Chapter 18

MALAYSIA
Chong Kok Seng and Chew Phye Keat1

I INTRODUCTION
The main legislation in relation to civil aviation in Malaysia is the Civil Aviation Act
1969 (the CAA 1969) and the subsidiary legislation made thereunder (i.e., the Civil
Aviation Regulations 1996 (the CAR1996).
Civil aviation is under the purview of the Ministry of Transport, Malaysia. The
Aviation Division2 of the Ministry is responsible for all civil aviation affairs in Malaysia,
such as the planning and reviewing of the policies relating to air services from time to
time. The objectives of the Division are to develop an efficient, economical and safe air
transport system for passengers and cargo, and to plan and implement infrastructural
projects to meet the demands of airtransport.
In this regard, to help achieve and administer the objects and policies of the
Ministry, the Department of Civil Aviation (DCA) was established by the Ministry. As
the primary regulator of civil aviation in Malaysia, the Director General of the DCA
(DGCA) is empowered by Section 2 of the CAA 1969to:
a
exercise regulatory functions in respect of civil aviation and airport and aviation
services including the establishment of standards and theirenforcement;
b
represent the government of Malaysia in respect of civil aviation matters and to
do all things necessary for thispurpose;
c
ensure the safe and orderly growth of civil aviation throughoutMalaysia;
d
encourage the development of airways and airport and air navigation facilities for
civilaviation;
e
promote the provision of efficient airport and aviation services by licensees;and

1
2

Chong Kok Seng is apartner and Chew Phye Keat is asenior partner at Raja, Darryl &Loh.
The Aviation Division is made up of five units: Air Transport, Airport Services, Aerospace and
Industrial Hubbing, Licensing and Rural Air Services, and Safety/Security andConvention.

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f

promote the interests of users of airport and aviation services in Malaysia in

respect of the prices charged for, and the quality and variety of, services provided
bylicensees.

Under the CAA 1969, certain activities require licensing. Applications for licences
(other than alicence for the operation of airport services) are processed by the DCA and
approved by theDGCA.
There is no express restriction under Malaysian laws in relation to investments
in or the setting up of aircraft operators, airport operators, public air transportation
providers, aircraft maintenance companies and the like. Nonetheless, because their
activities require licences that are granted at the discretion of the DGCA, the DGCA
effectively controls investments inlicensees.
Similarly, in relation to aircraft operators, while there is no express provision as
to its ownership structure under Malaysian law, for an airline to enjoy the traffic rights
and privileges agreed by the government of Malaysia with another member state of the
Chicago Convention (as defined below), it must be substantially owned and effectively
controlled by the party designated by Malaysia or itsnationals.
On 7April 1958 Malaysia ratified the Convention on International Civil Aviation
1944 (the Chicago Convention) and became aparty to the International Air Services
Transit Agreement in relation to transit and traffic rights from 31May1945.
With respect to interests in aircraft equipment, Malaysia has acceded to
the Convention on International Interests in Mobile Equipment (the Cape Town
Convention) and the Protocol to the Convention on International Interests in Mobile
Equipment on Matters Specific to Aircraft Equipment in2005.
With regard to labour and employment issues in the aviation sector, there are no
specific provisions addressing these under the CAA 1969; hence the general labour law
will beapplicable.
II

LEGAL FRAMEWORK FOR LIABILITY

International carriage

Malaysia has ratified four conventions in relation to the international carriage of

passengers, baggage and cargo byair:
a
the Warsaw Convention 1929, as amended at The Hague 1955 (WarsawHague
Convention), which is given the force of law by virtue of the First Schedule to the
Carriage by Air Act 1974 (the CAA1974);
b
the WarsawHague Convention further amended by Montreal Protocol No.4,
which is given force of law by virtue of the Fifth Schedule to the CAA 1974 (the
AmendedConvention);
c
the Guadalajara Convention 1961, which is given the force of law by virtue of the
Second Schedule to the CAA 1974 (the Supplementary Convention);and
d
the Montreal Convention 1999, which is given the force of law by virtue of the
Sixth Schedule to the CAA 1974 (the MontrealConvention).

