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STATEMENT BY DR. NORADURA HAMZAH

DIRECTOR OF POLICY AND LEGISLATION DIVISION

OFFICE OF THE CHIEF REGISTRAR

FEDERAL COURT OF MALAYSIA

 

AT THE 66^TH SESSION OF THE WORKING GROUP V OF THE UNITED NATIONS COMMISSION ON INTERNATIONAL TRADE LAW (UNCITRAL): INSOLVENCY LAW

 

AGENDA ITEM:

APPLICABLE LAW IN INSOLVENCY PROCEEDINGS

 

15 MAY 2025

_________________________________________________________

 

Mr. Chair,

 

1.      Malaysia extends our warm congratulations to you on your re-election. We also wish to express our gratitude to the Secretariat for its comprehensive and thoughtful work. We look forward to continuing our constructive engagement under your capable leadership.

 

2.      As a starting note, Malaysia is making significant strides in this area. We are currently progressing toward finalizing our national policy and drafting legislation to adopt the UNCITRAL Model Law on Cross-Border Insolvency. This reflects our commitment to aligning with international best practices and enhancing our legal framework.

 

3.      On Chapter II, Malaysia acknowledges the importance of enhancing legal certainty, particularly by affirming the primacy of the lex fori concursus in governing the administration of insolvency proceedings. Concurrently, we wish to underscore the importance of clearly defining the scope of its application, particularly in cross-border contexts.

 

4.      For jurisdictions such as Malaysia—where legal certainty and creditor protection are of paramount importance—predictable carve-outs, such as those relating to immovable assets or certain rights in rem, are crucial to prevent unintended consequences or interference. We would greatly appreciate it if the commentary could further clarify the practical application of these safeguards, including how courts might assess ‘unexpected’ or ‘unjustified interference’ under paragraph 5.

 

5.      On Chapter III & Chapter II sub (D), Malaysia wishes to offer a brief commentary on the proposed mechanisms for recognising the effects of the lex fori concursus across borders. While we appreciate that this provision aims to enhance effective coordination, we kindly suggest that the Working Group could provide further clarity on the application of the public policy exception. Currently, the draft provides that the Court is obliged to reject the application of foreign law if it is manifestly contrary to the public policy of the Court’s State.

 

6.      In practice, this exception is often invoked broadly and may undermine the predictability that these legislative provisions seek to establish. A clearer articulation of the parameter to assist the court in invoking public policy would be beneficial for both domestic application and cross-border recognition.

 

7.      Malaysia acknowledge the central role that the lex fori concursus plays in ensuring the coherence and predictability of insolvency proceedings. At the same time, Malaysia also appreciate that the draft provisions in Chapter II outline specific exceptions that are necessary to preserve other vital legal interests.

 

8.      From our perspective in Malaysia, these exceptions hold significant importance in ensuring that domestic rules, particularly those designed to safeguard employees, secured creditors, and investors, are not overridden in ways that undermine national confidence or stability.

 

9.      Malaysia respectfully encourages the Working Group to provide further clarification on the thresholds and safeguards that govern the application of these exceptions. In particular, we seek more insight into the assessment of "substantial disadvantage" as outlined in the proposed paragraph 5, as well as the appropriate boundaries of the public policy exception.

 

I thank you.