Amended Legal Opinion

The issue is whether in the case of foreign guarantor/director, the search report from the
origin country (in this case Austria) is required.
Please draft an opinion and incorporate the following point:-
*the security documents are governed by the Malaysian Law
- Under Malaysian law, while there is no explicit statutory requirement mandating a search
report from a foreign guarantor’s or director’s home country, financial institutions typically
have discretion in their risk assessment procedures. It is common practice for banks to
request additional documentation, including search reports or credit checks from the
guarantor's country of origin, to ascertain the individual’s financial standing and ensure there
are no legal impediments, such as bankruptcy, that could affect the security of the loan.
* under the Malaysia law the person contracting must not be ......... (under Malaysia
contract act and Insolvency Act)
S.17 CA 1950 – Fraud

“Fraud” includes any of the following acts committed by a party to a contract, or with his
connivance, or by his agent, with intent to deceive another party thereto or his agent, or to
induce him to enter into the contract:
. (a) the suggestion, as to a fact, of that which is not true by one who does not believe it to
be true;
. (b) the active concealment of a fact by one having knowledge or belief of the fact;
. (c) a promise made without any intention of performing it;
. (d) any other act fitted to deceive; and
. (e) any such act or omission as the law specially declares to be fraudulent.
S.18 – Misrepresentation
“Misrepresentation” includes—
. (a) the positive assertion, in a manner not warranted by the information of the person
making it, of that which is not true, though he believes it to be true;
. (b) any breach of duty which, without an intent to deceive, gives an advantage to the
person committing it, or anyone claiming under him, by misleading another to his
prejudice, or to the prejudice of anyone claiming under him; and
. (c) causing, however innocently, a party to an agreement to make a mistake as to the
substance of the thing which is the subject of the agreement.
- Sections 17 and 18 of the CA 1950 deal with fraud and misrepresentation, respectively.
While these provisions do not directly address the requirement of a search report, they do
highlight the importance of disclosing relevant information to avoid fraudulent or misleading
contracts.
S.3(1)(f) of Insolvency Act 1967 – Act of Bankruptcy
3. (1) A debtor commits an act of bankruptcy in each of the following cases:
(f) if he files in the court a declaration of his inability to pay his debts or presents a
bankruptcy petition against himself;
- Section 3(1)(f) of the Insolvency Act 1967 defines an act of bankruptcy to include the filing
of a declaration of inability to pay debts or the presentation of a bankruptcy petition against
oneself. While this provision does not specifically require a search report from a foreign
country, it does imply that a person's financial status is relevant to determining their ability to
fulfil contractual obligations.
General Conclusion:
- While Malaysian law does not have direct jurisdiction over foreign bankruptcy proceedings,
the bankruptcy can have implications for the guarantor's ability to perform their contractual
duties. While Malaysian law does not explicitly require a search report for a foreign
guarantor/director, the implications of bankruptcy in Austria and the general principles of
contract law suggest that obtaining such a report would be prudent. A search report can
provide valuable information about the guarantor's financial status, which can help to assess
their ability to fulfil their obligations under the contract.
* contract is valid and enforceable under the Malaysia Law
According to the S.10 of Contracts Act 1950, a valid contract in Malaysia must possess
several essential elements. These elements are crucial to ensure that agreements are legally
binding and enforceable:
 Free consent: The parties must agree to the terms of the contract without coercion,
undue influence, fraud, misrepresentation, or mistake.
 Competence: The parties must have the legal capacity to contract (e.g., not minors or
mentally incapacitated).
 Lawful consideration: Each party must provide something of value to the other
party.
 Lawful object: The purpose of the contract must be legal and not prohibited by law.
If an agreement meets these criteria, it is generally considered a contract under Malaysian

law.
- While the guarantor's bankruptcy in Austria may raise concerns about their financial
capacity, it does not automatically invalidate the contract. If the contract was entered into
freely, competently, and with lawful consideration and object, it is generally valid and
enforceable under Malaysian law.
- Malaysian law provides various mechanisms to protect the interests of creditors, including
banks. These mechanisms may include security interests, remedies for breach of contract, and
insolvency proceedings. Therefore, even if the guarantor's financial situation deteriorates, the
bank may have recourse to these legal remedies to recover its losses.
- Based on the analysis above, it can be concluded that a search report from Austria is not
strictly required for a foreign guarantor/director in Malaysia. If the contract meets the
essential elements of a valid contract under Malaysian law, it is generally enforceable,
regardless of the guarantor's financial status.
* if a person is bankrupt in its origin country (in this case Austria), will the Malaysian
Law acknowledge the said bankruptcy act? (this one has to do some research) Is the
judgment of court in Austria can be enforced here ?, check the Hague Convention on
the recognition and enforcement of foreign judgment in civil and commercial matters.
Has Malaysia and Austria signed / ratified this convention?
1. The Reciprocal Enforcement of Judgments Act 1958 (REJA) is a Malaysian law