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The aforesaid conventions are hereinafter referred to as the Carriage by
AirConventions.
The aforementioned conventions are self-contained regimes whereby any claim
against a carrier falling within the ambit of the conventions will be subject to the
conditions and limitations of liability as provided in Article22 of the WarsawHague
Convention, Article22 of the Amended Convention and Articles 21, 22 and 44 of the
Montreal Convention, regardless of the nature of the proceedings by which the claim
may be enforced. For the conventions to apply, inter alia, the carriage in question must
fall squarely within the special definition provided for international carriage under the
Carriage by Air Conventions (ConventionCarriage).
Note that pursuant to Section 9 of the CAA 1974, the Yang di-Pertuan Agong3
may by order direct that the Carriage by Air Conventions shall apply to or shall cease to
apply to any carriage of persons, baggage or cargo for the military authorities of astate to
which this section applies in aircraft registered in that state if the whole capacity of the
aircraft has been reserved by or on behalf of those authorities. However, we are not aware
of any such order having been issued by the Yang di-Pertuan Agong thusfar.
As at the time of writing, Malaysia has yet to accede to any international
convention that regulates the liability of air carriers to third parties on the ground,
such as the Rome Convention 1952 on Damage Caused by Foreign Aircraft to Third
Parties on the Surface as amended at Montreal in 1978 and the Montreal Convention
2009 on Compensation for Damage to Third Parties, Resulting from Acts of Unlawful
Interference InvolvingAircraft.
ii

Internal and other non-convention carriage

Carriage by air not within the ambit of the WarsawHague Convention is governed
by the Carriage by Air (Application of Provisions) Order 1975 (the 1975 Order)
(1975 Order Carriage). This order, in essence, adopts the provisions of the Warsaw
Hague Convention as supplemented by the Guadalajara Convention to govern such
nonconvention carriage with certain minor exceptions and amendments to facilitate the
adaptation of theseconventions.
The 1975 Order is applicable to (1) non-convention carriage of persons, baggage
or cargo performed by aircraft for reward, (2) non-convention gratuitous carriage by
aircraft performed by an air transport undertaking, the state or by legally constituted
public bodies and (3) carriage of mail and postalpackages.
Other notable exceptions or amendments include the omissions of Chapter II in
relation to passenger tickets, Article28 in relation to the jurisdiction in which aclaim
must be made and Article40A in relation to deemedterritory.
Further, the Minister is empowered under the 1975 Order to exempt, subject to
such conditions as he thinks fit, any carriage or any person from any of the requirements
imposed by the 1975Order.
It should be highlighted that the provisions of the 1975 Order relating to the
carriage of passengers, baggage or cargo are similar to those set out in the WarsawHague

The head of state ofMalaysia.

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Convention; thus the liability of the carrier for the death or injury of passengers, delay,
loss or destruction of baggage or cargo and the limitations thereto are the same as under
the WarsawHagueConvention.
While it may appear that all non-convention carriages would fall within the
1975Order, this is certainly not the case. There are certain special categories of carriage
that do not fall within the Carriage by Air Conventions or the 1975 Order (Other
Carriage). An example would be gratuitous carriage not performed by an air transport
undertaking (i.e., by an individual). Such carriage is subject to the ordinary law with
regard to carriers. There are afew Malaysian cases in which the application of common
law rules to aircraft operation has been discussed,4 but it seems likely that the courts will
proceed by analogy with cases relating to the operation of the various forms of land and
watertransport.
iii

General aviation regulation

In Malaysia, liability in the operation of civil aviation aircraft is governed by the

