The Court of Appeal recently made an interesting decision in the case of KNM Process Systems Sdn Bhd v Ceca Gold Company Ltd & Ors [2023] 1 MLJ 814 CA. It marks the first reported success in applying the Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (Covid-19) Act 2020 (“Covid-19 Act 2020 (MY)”) to a contract subject to Singaporean law.

The case centered around an EPC contract located in Myanmar, with fabrication work carried out in Malaysia. The contract was subject to arbitration and Singaporean law. Due to alleged non-performance, Ceca called upon KNM’s performance bond. KNM sought to restrain the call, but the High Court Judge rejected their application, citing no prohibition under Singaporean law against the call on the bond.

The Covid-19 Acts
The High Court Judge considered the Singaporean Covid-19 (Temporary Measures) Act 2020 (“Covid-19 Act 2020 (SG)“) and found no blanket prohibition against the call of performance bonds for construction contracts due to the pandemic, unlike the Covid-19 Act 2020 (MY).

The Court of Appeal’s decision
However, the Court of Appeal considered and applied the Covid-19 Act 2020 (MY) since a major part of the fabrication work was in Malaysia. In paragraph 50 of the decision, the Court noted that the laws of a particular country not mentioned in a contract could still apply based on the justice and facts of the case. Hence, despite the contract stipulating Singaporean law to be applicable, the Court of Appeal chose to apply the Malaysian Covid-19 Act 2020 due to the facts of the case (i.e. fabrication being carried out in Malaysia) and the justice of the case.

Key Takeaway
This decision serves as a reminder that one cannot contract out the applicability of the laws of any country, including Malaysia, entirely.

In conclusion, this case demonstrates how the Covid-19 Act 2020 (MY) can impact cross-border contracts and the importance of considering all relevant laws, regardless of what is stipulated in the contract.

Author information:
Chan Kheng Hoe ([email protected])

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