Legal Environment

flag Malaysia Malaysia: Legal Environment

In this page: Business Contract | Intellectual Property | Legal Framework of Business | International Dispute Resolution


Business Contract

General Observation
Called "Contract of Service" or "Contract of employment", the contract is deemed to exist as soon as the employee starts to work. The signature is only a formality, but any contract of at least one month's duration must be written. The trial period varies between 1 and 6 months for non-managerial staff. Only legal measures govern the work contract. In large national companies and in large trade associations there are collective agreements. The form of the work contract is inalienable, hiring conditions rather rigid and the constraints of dismissal flexible.
Law Applicable to the Contract
Civil Law Act 1956, Contract Acts 1950 (and amendments).
Advisable Incoterms
Language of Domestic Contract
Malay (and/or English)
Other Laws Which Can Be Used in Domestic Contracts
Malaysia is a signatory to the Vienna Convention on contracts, so the CISG can replace national law when there is international trade in goods between States which have ratified the Convention.

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Intellectual Property

National Organisations
Inside the Ministry of Trade and Consumption (Ministry of Domestic Trade, Cooperatives and Consumerism) the Enforcement Division deals with problems of counterfeiting and pirating.

The central organisation in charge of the protection and promotion of intellectual property rights is the Intellectual Property Corporation of Malaysia (MyIPO).

In order to register a trademark, it is necessary to seek its registration from the Registrar of Trade Marks and to indicate a user of the brand in the country. As soon as the trademark is registered, it becomes protected and its use is continuous.

Regional Organisations
Malaysia is a signatory to the ASEAN framework agreement on cooperation regarding intellectual property.
International Membership
Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention For the Protection of Intellectual Property
Membership to the TRIPS agreement - Trade-Related Aspects of Intellectual Property Rights (TRIPS)

National Regulation and International Agreements

Type of property and law Validity International Agreements Signed
Law on Patents 1983 (amended 1993)
20 years Patent Cooperation Treaty (PCT)
Law on Trademarks 1976 (amended 1994 and completed 1997)
Standards and regulations for trademarks 1983
10 years renewable without limit
Law on designs and industrial models 1996
5 years renewable twice  
Law on copyright 1987
Either up to 50 years after the author's death or 50 years after the first publication or the creation of the work Berne convention For the Protection of Literary and Artistic Works
Industrial Models
Law on designs and industrial models 1996
5 years renewable twice  

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Legal Framework of Business

Equity of Judgments

Equal Treatment of Nationals and Foreigners
Not guaranteed.
The Language of Justice
The judicial language used in the country is Bahasa Malaysia.
Recourse to an Interpreter
Having an interpreter is possible.
Legal Similarities
The main source of the law in Malaysia is the constitution of 1957 (amended in 1963). The country's legal system is based on English common law and the judicial review of legislative acts in the Supreme Court. Islamic law is applied to Muslims in family matters. Each state in Malaysia has its own constitution which sometimes results in variations of law from state to state. Malaysia has not accepted compulsory ICJ jurisdiction.

The Different Legal Codes

Penal Code Penal law
National Property Code Property law
Islamic Family Code Islamic law governing cases relative to Muslims
Islamic Penal Code (Sharia) Islamic law governing cases relative to Muslims
Civil Code Civil law
Checking National Laws Online
Attorney General's Chambers
Other Useful Resources
CLJ Law, Law Database of Malaysia.
Lawyerment, Malaysian online laws.
Country Guides
Guide to Law online, from the Library of Congress

The Jurisdictions

Federal Court The Federal Court is the highest national authority
Court of Appeal The Court of Appeal receives appeals concerning the decisions made by the High Court, including criminal cases.
High Courts There are two High Courts in charge of all civil and criminal cases (non Islamic)
Sessions Courts Criminal cases not punishable by death, car accidents
Magistrates' Courts Civil cases under MYR 25,000
Syariah Courts Cases relative to Muslims (marriage, inheritance...)
Penghulu Courts, Native Courts Village cases affecting the Asian and Malay speaking population, customary law
Courts for Children Children's tribunal
Special Court Cases involving the rulers, including the King

Court Officials

Attorney General
Chief justice of Malaysia, President of the Federal Court, President of the Court of Appeal
Notary (tetuan)
Village headman

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International Dispute Resolution

Arbitration has become the main instrument of conflict resolution. The only, if constraining, alternative to often long and costly legal procedures, arbitration has the advantage of being confidential, neutral and flexible.
Arbitration Law
Legislation concerning arbitration has been modernized recently, and it is the Arbitration Act  2005 which applies presently.
Conformity to International Commercial Arbitration Rules
Party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
Appointment of Arbitrators
The parties are free to choose the number of arbitrators and the way they are selected. If they do not agree, two arbitrators are designated if it is a local arbitration, and three arbitrators for an international arbitration. If there is no agreement, each party chooses an arbitrator and the two arbitrators designate a third arbitrator who presides. If there is disagreement, recourse must be had to the director of the Kuala Lumpur Regional Centre for Arbitration. In a case where only one arbitrator is planned and if there is no agreement, recourse must also be had to the Kuala Lumpur Regional Center for Arbitration. In the case of default by the latter, recourse must be had to the High Court.
Arbitration Procedure
The parties are free to determine the procedure to be followed by the arbitration tribunal. If there is no agreement, the arbitration tribunal sets its own procedures and thus decides if the request for arbitration is admissible, the deadlines to be observed for producing documents and evidence, the dates of hearings, etc. The choice of the language used is left to the parties, and if there is no agreement, to the arbitration tribunal. Within a period of time decided by the parties, or if not by the arbitration tribunal, the plaintiff must state the facts supporting his complaint, the object of the dispute, the solution or compensation suggested, and the defendant must formulate his defense. The parties must base their declaration on any document judged to be pertinent, or refer to it. Unless there is prior agreement between the parties, the tribunal decides if an oral hearing is appropriate, to be added to the examination of the written documents provided. The tribunal can appoint an expert, and the parties can, with the agreement of the tribunal, have recourse to the High Court to provide evidence. The law applicable is that of Malaysia for a local case, or that of the State chosen by the parties in the case of international arbitration. The procedure terminates when the tribunal prounounces its judgement, or when the plaintiff withdraws his complaint, the parties agree to terminate the procedure, or the tribunal decides to terminate the procedure. The judgement pronounced is definitive and binding.
Permanent Arbitration Bodies
Kuala Lumpur regional centre for arbitration (AIAC)
International centre for settlement of investment disputes (ICSID)

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Latest Update: July 2024