The Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (Covid-19) Bill 2020 *Update*

The Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (COVID-19) Bill 2020 (the ‘Bill’) was passed without amendment by the Dewan Rakyat (House of Representatives) of the Malaysian Parliament on 25 August 2020. The Bill will now be presented to the Dewan Negara (Senate), and upon it being approved, will be presented for Royal Assent. Thereafter, the Bill will become law upon its publication in the Gazette. Our Alert on the salient features of the Bill is available here.
Inability to perform contractual obligations
Amongst other measures, the Bill provides that the inability of any party or parties to perform any contractual obligation arising from any contract falling within any of the categories of contracts set out in the Schedule to Part II of the Bill (‘Scheduled Contracts’) due to the measures prescribed, made or taken under the Prevention and Control of Infectious Diseases Act 1988 to control or prevent the spread of Covid-19 shall not give rise to the other party or parties exercising his or their rights under the contract.[1]
The Bill also provides that any dispute in respect of any inability of any party or parties to perform any obligation arising under a contract that falls within the categories of Scheduled Contracts may be settled by way of mediation in accordance with a process to be determined by the Minister charged with the responsibility for law (‘Minister’).[2]
According to a media report[3], the Minister has said that the Government has set aside RM29 million to provide mediation services through the Covid-19 Mediation Centre and has made the following statements with regard to the mediation centre:
  1. the Government will bear the cost of mediation carried out through the mediation centre during the period of one year from 1 October 2020 to 30 September 2021; and
  1. only those qualified can seek mediation through the mediation centre; these would include:
  1. individuals from the B40 and M40 categories;[4]
  1. micro and small-scale enterprises;
  1. manufacturers with annual sales of between RM300,000 and RM15 million, or have five to 75 full-time employees; and
  1. those from the service and other sectors with annual sales of between RM300,000 and RM3 million, or have five to 30 full-time employees.
It is heartening to see that the Bill has cleared the first hurdle in its passage to become law. It is hoped that the process will be completed as soon as possible given that actions taken and proceedings commenced before the Bill comes into operation will remain valid and not be affected by the measures to be introduced under the Bill.[5]
It appears from the Minister’s statement that the proposed Covid-19 Mediation Centre will commence operation on 1 October 2020. However, details of the mediation process including the basis for empanelment of mediators, the appointment and role of a mediator, and the procedures and conduct of mediation remain to be formalised by further primary or subsidiary legislation. Based on the media report, it is disappointing to see that only limited categories of persons will be eligible to seek recourse to the mediation process to be offered by the mediation centre. It is hoped that the Government will make these facilities available to all parties seeking to resolve disputes in relation to Scheduled Contracts.

[1] Clause 7 of the Bill.
[2] Clause 9(1) of the Bill.
[3]Covid-19 Bill gets green light”, The Star, 26 August 2020.
[4] The expressions ‘B40’ and ‘M40’ refer to the lowest 40% and the middle 40% income segments respectively of Malaysian society.
[5] As mentioned in our Alert dated 17 August 2020, it is likely that the Bill will come into operation in late-September 2020.