JUDGMENT

Muhammad Kamil Awang J:

The plaintiff obtained a judgment against the defendant in Singapore High Court for a sum of USD5 million dated 28 July 1998. This judgment was registered at the High Court Sabah & Sarawak, Kuching, and a notice thereof was served on the defendant on 9 June 1999.

This is the defendant's application to set aside the registration of the foreign judgment on the following grounds:

(a) that the enforcement of judgment is contrary to public policy in Malaysia insofar as the defendant had not obtained prior written permission of the Controller of Foreign Exchange who is the Governor of Bank Negara, contrary to the provision of the Exchange Control Act 1953, for the opening of account with the plaintiffs and neither the plaintiff nor the defendant obtained prior written permission of the said controller of Foreign Exchange for the credit facilities granted by the plaintiffs to the defendant; and (b) that the opening of the account and the granting of banking facilities were illegal being contrary to the provisions of the Exchange Control Act 1953 and the respective notices issued thereunder and contrary to public policy of Malaysia.

In the instant case, the defendant had obtained credit facilities from the plaintiff in Singapore without the permission of the Controller of Foreign Exchange Malaysia, thus in contravention of s. 4(2) of the Exchange Control Act 1953. However, the 1953 Act does not prohibit a Malaysian resident or citizen from borrowing foreign currencies outside Malaysia. This is because the Act has no extra-territorial application, and therefore neither party had flouted s. 4(2) of the Act, thus the contract between the parties is not illegal. On the question of extra territoriality it is useful to refer to the case of Lee Lee Cheng (f) v. Seow Peng Kwang [1960] 26 MLJ 1, where his Lordship, Thomson CJ said at p. 3:

there is a distinction between the jurisdiction of a court and its powers, and this suggests that the word "jurisdiction" is used to denote the types of subject matter which the court may deal with and in relation to which it may exercise its powers. It cannot exercise its powers in matters over which, by reason of their nature or by reason of extra-territoriality, it has no jurisdiction.

On the other hand, in dealing with matters over which it has jurisdiction, it cannot exceed its powers.

In Keppel Finance Ltd v. Phoon Ah Lek [1994] 3 MLJ 26, VC George J (as he then was) held that s. 4(2) of the Exchange Control Act 1953 ("the ECA") does not per se prohibit residents in Malaysia from borrowing foreign currency outside Malaysia as it is restricted to acts done "in Malaysia". Since "resident" is defined to include Malaysian Citizens who do not reside in Malaysia, the words "in Malaysia" in s. 4(2) must be meant to qualify "borrowing" and not "resident". This also supports the view that ECM10, the document issued by Bank Negara under the ECA, has no application to borrowing by a resident outside Malaysia from a noncitizen.

Clearly, when the defendant applied for the loan from Malaysia to Singapore without the permission of the Controller, he had contravened s. 4(2). However as the actual borrowing took place in Singapore, it did not run foul of s. 4(2) or any other provision of the ECA or ECM10, and was not illegal.

The defendant had applied for credit-facilities in Singapore and he had no permission of the Controller of Foreign Exchange of Malaysia, and if the purpose of the facilities in Singapore was to circumvent the Malaysian laws (ie, the Exchange Control Act 1953), he must not be allowed to profit from his own wrongdoing at the expense of an innocent party.

With respect, the learned counsel for the defendant in her submission had totally missed the point. In an application to set aside the registration of a foreign judgment, it concerns with the procedural law of registration. She had not shown to the court that the registration was bad for non-compliance of ou