CAA1969 and the CAR 1996. The CAR 1996 regulates various aspects of civil aviation
including but not limited to registration of aircraft, licensing of aircraft operators, crew
and engineers, detention and sale of aircraft, investigations of aircraft accidents, operation
of aircraft and mortgage of aircraft. The non-compliance with these requirements may
attract criminal liability. Further, the CAA 1969 also imposes civil liability on owners or
lessees, as the case may be, for any material damage that is caused by an aircraft in flight,
taking off or landing, or by any person in any such aircraft, or by any article falling from
any such aircraft on to any person or property whether on land orwater.
It is to be noted that the definition of the term aircraft under the CAR 1996
includes any non-power-driven object such as a free balloon, captive balloon, glider
by kite and any power-driven flying machine such as an airship, aeroplane, whether
alandplane, seaplane, amphibian or aself-launching motor glider, rotorcraft, whether
ahelicopter or gyroplane, and amicrolight aeroplane. Accordingly, the CAA 1969 and
the CAR 1996 are equally applicable to these air objects though the requirements may
differ from commercialaircraft.
iv

Passenger rights

Where the carriage by air is Convention Carriage, the liability provisions for delay,
damage or destruction of baggage and cargo under the WarsawHague Convention or
the Montreal Convention (if this has been adopted by the states) would be applicable
subject to the limitationstherein.
Where the carriage by air is a1975 Order Carriage, the liability for delay, damage
or destruction of baggage and cargo is governed by the 1975 Order. As noted above, the
1975 Order in essence adopts the WarsawHague Convention with afew modifications.
In this regard, we note that the liability provision for delay and the limitation provisions

Etonic Garment Manufacturing Sdn Bhd v. Kunn-G Freight Systems (M) Sdn Bhd (Malaysian
Airline System Bhd, third party) [2011] 3 MLJ98

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under Articles 19 and 22 of the Schedule to the 1975 Order are the same as Articles 19
and 22 of the WarsawHagueConvention.
Notwithstanding the aforesaid, however, in the case of Malaysian Airline System
Bhd v.Malini Nathan & Anor [1986] 1 MLJ 330, the court held that Article19 of the
Montreal Convention only applies in acase where, under the contract of carriage, the
time for the carriage is fixed. In this case, there was acondition in the contract of carriage
providing that the times shown in the timetables or elsewhere are not guaranteed and
form no part of this contract. The judge, on the basis of Article3(2) of the Montreal
Convention, interpreted this condition to be part of the condition of carriage and
hence found that there was no delay occasioned. Accordingly, until the aforesaid case
is overruled, notwithstanding the adoption of the Carriage by Air Conventions or the
1975Order, passengers of commercial airlines who experience flight delays would not
seem to be able to claim relief other than the remedies set out in the conditions of
carriage, which usually involves aseat on the next available flight and some compensation
for meals or accommodation, whereapplicable.
With regard to the rights of disabled passengers, Section 26 and Section 27 of the
Persons with Disabilities Act 2008 require the providers of public facilities and public
transport facilities to give appropriate consideration and take necessary measures to
ensure that the facilities, amenities and services provided conform to universal designs
to facilitate access and use by disabled persons. In conjunction with this, the airport
operators should ensure that equipment such as aerobridges and wheelchairs are always
made available to assist passengers with reduced mobility. On the other hand, unlike
European countries, Malaysia has not at the time of writing passed any legislation to cater
for the rights of disabled persons and persons with reduced mobility when travelling by
air, although it is commendable to see that one local air transport service provider has
taken efforts to enhance its care towards passengers with special needs by reference to
foreign regulations such as Regulation (EC) No.1107/2006 of the European Parliament
and of the Council of 5 July 2006 and Nondiscrimination on the Basis of Disability in
Air Travel issued by the US Department of Transportation.5
III

LICENSING OF OPERATIONS

Licensed activities

An aircraft operator in Malaysia would be required to obtain an air operator certificate

from the DCA to operate Malaysian-registered aircraft for the purpose of public transport.
Pursuant to the CAR 1996, before issuing the certificate, the DGCA would need to be
satisfied that the applicant is competent, having regard in particular to his or her previous
conduct and experience, his or her equipment, organisation, staffing, maintenance and
other arrangements, to secure the safe operation of the type of aircraft to beoperated.
An air service licence or permit is also required from the DCA for the provision
of air service (i.e., the carriage of passengers, mail or cargo for hire or reward, whether
scheduled or non-scheduled but not including flights carried on by flight schools).

