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Company Law

COMPANIES ACT – OPPRESSION – DRAWING THE LINE: FEDERAL COURT DEFINES OPPRESSION VS. CORPORATE HARMS

In a decisive ruling, the Federal Court clarified the boundaries between personal shareholder oppression and corporate harm, overturning the Court of Appeal’s findings. The Court held that claims tied to the wrongful transfer of trademarks belonged to the company, not the individual shareholder, reaffirming that corporate harm must be addressed through a derivative action rather than an oppression claim.

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Company Law

COMPANIES LAW – WHEN DIRECTORS BETRAY: COURT CONDEMNS BREACH OF TRUST AND CORPORATE MISCONDUCT

In a stark reminder of the consequences of corporate betrayal, the court found that the directors had systematically dismantled their own company to benefit a competing entity they controlled. By breaching their fiduciary duties, conspiring to harm the business, and unjustly enriching themselves, the defendants were held accountable through significant compensatory and exemplary damages, reaffirming the critical importance of trust and integrity in corporate governance.

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Updates

JURISDICTION – CHOOSING THE RIGHT COURT: THE SEA JUSTICE CASE HIGHLIGHTS WHERE MARITIME DISPUTES SHOULD BE HEARD

In The Sea Justice cases [2024] 2 Lloyd’s Rep 383 and [2024] 2 Lloyd’s Rep 429, the Singapore courts tackled a key question: which country should handle a maritime dispute when incidents span international waters? After examining the location of the collision, existing limitation funds in China, and witness availability, the courts concluded that China was the more appropriate forum. This ruling highlights that courts will often defer to the jurisdiction with the closest ties to the incident, ensuring efficient and fair handling of cross-border maritime disputes. This approach is also relevant in Malaysia, where similar principles apply.

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Updates

BREACH OF CONTRACT – FORCE MAJEURE – FORCE MAJEURE UNPACKED: WHEN ‘REASONABLE ENDEAVOURS’ DON’T BEND CONTRACT TERMS

The UK Supreme Court clarified the limits of force majeure clauses, ruling that “reasonable endeavours” do not require a party to accept alternative performance outside the agreed contract terms. This decision emphasizes that force majeure clauses are meant to uphold, not alter, original obligations – even in unexpected circumstances. The case serves as a reminder for businesses to define alternative options explicitly within their contracts if flexibility is desired.

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Updates

NEGLIGENCE – MEDICAL NEGLIGENCE – HOSPITAL ACCOUNTABILITY REINFORCED: COURT UPHOLDS NON-DELEGABLE DUTY IN MEDICAL NEGLIGENCE

In a landmark ruling, the court reinforced the hospital’s non-delegable duty of care, holding that even when services are outsourced to independent contractors, the hospital remains accountable for patient welfare. This decision emphasizes that vulnerable patients, reliant on medical institutions, must be safeguarded against harm caused by third-party providers. The ruling ultimately rejected the hospital’s defense of independence for contracted consultants, underscoring a high standard of duty owed to patients.

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Contract Law

CONTRACTS – CONTRACT FOR THE SALE OF GOODS FOB – REMOTENESS OF DAMAGES IN BACK-TO-BACK CONTRACTS – COURT DEFINES LIMITS ON LIABILITY

In a complex dispute involving back-to-back contracts, the court clarified the boundaries for assessing damages, emphasizing that a chain of contracts does not automatically ensure liability passes through. Although substantial losses resulted from delays and disruption, the court highlighted the importance of the remoteness of damages, noting that each contract’s unique terms ultimately limited liability. This decision emphasise the need for parties in chain contracts to carefully define indemnity and liability provisions, as damages are assessed based on foreseeability rather than simply the structure of linked agreements.

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Tort

TORT – BREAKING CONFIDENTIALITY – COURT CRACKS DOWN ON INSIDER LEAKS AND CORPORATE CONSPIRACY

In a recent ruling on corporate confidentiality, the court held two former employees liable for disclosing sensitive business information to a competitor, deeming it a breach of both employment contracts and fiduciary duties. This case highlights the serious consequences of unauthorized sharing of proprietary data and reinforces that such disclosures can lead to substantial legal and financial repercussions, even for the receiving parties if they knowingly benefit from confidential information.

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Family Law

FAMILY LAW – CHILDREN’S CUSTODY – CUSTODY DISPUTES IN MALAYSIA: ESSENTIAL INSIGHTS ON CHILD WELFARE AND PARENTAL ROLES

In a recent custody dispute, the court emphasized the importance of child welfare, reaffirming the maternal custody presumption for young children unless strong evidence suggests otherwise. In high-conflict situations, the court favored sole custody over joint arrangements to minimize stress on the children. This case underscores that Malaysian parents should provide credible evidence for their claims and focus on practical, child-centered solutions.

