Investment treaty practice in Malaysia

Investment treaty practice

Does the state have a model BIT?

The latest publicly available model BIT is the Malaysian Model BIT (1998) (see: https://investmentpolicy.unctad.org/international-investment-agreements/treaty-files/2834/download).

Does the state have a central repository of treaty preparatory materials? Are such materials publicly available?

Malaysia does not have a central repository of treaty preparatory materials. However, the ASEAN Trade Repository functions as a single point of access to all the trade-related information of ASEAN member states, including Malaysia (see: https://atr.asean.org/index.php/links/search/?country_code=my&src=home).

What is the typical scope of coverage of investment treaties?

Malaysian BITs tend to cover a broad range of investments, including movable and immovable property and other property rights, shares, stocks and debentures of companies or interests in the property of such companies, debt instruments and claims to money or performance having a financial value, intellectual and industrial property rights including copyrights, patents, trademarks, tradenames, industrial design, trade secrets, technical processes and know-how and goodwill, and business concessions conferred by law or under contract.

Such investment treaties provide protection to citizens of the contracting state, and any corporation, partnership, trust, joint-venture, organisation, association or enterprise duly incorporated in accordance with the applicable laws of that contracting state.

Once a foreign investor has established a lawful investment in Malaysia, it will enjoy the rights and protections set out in the relevant BIT. For several BITs with Malaysia, such investments must first be admitted or registered as an approved project by Malaysia to qualify as an investment under the relevant BIT. The requirement to be designated as an approved project is, however, slowly being removed from newer BITs that Malaysia seeks to enter into.

What substantive protections are typically available?

Malaysian BITs provide a core set of protections by providing investors with full and adequate protection and security in the territory of the state, protection from expropriation or nationalisation and guarantees of fair and equitable treatment.

Malaysian BITs also contain most-favoured-nation (MFN) clauses, which in effect provide that a country accorded an MFN status shall receive fair and equitable treatment that is not less favourable than that accorded to investments made by investors of any other country.

What are the most commonly used dispute resolution options for investment disputes between foreign investors and your state?

No publicly available investment treaty award has been rendered against Malaysia. Both of the two reported investment disputes brought against Malaysia that were arbitrated were under ICSID.

Does the state have an established practice of requiring confidentiality in investment arbitration?

The lack of public information on investment arbitrations involving Malaysia does not allow firm conclusions to be drawn regarding Malaysia’s policy on confidentiality, although there are indications that Malaysia favours confidentiality.

Does the state have an investment insurance agency or programme?

Malaysia does not have an investment insurance agency or programme. However, Malaysia is a member of the Multilateral Investment Guarantee Agency.

A number of Malaysian BITs include compensation-for-losses clauses, which regulate the treatment of foreign investors in the event their investments suffer losses owing to war or other armed conflict, revolution, a state of national emergency, revolt, insurrection or riot by requiring Malaysia to provide MFN treatment to the availability of compensation for such losses.

Notably, Malaysia has also entered into investment guarantee agreements with the United States (1959) and Canada (1971).