5 www.malaysiaairlines.com/us/en/plan/special-needs/passengers-special-requirement.html

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The applicant would need to submit, inter alia, details or information relating to its
organisation chart, equity structure, proof of sufficient funding, proposed services,
proposed aircraft, aircraft insurance and third-party liability insurance and aircraft
maintenance. The DGCA, in exercising his or her discretion to grant or to refuse an
air service licence or permit may impose any conditions and shall have regard to (1)
the coordination and development of air services generally with the object of ensuring
the most effective service to the public, (2) those persons requiring or likely to require
facilities for air transport as well as those persons providing such facilities for purposes
of avoiding uneconomical overlapping, (3) the existence of other air services in the
area through which services are to be operated, (4) the period for which such services
have been operated by the applicant or other operators, (5) the extent to which it is
probable that the applicant will be able to provide a satisfactory service in respect of
safety, continuity, regularity of operation, frequency, punctuality, reasonableness of
charges and general efficiency, (6) the financial resources of the applicant, and (7) the
remuneration and general conditions of employment of aircrew and other personnel
employed bytheapplicant.
Other than the aforesaid activities, flight crews (i.e., pilot and flight engineers)
and aircraft maintenance engineers are also required to be licensed by theDCA.
Lastly, while not specifically alicence, every aircraft6 (other than aircraft registered
with the registry of a member state of the Chicago Convention) is required to be
registered with the DCA and maintain an airworthiness certificate from the DCA to fly
into or overMalaysia.
ii

Ownership rules

As stated above, there is no express law enacted or rule issued that prescribes or imposes
any ownership rules in relation to an air operator. However, because of bilateral air service
agreements signed by Malaysia with other countries, for alocal air operator to enjoy the
rights under such agreements, the air operator is required to be substantially owned
and effectively controlled by the party designated by Malaysia or its nationals. Based
on recent experience, the percentage of foreign ownership in an air operator7 allowed by
DCA can go as high as 49percent.8
Aircraft owned by foreigners can be registered with the DCA in Malaysia if the
aircraft is leased to aMalaysian entity or individual or to the Malaysian government.
Except as stated, only aircraft owned by the government of Malaysia, acitizen of Malaysia
or abody corporate incorporated and having its principal place of business in Malaysia
can be registered with the DCA inMalaysia.

6
7
8

Does not include gliders, kites and balloons that are not for hire or reward and aircraft that are
conducting test flights to obtain new certificates or the renewal of certificates ofairworthiness.
Malindo Air is ajoint venture between National Aerospace and Defence Industries of Malaysia
and Lion Air ofIndonesia.
Presenna Nambiar. Shareholders of Malindo Air to meet, The Sun, 23 May 2014,
SunBizsection.

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iii

Foreign carriers

A foreign carrier must obtain an air service licence9 from the DCA. Generally, however,
such alicence is issued only where the country of registration of the foreign carrier has
entered into abilateral or multilateral air service agreement withMalaysia.

