamad, ‘Implied Term of Trust and Confidence in Contract of Employment’ [2005] 3 MLJ xxi, xxix. Ecooils Sdn Bhd v Raghunath Ramaiah Kandikeri [2014] 7 MLJ 309, page 323. [1998] 7 MLJ 551. Ibid Ibid Ibid at page 552. Ibid. [2016] 12 MLJ 461. Ibid Ibid Stimmel, Stimmel & Roeser, “The Economic Espionage Act”, (n.d., Law Offices of Stimmel, Stimmel & Roeser), accessed 21 April 2022. 18 U.S.C Section 1836(b)(3)(A). 18 U.S.C Section 1836(b)(3)(B). 18 U.S.C Section 1836(b)(3)(C). 18 U.S.C Section 1836(b)(3)(D). Intellectual Property Office, “The Economic and Innovation Impacts of Trade Secrets”, (19 April 2021, Gov.UK), accessed 21 April 2022. Article 3 UCPA. Article 4 UCPA. Article 14 UCPA. Thomas Landman, ‘The Secret Protection in Japan and United States: Comparison and Recommendations’, (2019), Brooklyn Journal of International Law, Vol. 44 Issue 2, 714-761, 750. LawCom, “Reforms to UK’s antiquated spying laws published by law commission”, (1 September 2020, Law Commission), accessed 21 April 2022. Bradley Limpert & Oxiana Iatsyk, Technology Contracting: Law, Precedents and Commentary, (2005), Carswell. Cheong May Fong & Lee Yin Harn, Civil Remedies, (Second Edition 2016, Sweet & Maxwell)  
30 October 2024

Mandatory Merger Notification on the Cards

Merger notifications in Malaysia are still nascent and limited to the aviation services sector regulated by the Malaysian Aviation Commission(“MAVCOM”) and communications and multimedia sector regulated by the Malaysian Communications and Multimedia Commission (“MCMC”). In fact, the country witnessed the first-ever competition-related merger decision in September 2021 via MAVCOM’s approval of Korean Air Lines Co, Ltd. and Asiana Airlines, Inc.’s merger and the market is now awaiting the decision of the MCMC on the proposed merger of the telco operation of Celcom Axiata Berhad and Digi.Com Berhad. Nevertheless, the incorporation of a merger control regime in the Competition Act 2010 (“CA 2010”) is on the horizon and expected to be completed by this year. Merger Control Regime Under CA 2010 Merger control provision was initially mooted during the formation of the CA 2010. However, it was later removed in the interest of capital market development in Malaysia and to encourage mergers and acquisitions (“M&A”) in order to strengthen the domestic economy and promote corporate competition globally. After almost 10 years in force, Malaysia Competition Commission (“MyCC”) noted the need to directly regulate M&A in addition to its existing power of monitoring anti-competitive behaviour and abuse of dominant position post-M&A. It has initiated the process of amending the CA 2010 in 2019. The merger control regime is reported to be in the form of a mandatory pre-closing merger notification requiring clearance from MyCC. Nonetheless, it remains to be seen what kind of merger notification and its mechanics that will be finally adopted by MyCC. Given the cross-sectoral ambit of the CA 2010, MyCC should carefully determine items such as qualitative and/or quantitative threshold of the parties or group involved, filings in cases of multiple transactions, applicable exemptions and sanctions so that changes in the market structure can be regulated without inhibiting M&A activities in Malaysia.   Aviation Services and Communications and Multimedia Sectors In both sectors, merger notification is a voluntary process. This means that the M&A parties are required to self-assess their transaction based on the threshold set and if their transaction may result in a substantial lessening of competition within their markets, they should submit a notification of their transaction to their authority for assessment and decision. For the aviation services sector, the notification mechanism is set out in the Malaysian Aviation Commission Act 2015 (“MAVA 2015”) and the Guidelines on Substantive Assessment of Mergers, Guidelines on Notification and Application Procedure for an Anticipated Merger or a Merger and Notification and Application Form for an Anticipated Merger or a Merger issued by MAVCOM. On the other hand, for the communications and multimedia sector, the notification mechanism is stipulated in the Guidelines on Mergers and Acquisitions issued by MCMC in 2019. One thing to note is that while the M&A parties retain the option to notify their regulator and may technically proceed with the deal without the regulator’s decision, they bear the risk of being investigated post-M&A if the transaction raises any competition concerns. M&A are likely to be investigated by MAVCOM if: the combined turnover of the parties in Malaysia in the financial year preceding the transaction is at least RM50 million or the combined worldwide turnover of the parties in the financial year preceding the transaction is at least RM500 million; or if the turnover thresholds are not met, the transaction has resulted or may be expected to result in substantially lessening of competition in any aviation services market. As for MCMC, M&A are likely to be investigated if: for proposed M&A, at least one of the parties to the M&A is a licensee in a dominant position; for completed M&A, the merged or acquired entity is a licensee in a dominant position; for horizontal proposed M&A, the M&A would result in the merged or acquired entity obtaining a dominant position with a market share of 40% or more post-M&A; at least one of the parties to the M&A is subject to an ongoing investigation by the MCMC in respect of any conduct prohibited under the Communications and Multimedia Act 1998 (“CMA 1998”); there is significant cross shareholding between the parties to the M&A of 40% or more; or the M&A have the purpose of or have or may have the effect of substantially lessening competition in the market. Conclusion With the upcoming amendments to the CA 2010, merger notification in Malaysia will no longer be limited to the two sectors. It will be extended to all M&A in Malaysia apart from those regulated under the MAVA 2015, CMA 1998, Energy Commission Act 2001 and Petroleum Development Act 1974 and Petroleum Regulations 1974 (upstream operations). In the aviation services and communications and multimedia sectors, as a general principle, merger notification should be made if the M&A may result in substantial lessening of competition within their markets. Once the new merger control regime is enforced under the CA 2010, it would not be far-fetched to say that a similar principle would also be applicable to those under the CA 2010. Parties to the M&A are advised to seek professional help to be cognisant of the upcoming changes to the law and structure their deal and contractual provisions accordingly. Author: Nur Sajati Asan Mohamed
30 October 2024
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