that allows for the enforcement of foreign judgments in Malaysia under certain
conditions. Essentially, it establishes a mechanism for recognizing and enforcing
judgments from other countries that have similar reciprocal agreements with
Malaysia.
Key points of the REJA:
Reciprocity: The Act only applies to countries that have reciprocal arrangements with
Malaysia. This means that both countries agree to recognize and enforce each other's
judgments. Austria is not one of them.
Types of Judgments: The REJA covers civil judgments, including those related to
money, property, and certain other matters.
Enforcement: If a foreign judgment is recognized under the REJA, it can be enforced
in Malaysia as if it were a domestic judgment. This means that the Malaysian courts
can order the debtor to pay the amount owed.
Defenses: There are limited defenses available against the enforcement of a foreign
judgment under the REJA. These defenses typically include fraud, public policy, and
natural justice.
- While the REJA provides a mechanism for enforcing foreign judgments in certain
circumstances, it is limited to countries that have reciprocal arrangements with Malaysia. As
Austria is not a signatory to the REJA, it cannot be relied upon in this case.
- Malaysia relies on common law principles for recognizing and enforcing foreign judgments.
These principles generally require that the foreign judgment be final, conclusive, and in
accordance with natural justice. However, the recognition and enforcement of foreign
bankruptcy proceedings can be more complex due to the potential conflicts of jurisdiction
and the need to consider the principles of comity and international cooperation.
2. The Hague Convention on the Recognition and Enforcement of Foreign

Judgments in Civil and Commercial Matters is a multilateral treaty governing the
enforcement of judgments entered by one nation's legal authorities in other signatory
nations. The parties to the convention are:
 Albania,
 Cyprus,
 Kuwait,
 Portugal
 Netherlands (Territory in Europe, Aruba and Curaçao)
Article 2(e) of the Convention specifically excludes insolvency-related matters, such
as bankruptcy and liquidation, from its scope.
- The Hague Convention specifically excludes insolvency-related matters, such as bankruptcy
and liquidation, from its scope. Therefore, it cannot be relied upon for the recognition and
enforcement of foreign bankruptcy proceedings.
3. The UNCITRAL Model Law on Cross-Border Insolvency, adopted in 1997 by the

United Nations Commission on International Trade Law (UNCITRAL), is designed to
assist States to equip their insolvency laws with a modern, harmonized and fair
framework to address more effectively and efficiently instances of cross-border
insolvency. It's a guide that tells countries how to:
 Recognize insolvency proceedings in other countries: If a company goes bankrupt

in one country, other countries can recognize this and cooperate.
 Assist each other: Countries can help each other manage the bankruptcy process, like
sharing information or allowing foreign representatives to participate.
 Ensure fairness: The rules aim to treat everyone involved fairly, including the
company, its creditors, and the countries involved.
In simpler terms, it's a way for countries to work together to solve problems when
companies go bankrupt across borders. Malaysia relies on common law recognition
principles, as it has not incorporated the Model Law into its domestic legislation.
- It can be concluded that Malaysian law does not have a specific mechanism for recognizing
and enforcing foreign bankruptcy proceedings. The recognition and enforcement of such
proceedings would likely depend on common law principles and the specific circumstances
of the case.

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The issue is whether in the case of foreign guarantor/director, the search report from the

origin country (in this case Austria) is required.

Please draft an opinion and incorporate the following point:-

*the security documents are governed by the Malaysian Law

S.17 CA 1950 – Fraud

If an agreement meets these criteria, it is generally considered a contract under Malaysian

1. The Reciprocal Enforcement of Judgments Act 1958 (REJA) is a Malaysian law

2. The Hague Convention on the Recognition and Enforcement of Foreign

3. The UNCITRAL Model Law on Cross-Border Insolvency, adopted in 1997 by the

 Recognize insolvency proceedings in other countries: If a company goes bankrupt

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