IV SAFETY
The general rules relating to matters such as the airworthiness of aircraft, maintenance
of aircraft, aircraft crew and licensing, operation of aircraft, conduct of operations, air
traffic control and investigation of accidents are prescribed in the CAR1996.
Further to this, airworthiness notices (AN) have been published by the DGCA
from time to time pursuant to the CAA 1969 to prescribe or supplement the requirements
relating to maintenance of aircraft and components, certification or airworthiness of
types of aircraft and components, training organisations, licences for maintenance
engineers and soon.
For example, in respect of airworthiness of aircraft, acertificate of airworthiness
is required to be obtained from the DCA before the import or export of an aircraft. The
DCA, however, does not issue type certificates for imported aircraft. The certificate of
airworthiness (whether issued by the DCA or another state) is also anecessity for the
operation of the aircraft. In relation to maintenance, an aircraft registered in Malaysia
must be maintained in accordance with the maintenance schedule approved by the
DGCA and there must be in force a certificate of maintenance review issued by the
DCA in respect of the aircraft certifying the date on which the maintenance schedule was
carried out and the date thereafter when the next review isdue.
Other than safety requirements imposed on operators as set out above, certain
international conventions in relation to the safety of passengers have also been given
force of law by virtue of the Aviation Offences Act 1984 (the AOA 1984). In essence,
Part IV of the AOA 1984 gives effect to (1) the Montreal Convention 1971 for the
Suppression of Unlawful Acts Against the Safety of Civil Aviation and (2) the Montreal
Protocol 1988 for the Suppression of Unlawful Acts of Violence at Airports Serving
International CivilAviation.
V INSURANCE
Article 50 of the Montreal Convention provides that state parties shall require their
carriers to maintain adequate insurance covering their liability under the Convention
and acarrier may be required by the state party into which it operates to furnish evidence
that it maintains adequate insurance covering its liability under theConvention.
There is no other express Malaysian legislation or regulation prescribing the
requirements on insurance for carriers, but an applicant for an air service permit or
air service licence (i.e., an air operator) will have to provide to the DCA, as part of its

For the requirements to obtain an air service licence, see Section III.i,supra.

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application, details of the proposed insurance to be taken out by the applicant for (1) loss
of or damage to the aircraft, (2) liability to passengers and (3) liability to thirdparties.
VI COMPETITION
In Malaysia, competition law is governed by the Competition Act 2010 (CA), which
only recently came into force on 1st January 2012. The two key prohibitions under the
CA are the prohibitionsagainst:
a
horizontal and vertical agreements that have the object or effect of adversely
affecting competition;and
b
the abuse of adominant position by an enterprise having adominant position in
any market of products orservices.
The regulator of the CA is the Malaysian Competition Commission (MyCC), which also
acts as the enforcement agency under the CA. Various Guidelines have been issued by
MyCC on the implementation of the CA, including Guidelines on Market Definition,
on Anti-Competitive Agreements and on Abuse of Dominant Position. The various
enforcement remedies available to MyCC under the CA include afinancial penalty of up
to 10percent of worldwide turnover, interim measures and compliance orders. There is
aleniency regime and also the acceptance of undertakings in lieu ofpenalties.
Since the CA is recent legislation, there have been very few infringement cases,
but notable among those has in fact been an aviation case. MyCC took action against
the Malaysian Airline System Berhad (MAS), Air Asia Berhad and Air Asia X Sdn Bhd
for acollaboration agreement that was alleged to have anti-competitive elements. The
agreement was alleged to have been entered into among the parties to allow them to operate
freely within separate market segments in the airline industry and to impose higher prices
to maximise profitability. MyCC concluded that such an agreement infringed Section
4(2) (b) of the CA, which prohibits horizontal agreements between competitors with
the object of sharing markets. In response to MASs contention that MyCC had failed
to conduct any anti-competitive effects analysis in arriving at the proposed decision,
MyCC relied on Paragraph 2.14 of the Guidelines on AntiCompetitive Agreements that
provided that the anti-competitive effect of the agreement need not be examined once
the anti-competitive object is shown. The case is pending appeal to the Competition
AppealsTribunal.
VII

ESTABLISHING LIABILITY AND SETTLEMENT

i Procedure
The forum for an action is dependent on whether the carriage is aConvention Carriage,
1975 Order Carriage or Other Carriage (as definedabove).
Action in relation to aConvention Carriage or 1975 Order Carriage
The forum for an action claiming for damages are as provided in Article 33 of the
Montreal Convention, which generally provides that an action must be brought, at the
option of the plaintiff, at (1) the place where the carrier is ordinarily resident, (i.e., its

