Civil Law Act 1956
Long before the adoption of the Cape Town Convention and the Aircraft Protocol, the Civil Law Act 1956 (Act 67) has played and continues to play a very important role in the Malaysian legal system as it states the importance of the role of English rules of equity in addition to or in the absence of legal rules. This piece of legislation applies to the administration of all civil laws in Malaysia as enumerated in the Act unless otherwise provided. It was first enacted as Ordinance No. 5 of 1956 and revised in 1972 as Act 67 with effect from 1 April 1972. It applies to Peninsular Malaysia with effect from 7 April 1956 and to the States of Sabah and Sarawak with effect from 1 April 1972, through subsidiary legislation P.U.(A) 424/1971. Sections 2, 3 and 5 of the Act in particular have some implications for the law of secured transactions in aircraft financing and mortgage before the adoption of the Convention and Protocol. This is because of the continuous weave of local and English statutory rules, common law rules and English equitable rules in the administration of civil law in this country. Of utmost importance to air carriers, is the law spelt out in section 5, discussed below. In brief, section 5 states very clearly that the law of the UK as decided in that subject-matter applies. Therefore, the adoption of the treaties above and the ensuing domestic legislation implementing the treaties, expressly exclude the application of section 5 which has been the hitherto governing section for aircraft carriers. This is one possible literal interpretation. It could always be argued that if the treaties created an unfair regime that caused injustice to either the chargor or chargee, then it is an unfair rule and should be struck down by the forum court as stipulated in the charge contract.
Besides, equitable maxims such as “equity prevails over the law” and “where the equities are equal the first in time prevails” are applicable in Malaysia. Therefore, it is important to outline the role equity plays in Malaysia to ensure justice is done at the end of the day.
Section 2 of the Civil Law Act interprets the term “Court” unless the context otherwise requires to mean any court in Malaysia of competent jurisdiction, and includes any Judge thereof whether sitting in court or in chambers and “written law” in relation to any part of Malaysia means written law as defined in the law relating to interpretation in that part of Malaysia.
PART II of the Act deals with general provisions. In particular section 3 on the Application of U.K. common law, rules of equity and certain statutes deserve special attention. This means that English common law, equitable rules and even in certain circumstances statutory rules, such as may be necessary in the states of Sarawak or Sabah, become applicable, as set out in section 3(3).
At the outset, this has far-reaching implications for the subject-matter of the treaties under consideration here. What this means is that the law of secured transactions in aircraft financing and mortgage was before the adoption of the treaties capable of being subject to section 3 as briefly described by its title above.
Section 3(1) provides that where other provisions have been made or shall be made hereafter by any written law in force in Malaysia, the Court in Malaysia shall
(a) in Peninsular Malaysia or any part thereof, apply the common law of England and the rules of equity as administered in England on 7 April 1956; (b) in Sabah, apply the common law of England and the rules of equity, together with statutes of general application, as administered or in force in England on 1 December 1951; (c) in Sarawak, apply the common law of England and the rules of equity, together with statutes of general application, as administered or in force in England on 12 December 1949, subject however to subparagraph (3)(ii). This is subject to a Proviso which states that -
Provided always that the said common law, rules of equity and statutes of general application shall be applied so far only as the circumstances of the States of Malaysia and their respective inhabitants permit and subject to such qualifications as local circumstances render necessary.
Section 3(2) is very important in that it states where there is a conflict between common law and the rules of equity with regard to the same subject-matter, the rules of equity shall prevail.
In the application of English law in commercial matters, section 5(1) governs all transactions unless special domestic law provides otherwise, as has happened in the context of the treaties. The scope of section 5(1) is that where questions or issues which arise or which have to be decided in the States of Peninsular Malaysia other than Malacca and Penang with respect to the law of partnerships, corporations, banks and banking, principals and agents, carriers by air, land and sea, marine insurance, average, life and fire insurance, and with respect to mercantile law generally, the law to be administered shall be the same as would be administered in England in the like case at the date of the coming into force of this Act, if such question or issue had arisen or had to be decided in England, unless in any case other provision is or shall be made by any written law. This means that the applicable law in the States of Peninsular Malaysia when this Act came into force was the law in the UK in 1956. While Courts and counsel in Malaysia are free to move from this ossification, the law in Section 5 of the Civil Law Act still remains unchanged. Further, section 5(2) provides that where these issues mentioned above have to be decided in Malacca, Penang, Sabah and Sarawak, the law to be administered shall be the same as would be administered in England in the like case at the corresponding period, if such question or issue had arisen or had to be decided in England, unless in any case other provision is or shall be made by any written law.