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UPDATE TO THE COVID ACT

By:

Harneshpal Karamjit Singh (Co-Managing Partner) [harnesh@luibhullar.com]


Bryan Lui (Co-Managing Partner) [bryanlui@luibhullar.com]



By the powers conferred to the Minister under Sections 5(2) and 8 of the Temporary Measures For Reducing The Impact Of Coronavirus Disease 2019 (COVID-19) Act 2020 (“COVID Act”), the following orders were made and published in the Gazette on 29.12.2020:

(1) Temporary Measures For Reducing The Impact Of Coronavirus Disease 2019 (COVID-19) (Extension Of Operation) Order 2020 (“EO Order 2020”); and


(2) Temporary Measures For Reducing The Impact Of Coronavirus Disease 2019 (COVID-19) (Amendment Of Schedule) Order 2020 (“AS Order 2020”).


EO Order 2020

Section 2 of the EO Order 2020 extends Part II of the COVID Act to 31.03.2021. Initially under Section 5(1) of the COVID Act, Part II was only to remain in operation from 18.03.2020 until 31.12.2020.


Part II of the COVID Act covered Inability to Perform Contractual Obligation. It covers Sections 5 to 10 and the Schedule of the COVID Act.


Section 7 of the COVID Act states “the inability of any party or parties to perform any contractual obligation arising from any of the categories of contracts specified in the Schedule to this Part due to the measures prescribed, made or taken under the Prevention and Control of Infectious Diseases Act 1988 [Act 342] to control or prevent the spread of COVID-19 shall not give rise to the other party or parties exercising his or their rights under the contract.


Section 9(1) of the COVID Act states “any dispute in respect of any inability of any party or parties to perform any contractual obligation arising from any of the categories of contracts specified in the Schedule to this Part due to the measures prescribed, made or taken under the Prevention and Control of Infectious Diseases Act 1988 to control or prevent the spread of COVID-19 may be settled by way of mediation.


Section 10 of the COVID Act states “notwithstanding section 7, any contract terminated, any deposit or performance bond forfeited, any damages received, any legal proceedings, arbitration or mediation commenced, any judgment or award granted and any execution carried out for the period from 18 March 2020 until the date of publication of this Act shall be deemed to have been validly terminated, forfeited, received, commenced, granted or carried out.


AS Order 2020

Section 2 of the AS Order 2020 amends the Schedule of the COVID Act by introducing two new categories of contracts.


The two new categories of contracts are as follows:

(a) Hire purchase agreements under the Hire-Purchase Act 1967 or leasing contracts entered by micro enterprises, B40 or M40 class of persons as specified in the Inland Revenue Board of Malaysia for motor vehicles, goods or public service vehicles and tourism vehicles; and


(b) Credit Sales Contract under the Consumer Protection Act 1999.


Initially, the Schedule of the COVID Act listed seven categories of contracts as follows:

(i) Construction work contract or construction consultancy contract and any other contract related to the supply of construction material, equipment or workers in connection with a construction contract;


(ii) Performance bond or equivalent that is granted pursuant to a construction contract or supply contract;


(iii) Professional services contract;


(iv) Lease or tenancy of non-residential immovable property;


(v) Event contract for the provision of any venue, accommodation, amenity, transport, entertainment, catering or other goods or services including, for any business meeting, incentive travel, conference, exhibition, sales event, concert, show, wedding, party or other social gathering or sporting event, for the participants, attendees, guests, patrons or spectators of such gathering or event;


(vi) Contract by a tourism enterprise as defined under the Tourism Industry Act 1992 and a contract for the promotion of tourism in Malaysia; and


(vii) Religious pilgrimage-related contract.


Ultimately, the EO Order 2020 and AS Order 2020 offers continued protection until 31.03.2021 to the inability of any party to perform any contractual obligation for nine categories of contracts as specified in the Schedule of the COVID Act.


Image by Daniel Roberts from Pixabay

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