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place of business, (2) the place where the carrier has its principal place of business, (3)the
place where the carrier maintains an establishment through which the contract has been
made, or (4) the place of destination. The parties to the contract may however stipulate
that any dispute relating to the liability of the carrier under the Montreal Convention
shall be settled by arbitration with the proceedings taking place within one of the
jurisdictionsstatedabove.
If the claim is for damages resulting from death or injury of a passenger, in
addition to the aforesaid fora, the action may also be brought in the country of the
passengers principal and permanent residence, so long as the carrier provides service to
that country.10
The question of procedures shall be governed by the law of the court seized
ofthecase.
The right to claim damages is extinguished if an action against the carrier is
not brought within two years, reckoned from the date of arrival at the destination, or
from the date on which the aircraft ought to have arrived or on which the carriage
stopped.11 However, such alimitation does not apply to any proceedings for contribution
betweentortfeasors.12
Pursuant to Order 22B of the Malaysian Rules of Court 2012, a party may
serve an offer to settle to the other party in aprescribed form. The offer to settle is on
awithout-prejudice basis except as to costs. The offer can be made open for acceptance
within aspecific period or open ended in that it may be accepted at any time before the
court disposes of the matter. If the offer is accepted, the court may incorporate any of the
terms into ajudgment. Failure to comply with the terms of the offer will entitle the other
party to make an application to ajudge for judgment in the terms of the accepted offer
or continue the proceedings as if there had been no accepted offer tosettle.
Action in relation to Other Carriage
As these actions are not governed by Convention, the action may be filed in the High
Court of Malaysia if (1) the cause of action arose in Malaysia, (2) the defendant or one of
several defendants resides or has his or her place of business in Malaysia, or (3) the facts
on which the proceedings are based exist or are alleged to have occurred in Malaysia.13
The limitation period whether the claim is based on contract or tort is six years from the
date of breach or the date the cause of action arose. Order 22B of the Rules of Court
2012 is equallyapplicable.
ii

Carriers liability towards passengers and third parties

An operators liability to passengers is on astrict liability basis whether the carriage is

aConvention Carriage, 1975 Order Carriage or OtherCarriage.

10
11
12
13

This additional forum is not available for aclaim under the 1975Order.
Carriage by Air Act 1974 Sch 6 Section 2 Chap III Art 35. See also Carriage by Air (Application
of Provisions) Order 1975 Sch Part II Chap III Art29.
Section 7(2) of the Carriage by Air Act1974.
Section 23 of the Courts of Judicature Act1964.

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In relation to Convention Carriage and 1975 Order Carriage, damage sustained
in case of death or bodily injury of a passenger whereby the incident that caused
the death or injury took place on board the aircraft or in the course of any of the
operations of embarking or disembarking, the carrier is liable for proven damages up to
113,100special drawing rights (SDR)14 or 250,000 francs15 for each passenger and such
liability shall not be excluded or limited. Further, acarrier could be liable for an amount
that is more than the stipulated amount if it fails to prove that such damage was not due
to negligence or other wrongful act or omission of the carrier or its servants or agents; or
such damage was solely due to the negligence or other wrongful act or omission of athird
party. In relation to Convention Carriage, for damage caused by (1) delay in the carriage
of persons, (2)destruction, loss, damage or delay to baggage and (3) destruction, loss,
damage or delay to cargo, the liability of the carrier is limited to 4,694 SDR, 1,131 SDR
and 19 SDR per kilogramme respectively. In relation to 1975 Order Carriage, damage
caused by (1) delay in the carriage of persons, and (2) destruction, loss, damage or delay
to baggage or cargo, the liability of the carrier is limited to generally 250,000 francs and
250 francs per kilogramme,respectively.
If the carrier proves that the damage was caused or contributed to by the negligence
or other wrongful act or omission of the claimant, the carrier shall be wholly or partly
exonerated from its liabilities to the claimant to the extent of the claimants fault.16 For
Convention Carriage, where an aircraft accident results in death or injury to passengers,
the carrier shall make advance payments without delay to persons who are entitled to
claim compensation to meet the immediate economic needs of such persons, but such
advance payments shall not constitute arecognition of liability and may be offset against
any amount payable subsequently as damages.17
In relation to the issue of whether damages in respect of mental injury is claimable,
it is likely that Malaysian courts would turn down such aclaim taking into consideration
a series of foreign cases that reached the same conclusion of not including purely
psychological injury as bodily injury under Article17 of the Montreal Convention or
the Schedule to the 1975 Order, as the case may be.18
Claims for death or personal injury, damages for delay or destruction, loss, damage
or delay to baggage or cargo in respect of Other Carriage are generally only subject to
limitations expressed in the contract between theparties.
With regard to information regarding the carriers liability towards third parties,
this can be found above (see Section II.iii, supra). The carrier has strict and unlimited
liability for damage to property or injury to third parties on the ground unless such
damage or injury was caused by thevictim.

