{"id":6870,"date":"2020-02-24T12:21:01","date_gmt":"2020-02-24T04:21:01","guid":{"rendered":"http:\/\/alexchanglaw.com\/?p=6870"},"modified":"2020-07-21T11:08:26","modified_gmt":"2020-07-21T03:08:26","slug":"why-litigate-in-malaysia","status":"publish","type":"post","link":"https:\/\/alexchanglaw.com\/index.php\/why-litigate-in-malaysia\/","title":{"rendered":"Why litigate in Malaysia"},"content":{"rendered":"\n

Why litigate in Malaysia?<\/strong><\/p>\n\n\n\n

\u4e2d\u6587\u7248<\/a><\/p>\n\n\n\n

\u201cIf\nI do not pay up, what can you do? Sue me?\u201d Unfortunately, the reality in\nMalaysia is that practically, the only way to deal with a defaulting debtor is\nto take legal action against the debtor.<\/p>\n\n\n\n

Debt\nis a major issue for both the debtor and creditor and this is no exception in\nMalaysia. In Malaysia, it is a major hurdle to collect debts and this essay\nshall demonstrate that litigation is the most effective way to enforce debts\nagainst the debtor.<\/p>\n\n\n\n

The\nculture of debt repayment in Malaysia<\/p>\n\n\n\n

As highlighted by a research conducted by Euler\nHermes, Malaysia was amongst the worst 3 countries in the world to collect debt\nin. Further in their research, problems in debt collection were greatly\nattributed to, inter alia, poor payment culture (78% of countries).<\/p>\n\n\n\n

            This can be further evidenced from\nthe sheer number of cases litigated in Malaysia. Statistics from the courts\nindicate that there have been over 100,000 cases undergoing litigation in just\nFebruary 2019 alone.[1]<\/sup><\/a> Although\nnot all cases may be cases on debt collection, an inference can be reasonably\ndrawn from the statistics that in Malaysia, there is a strong need to settle\ndisputes through legal means.<\/p>\n\n\n\n

Debtor\ncannot be located<\/p>\n\n\n\n

In a situation where the debtor cannot be located, the\ncreditor may experience difficulty enforcing his debts against the debtor. Such\na problem may be amply dealt with through litigation. As long as the Letter of\nDemand, Writ and Statement of Claim has been validly served, the creditor may\nenter a judgment in default in the event that appearance is not entered by the\ndefendant.<\/p>\n\n\n\n

Effectiveness\nof a judgement<\/p>\n\n\n\n

            Furthermore, once a judgement is\nobtained by the creditor, another advantage of litigation is that there are a\nlarge amount of methods available at the creditors disposal to enforce the\njudgement.<\/p>\n\n\n\n

            The most effective method of\nenforcement is through a writ of seizure and sale (WSS). A WSS is, in essence,\na court order commanding the Sheriff or Bailiff to seize and sell the property\nof the Judgement Debtor within Malaysia as may be sufficient to satisfy the\namount of the judgement debt, interest and cost of execution. Such sale is\nusually conducted by public auction, generally 14 days after seizure.<\/p>\n\n\n\n

Other methods of enforcement include judgement debtor\nsummons, garnishee proceedings, order of committal for contempt of court,\ncompanies winding-up etc.<\/p>\n\n\n\n

Through an order of committal for contempt of court, a\ndebtor may even be sentenced to imprisonment[2]<\/sup><\/a>!<\/p>\n\n\n\n

            Where the judgement sum exceeds\nRM50,000, bankruptcy proceedings may be made against the debtor. This is by far\nthe most threatening form of debt collection. The large reason behind this is\nthat when faced with the threat of potential bankruptcy, majority of debtors\nwould choose to obediently repay their debts. <\/p>\n\n\n\n

However, it should be noted that this method is an\nextreme method, and on the other hand, not necessarily the best method of debt\ncollection. This is because when a debtor is declared bankrupt, his\/her assets\nwill be distributed amongst his\/her other creditors, which priority is\ndetermined based on the facts (secured\/unsecured creditors etc). Hence, a\ncreditor may not necessarily be able to fully recover his\/her debt by declaring\na debtor bankrupt.<\/p>\n\n\n\n

Conclusion<\/p>\n\n\n\n

            In conclusion, due to the culture of\nMalaysians with regards to their debts, debt recovery is most effectively done\nthrough litigation. There are multiple tools available to the creditor once\njudgement is given in their favour and such tools are effective in compelling\nthe debtor to repay their debts.<\/p>\n\n\n\n

Bibliography<\/p>\n\n\n\n