Shipping Law in Malaysia

(1) Which regulatory bodies regulate shipping and maritime affairs in Malaysia?

The Marine Department of Malaysia is the main government department which administers matters related to shipping and ports including maritime affairs within Malaysian waters. Some of its main activities include the registration and licensing of ships, inspection of ships’ safety and flag state, and regulating shipping laws.

(2) How do I register my ship to be under a Malaysian flag ship?

In order to be a Malaysian flag ship, a ship would have to be registered under Merchant Shipping Ordinance 1952 (“MSO”). The MSO provides for two types of ship registries, namely the domestic registry and the Malaysian International Ship Registry (“MISR”). In order to qualify as a Malaysian flag ship under the domestic registry (Part IIA of the MSO), a ship needs to be wholly owned by either Malaysian citizens or a corporation incorporated in Malaysia in which the majority of directors and shareholders are Malaysianwith principal office in Malaysia and management is carried out mainly in Malaysia. If a ship is owned by foreigners or a corporation whereby the majority of directors and partners are foreigners, the ship can be registered as a Malaysian flag ship under Part IIC of the MSO under the Malaysian International Ship Registry in Labuan, Malaysia, as long as the corporation is incorporated in Malaysiaand the office of the corporation is established in Malaysia. This is provided that the ship is fitted with mechanical means of propulsion, of not less than 1600 gross tonnage and the does not exceed the maximum age restrictions.

(3) Is there any exemption given to registration of boats/ships?

Part IIA of the MSO exempts certain ships from registration under the domestic registry, namely ships whose net tonnage does not exceed 15used for navigation on the rivers and coastal waters of Malaysia, licensed boats and local fishing vessels with gross tonnage of 500which is licensed under laws relating to fisheries and any ships which has a boat license under Section 475 of the MSO.

(4) Besides the regulation of MSO, is there any other governing law in respect of shipping matters in Malaysia?

The MSO is the principal legislation dealing with merchant shipping in Peninsular Malaysia. In addition, there are a number of subordinate legislations made or having effect under the MSO. In Sarawak, merchant shipping is governed by the Merchant Shipping Ordinance 1960 (No. 2 of 1960), while merchant shipping in Sabah is governed by the Merchant Shipping Ordinance (No. 11 of 1960). There are also other key shipping legislation in Malaysia such as the following:-
(i) Carriage of Goods by Sea Act 1950
(ii) Bill of Lading Act 1855 (UK) (applicable by virtue of section 5 of the Civil Law Act 1956)
(iii) Merchant Shipping (Liability and Compensation for Oil and Bunker Oil Pollution) Act 1994
(iv) Territorial Sea Act 2012

(5) Can Malaysian courts apply foreign principles in regards to shipping law?

Several Malaysian legislation provide for application of English law and international conventions.

For instance, section 5 of the Civil Law Act 1956 provides for the application of English law in relation to certain issues including law of carriers by sea, marine insuranceand mercantile law generally, unless other provision is or will be made by statute. In addition, the section 24(b) of the Courts of Judicature Act 1964 provides that the jurisdiction of the High Court in Malaysia in relation to admiralty matters is the same as that of the High Court of Justice in England under the English Supreme Court Act 1981(now known as the Supreme Court Act 1981). Further, the Carriage of Goods by Sea Act 1950 and the MSO respectively provide for the application of the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading (Hague Rules) and Convention on Limitation of Liability for Maritime Claims (LLMC) as amended by the 1996 Protocol.

In the case of contractual disputes where the governing law is foreign, subject to certain considerations such as public policy, the Malaysian courts will apply the foreign governing law in determining the merit of the dispute.