14
15
16
17
18

In relation to international carriage within the Carriage by AirConventions.

In relation to carriage governed by the 1975Order.
Article20 of Montreal Convention and Article21 of the Schedule to the 1975 Order, as the
case maybe.
Article28 of MontrealConvention
King v.Bristow Helicopters Ltd [2001] 1 Lloyds Rep 95. See also El Al Israel Airlines Ltd v.Tseng
525 US 155 (1999) and Kotsambasis v.Singapore Airlines Ltd [1997] 42 NCWCR110

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iii

Product liability

There are three main areas that cover product liabilities, namely contract, tort and the
Consumer Protection Act 1999 (CPA).
In a contract for the sale of goods, terms may be express or implied through
statutes such as Section 16 of the Sale of Goods Act 1957, which provides for the
implied condition as to the merchantable quality or fitness for the purpose of the goods.
Hence, a manufacturer would attract liabilities if it is in breach of any of the terms.
Nonetheless, because of the doctrine of privity of contract, contractual remedies are
generally enforceable only by the other party or parties to the contract, namely, in this
case, the purchasers of the goods. Hence, amanufacturer of goods would not be liable
to apassenger incontract.
A manufacturer of defective goods may be liable to an operator or apassenger
in tort, for example in negligence. To establish liability for the tort of negligence, the
claimant must establish that the defendant owed aduty of care to the claimant that was
breached by the defendant, and that breach caused the damage or injury complained of.
In proving his or her case, if the claimant is able to show that the defect in the goods was
the cause of the damage or injury suffered, the onus will be shifted to the manufacturer
to show that it had exercised reasonable care, failing which the manufacturer will
bemadeliable.
As for product liability under the CPA, if aproduct (whether it be the aircraft or
any part thereof ) is purchased by aconsumer for personal use and not for commercial
use, the producer of the product (which includes the manufacturer), the importer of
the product into Malaysia and the person who has held himself or herself out to be the
producer of the product may be liable for damages caused by defects in the product. The
term damage in the CPA refers to death or personal injury, or any loss of or damage
to any property, including land, as the case may require. The CPA has also provided
statutory defences for the producer and the burden of proof lies with him or her. One of
the defences that is worth highlighting is that aproducer shall not be liable if the state of
scientific and technical knowledge at the relevant time was not such that aproducer may
reasonably be expected to discover the defect if it had existed in his or her product while
it was under his or hercontrol.
iv Compensation
Generally, damages awards for a cause of action whether under Carriage by Air
Conventions, the 1975 Order or otherwise, consist of two limbs that are, firstly, general
damages for pain and suffering and loss of amenities and, secondly, special damages in
respect of the financial expenses incurred or that may be incurred as aresult oftheincident.
For the assessment of general damages, the courts will look at previous judgments
to determine the upper and lower limits of the award and take into account the nature,
extent and duration of the injuries to decide how much to award. It should be noted
that loss of expectation of life is statutorily barred in Malaysia and the claimant can only
recover damages for pain and suffering if he or she was conscious, sentient and able to
feel the pain and suffering. On the other hand, special damages would include medical
expenses, cost of care, loss of future earnings and loss of earningcapacity.

