This morning, I was invited by BFM Radio to share my thoughts on whether Malaysia should have a specific COVID-19 Bill. This is similar to the approach taken by Singapore. I also shared generally on how legal practice has been affected by the movement control restrictions and how it is important to leverage on technology.
I set out below some of the questions and my answers, and you can tune in to the BFM podcast (the BFM website requires free registration) for the full discussion.
Should Malaysia be considering a Covid-19 legislation similar to what has been enacted in Singapore? What would the purpose of such a law be?
Malaysia should indeed consider implementing such a stand-alone Act. It will provide a holistic multi-sector remedy rather than having to have piecemeal changes in the law on across different statutes.
At the heart of such a stand-alone Act, is the need to give all businesses breathing space and temporary relief. Allow businesses a period of time until the end of the year, or longer, to build up their cashflow, and retain employees. Give businesses temporary protection from legal suits, from being evicted, and from defaulting on loans.
Having a stand-alone Act would be clean and targeted: it can have a specific lifespan and then can be withdrawn once the COVID-19 storm has passed.
COVID-19 is a Black Swan event, and it requires an extraordinary Black Swan legislation to provide relief.
What kinds of contracts should the Covid-19 bill cover? Should it be limited to certain sectors or industries?
First, I think all contracts should have the benefit of any such COVID-19 coverage. We should not be limiting it only to particular types of contracts or particular industries.
Second, the important point is the balancing act. To ensure that the law provides you protection from defaulting on a contract ONLY IF you are unable to perform due to the COVID-19 outbreak. There must be a direct link, and not to provide an excuse or a get-out-jail card for non-performance of a contract due to other reasons.
Third, who then decides on whether being unable to perform was due to COVID-19 or not? Would it be back to the courts and do we see a surge of court cases? Can it be a specialised dedicated court or tribunal, to make quick decisions? For example, Singapore has a system of assessors, being industry experts, to make quick decisions and where the decision cannot be appealed to court.
What kinds of relief would be afforded under such a law?
I think three critical categories of relief would need to be provided:
First, a temporary moratorium on legal-related proceedings. For example, no filing of court actions, landlords cannot evict, suspend the enforcement of security, don’t call on the bank guarantee, don’t repossess. This will be for a specific time period of say 6 months or until the end of the year, and where the Minister can be given the power to extend this period if necessary.
Second, insolvency protection: winding up protection for companies and personal bankruptcy. We have already seen the Companies Commission of Malaysia announce some temporary winding up relief measures for companies.
Third, and I think this is critical, strengthen existing restructuring and rescue mechanisms in the Companies Act. Once the immediate movement control restrictions are gradually lifted and with COVID-19 still, companies will be in great need to restructure its debts and liabilities incurred during the temporary moratorium period.
Companies, both SMEs and PLCs, will need to restructure themselves and become more nimble. So let us adopt the best rescue features from Chapter 11, rescue financing and cross-border insolvency.
Do you see any legislative hurdles or other challenges that may obstruct the passing of a Covid-19 bill?
Where there is political will, there will be a way to pass such a law.
In Singapore, their COVID-19 Temporary Measures Act was drafted in 9 days, with cross-ministry input and also input from the private sector. It was passed in Parliament the same day it was tabled.
The challenge for Malaysia is that based on recent news, Parliament is now scheduled to sit for only one day on 18 May. This is instead of the usual thirty days.
It does not seem that there is any time scheduled for voting on any such Bills.