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Admiralty

CHARTERPARTY AGREEMENTS – CHARTERER’S GUIDE TO FOULING CLAUSES

In maritime charterparty agreements, fouling clauses outline who is responsible for the costs and time associated with hull cleaning when marine organisms accumulate due to specific operating conditions. These clauses are crucial for clarifying liabilities, particularly when charterers operate in warm, bio-rich waters or leave vessels idle, as fouling can significantly impact performance and fuel efficiency. Understanding the scope of a fouling clause helps charterers navigate potential costs and ensure clear terms for post-redelivery responsibilities, as highlighted in cases like The “Globe Danae” [2024] 1 Lloyd’s Rep. 309.

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Recent Legal Updates

NAVIGATION AND SHIPPING LAW – COLLISION REGULATIONS – COLLISION AT SEA – A WAKE-UP CALL FOR ADHERING TO NAVIGATION RULES

The collision between the FMG Sydney and MSC Apollo highlights the critical importance of adhering to established navigation rules. Deviations, delayed actions, and reliance on radio communications instead of clear, early maneuvers can lead to disastrous outcomes. This case serves as a stark reminder for mariners: follow the rules, act decisively, and prioritize safety above assumptions.

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SHIPPING AND ADMIRALTY IN REM – A SINKING ASSET – COURT ORDERS SALE OF ARRESTED VESSEL TO PRESERVE CLAIM SECURITY

In a landmark admiralty decision, the High Court ordered the pendente lite sale of the arrested vessel Shi Pu 1, emphasizing the principle of preserving claim security over the defendant’s financial incapacity. The court ruled that the vessel, deemed a “wasting asset,” could not remain under arrest indefinitely without proper maintenance or security. This case reinforces the necessity for shipowners to manage arrested assets proactively to prevent significant financial and legal repercussions.

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EMPLOYMENT LAW – IS DIRECTOR A DIRECTOR OR EMPLOYEE? UNPACKING DUAL ROLES IN EMPLOYMENT LAW

The Court of Appeal clarified the dual roles of directors as both shareholders and employees, affirming that executive directors can qualify as “workmen” under the Industrial Relations Act 1967. The decision emphasizes that removal as a director does not equate to lawful dismissal as an employee unless due process is followed. This case highlights the importance of distinguishing shareholder rights from employment protections, ensuring companies navigate such disputes with clarity and fairness.

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COMMERCIAL CONTRACT – FORCE MAJEURE OR JUST EXCUSES? LESSONS FROM LITASCO V DER MOND OIL [2024] 2 LLOYD’S REP 593

The recent decision in Litasco SA v Der Mond Oil and Gas Africa SA [2024] 2 Lloyd’s Rep 593 highlights the strict thresholds required to invoke defences such as force majeure and trade sanctions in commercial disputes. The English Commercial Court dismissed claims of misrepresentation and found that banking restrictions and sanctions did not excuse payment obligations under the crude oil contract. This judgment reinforces the importance of precise contractual drafting and credible evidence in defending against payment claims, serving as a cautionary tale for businesses navigating international trade and legal obligations.

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SHIPPING – LETTER OF CREDIT – LESSONS FROM UNICREDIT’S FRAUD CLAIM AGAINST GLENCORE

The Singapore Court of Appeal’s decision in Unicredit Bank AG v Glencore Singapore Pte Ltd [2024] 2 Lloyd’s Rep 624 reaffirms the principle of autonomy in letters of credit and highlights the high evidentiary threshold for invoking the fraud exception. Unicredit’s claim of deceit was dismissed as the court found no evidence of false representations by Glencore, emphasizing that banks deal with documents, not underlying transactions. This case serves as a critical reminder for international trade practitioners to prioritize clear documentation and robust due diligence to mitigate risks in financial transactions.

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LAND LAW – PROPERTY SOLD TWICE: OWNERSHIP NOT TRANSFERRED IN FIRST SALE

This legal update examines the Court of Appeal’s decision in Malayan Banking Bhd v Mohd Affandi bin Ahmad & Anor [2024] 1 MLJ 1, which reaffirmed the binding nature of valid Sale and Purchase Agreements (SPAs) and the establishment of constructive trust. The court dismissed claims of deferred indefeasibility by subsequent purchasers and a chargee bank, emphasizing the critical importance of due diligence in property transactions. The decision serves as a cautionary tale for financial institutions and vendors, reinforcing the need for meticulous compliance with legal and equitable obligations.

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