11

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As for dependency claims, the statutory dependants are entitled to claim for
(1) loss of support from the deceased victims earnings and (2) loss of support in the
form of services rendered by the deceased victim to the dependants. In this regard, the
calculation for the former will be contributions made by the deceased through his or her
earnings, which are exclusive of personal expenses (multiplicand) multiplied by the fixed
statutory multiplier that is according to the age of the deceased at the time of death. In
addition, the law also provides asum of 10,000ringgit to be granted to the spouse of the
deceased victim or to his or her parents if he or she wasunmarried.
VIII THE YEAR IN REVIEW
The year 2014 is one that has seen the Malaysian flagship carrier, MAS, squarely in
the limelight. Already battling year on year to turn around its floundering business,
the airline suffered two aircraft crashes within a period of four months. The first
was the disappearance of flight MH370 en route from Kuala Lumpur to Beijing on
8March2014, which at the time of writing has yet to be found. The second was flight
MH17, which was brought down by a surface-to-air missile on 17 July 2014 near Hrabove
in Donetsk Oblast, Ukraine, about 40 kilometres (25 miles) from the UkraineRussia
border, en route from Amsterdam to Kuala Lumpur. These disasters may see further
damage to the airline in terms of branding and business growth with opinions from some
quarters now expressing doubt as to its ability to weather this one out. Although MAS
had already been significantly affected by Malaysias first low-cost carrier,19 in 2013 the
Malaysian government approved another low-cost carrier, namely Malindo Air, ajoint
venture between National Aerospace and Defence Industries of Malaysia and Lion Air
ofIndonesia.
IX OUTLOOK
Malaysias liberal stance in respect of the aviation industry looks set to continue with
more open-skies agreements being entered into. However, the implementation of the
multilateral ASEAN open-skies agreement, which was originally targeted to take place
no later than 2015, may be delayed in light of recent opposition by the governments of
Indonesia and thePhilippines.
One other significant piece of legislation that may affect the aviation industry
is the Goods and Services Tax Act 2014, which was just passed in June 2014 and will
come into effect on 1April 2015. It remains to be seen whether the imposition of this
consumption tax will cause adecline in the growth of carriage of passengers and goods20
byair.

19 AirAsia
20
Note that some goods are exempted fromGST.

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Malaysia
RAJA, DARRYL & LOH
18th Floor, Wisma Sime Darby
Jalan Raja Laut 50350
Kuala Lumpur
Malaysia
Tel: +603 2694 9999
Fax: +603 2698 4759
kokseng@rdl.com.my
chewphyekeat@rdl.com.my
www.rajadarrylloh.com
CHONG KOK SENG
Raja, Darryl & Loh
Kok Seng is the firms specialist in aviation law, having acted for major airlines, aircraft
lessors and banks or collateral agents or security trustees in advising on local laws
in relation to the sale and purchase, lease or financing and securitisation of aircraft.
KokSeng obtained his bachelors degree in law from the University of London in the
United Kingdom in 2001 and subsequently sat for and obtained the Certificate in Legal
Practice from the Malaysian Qualifying Board. He was called to the Peninsular Malaysian
Bar in November 2003 after having read in chambers with the firm. Kok Seng joined the
ranks of the partners on 1March2011.
CHEW PHYE KEAT
Raja, Darryl & Loh
Phye Keat has been in legal practice since 1987 with the firm of Raja, Darryl & Loh. He
has aBachelor of Laws (Honours) anda Master of Laws from the University of Malaya.
He is asenior partner of the firm with afocus on intellectual property as well as generally
on corporate and commercial matters. Recently, Phye Keat has been handling matters
relating to competition law and the personal data protection act. He was also part of
the consultation group interacting with the Malaysian Government on the drafting of
the Competition Bill. The Competition Act subsequently came into force on 1 January
2012. From the second half of 2011 onwards, Phye Keat has been very active in helping
various clients become compliant with the Competition Act by giving seminars and
training sessions to create awareness of the impact of competition law on business;
giving specific advice on various transactions and agreements from acompetition law
standpoint; undertaking competition law audits for companies; drafting guidelines on
competition law for company manuals, handbooks or codes of conduct; and generally
assisting companies with theircompetition law complianceprogrammes.

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