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Malaysia Dismisses Application to Enforce Chinese Judgment Due to “Procedural Irregularities” in 2023

Thu, 25 Apr 2024
Categories: Insights
Contributors: Meng Yu 余萌
Editor: C. J. Observer



Key takeaways:

  • In March 2023, Malaysia's High Court in Kuala Lumpur dismissed an application to enforce a Chinese monetary judgment, citing procedural irregularities (Mah Sau Cheong v. Wee Len, OS No. WA-24NCvC-800-03/2022).
  • The case underscores the critical importance of presenting foreign judgments with proper documentation that adheres to Malaysian legal requirements, such as producing originals or certified copies.
  • It sheds light on the complexities involved in enforcing foreign judgments in Malaysia, particularly in jurisdictions like China that are not First Schedule countries under the Reciprocal Enforcement of Foreign Judgment Act 1958.

On 22 Mar. 2023, the High Court in Malaya at Kuala Lumpur, Malaysia (hereinafter “Malaysian Court”) dismissed the originating summons (OS) to enforce a Chinese monetary judgment, due to “procedural irregularities” (Mah Sau Cheong v. Wee Len, OS No. WA-24NCvC-800-03/2022). 

This Chinese judgment, (2019) Hu 02 Min Zhong No. 5918 ((2019) 沪02民终5918号, hereinafter “Shanghai Judgment”), was rendered by the Second Intermediate People’s Court of Shanghai, which affirmed the trial judgment (2018) Hu 0107 Min Chu No. 20019 ((2018) 沪0107民初20019号) from the Primary People’s Court of Pudong District, Shanghai. 

To our knowledge, this is the first case where a Chinese monetary judgment has been sought for enforcement in Malaysia. We thank the Asian Business Law Institute (ABLI) for posting a commentary on the case and sharing valuable information with us.

The case provides a window into whether and how a foreign judgment is enforceable in Malaysia, particularly through a common law action, as it applies to judgments from China and other foreign countries that are not First Schedule countries under the Reciprocal Enforcement of Foreign Judgment Act 1958 (“REJA”). 

It also shows the emphasis that Malaysian law places on the formality of proof of foreign judgments. In this case, it is non-compliance with formality (“procedural irregularities” in the eyes of the Malaysian court) that led to the dismissal of the OS.

I. Case Background

It is a loan dispute between the Plaintiff (judgment creditor), Mah Sau Cheong, and the Defendant (judgment debtor), Wee Len, both of whom were Malaysians and resided in Kuala Lumpur. The Defendant was an employee of the Plaintiff at the material time.

When the dispute arose over the two loan agreements, the Plaintiff brought a lawsuit against the Defendant in the Primary People’s Court of Pudong District, Shanghai. The trial court found the loan was valid and the two agreements were evidence of the CNY 14,000,000 loan made by the Plaintiff to the Defendant. 

On 27 Mar. 2019, the Chinese trial court ruled in favor of the Plaintiff, ordering the Defendant to pay the said amount and the outstanding interest to the Plaintiff within ten days from the date of judgment. Dissatisfied, the Defendant lodged an appeal.

On 30 Nov. 2020, the Second Intermediate People’s Court of Shanghai, as the appellate court, dismissed the Defendant’s appeal and upheld the trial court’s judgment. The Defendant was ordered to repay the loan granted by the Plaintiff in the sum of CNY 14,000,000 with interest and case acceptance fees of CNY 110,840 for each court respectively.

As the Defendant had failed and/or refused to comply with the Shanghai Judgment, the Plaintiff applied to the Malaysian Court for enforcement of the Shanghai Judgment in Malaysia.

II. Court Views

2.1 Assessment under the Malaysian Common Law

In assessing the Plaintiff’s application, the Malaysian Court noted that since China was not listed in the First Schedule of REJA, the question of whether the Shanghai Judgment could be enforced shall be assessed under common law.

Upon review, the Malaysian Court found that: 

a) The Shanghai Judgment was definite and final.

b) The Shanghai Judgment was issued by a court of competent jurisdiction recognized under the Malaysian common law, as both parties had contractually agreed to submit to the jurisdiction of the court in Pudong District, Shanghai, and to have their contract governed by the laws of China. 

c) The Shanghai Judgment was not contrary to public policy, as all three grounds the Defendant relied on, such as the alleged prejudice in presenting his defenses due to the procedural differences between the inquisitorial system used in China and the inquisitorial system applied in Malaysia, were simply unsustainable.

d) The Shanghai Judgment was not obtained by fraud. 

e) The proceedings in which the Shanghai Judgment was obtained were not opposed to natural justice, as the Defendant had a fair opportunity to present its case before Shanghai courts.

Consequently, the Malaysian Court opined that the Defendant “had not managed to raise any defenses” under Malaysian law.

2.2 Proof of Shanghai Judgment

Under the Malaysia Evidence Act 1950 (EA), for Shanghai Judgment to be admitted into evidence and used by the Malaysia court, s78 EA or s86 EA must be fulfilled. 

To be more specific, either an original of the judgment must be produced or, if the copy was relied upon, then the copy must be certified in accordance with s78(1)(f) EA. Alternatively, the judgment is admissible if the requirements of s86 EA are satisfied.

In this case, only copies of the Shanghai Judgment, together with its translations, were produced and such copies did not comply with either s78(1)(f) or s86 EA. Such copies were therefore inadmissible as evidence of the Shanghai Judgment.

Interestingly, the Malaysia Court did not allow the Plaintiff’s application for leave to admit further affidavit that attached to it the original Shanghai Judgments, as the court considered that allowing the introduction of new evidence like the original Shanghai Judgment at that stage would allow the Plaintiff to steal the march from the defendant.

As a result, in the absence of the Shanghai Judgment, the Plaintiff’s application for enforcement of the Shanghai Judgment was dismissed.

III. Comments

A “lesson learned” from this case was that the importance of the formality of applications cannot be overemphasized. With regard to the proof of foreign judgments in Malaysia, either the original foreign judgments or the copies that comply with the relevant provisions of the EA must be produced. A simple copy with translation is not admissible as evidence in Malaysian courts.

Similar cases can be found in China. 

For instance, a Chinese local court in Chenzhou, Hunan Province, dismissed the application for enforcing a Myanmar monetary judgment, on the ground that the applicants failed to submit the original or a certified copy of the judgment (see Tan Junping et al v. Liu Zuosheng et al, ((2020) Xiang 10 Xie Wai Ren No.1). 

Another example is Chen v. China Metallurgical Chenggong Construction Co. Ltd. (2018) Chuan 01 Xie Wai Ren No.3),  a case where an application for enforcement of a UAE monetary judgment was dismissed by a local court in Chengdu, Sichuan Province, due to translation errors in the Chinese version of the application.

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It is also worth noting that the “dismissal” of an application is not the same as the “denial” of recognition and/or enforcement. 

At least in the Chinese legal context, if the foreign judgment does not meet the preconditions for recognition and enforcement, the Chinese court will render a ruling to dismiss the application, and such dismissal is equivalent to a dismissal without prejudice, meaning judgment creditors can still file a lawsuit before a Chinese court or re-apply after all preconditions are met. By contrast, if any of the refusal grounds are found to exist, the Chinese court will render a ruling against recognition and enforcement, and such a ruling of refusal is equivalent to a dismissal with prejudice. Under China's newly amended Civil Procedure Law, such a decision is not subject to appeal but is subject to review.

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Photo by Hongwei FAN on Unsplash

Contributors: Meng Yu 余萌

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