Under Paragraph 1 of the First Schedule to the International Organisations (Privileges and Immunities) Act 1992 (“IOPIA”), an international organisation may be granted immunity from suit and other legal process. Does this immunity bar an employee’s unlawful dismissal claim before the Industrial Court?
In Alliance for Financial Inclusion (AFI) v Nazira binti Nasir (Civil Appeal No.: W-04(A)-20-01/2025), the Court of Appeal examined the scope of that immunity and whether it barred an employee’s unlawful dismissal claim. The decision confirms that immunity is not absolute. Its scope depends on the statutory framework, the organisation’s host country agreement and the nature of the acts in question.
Factual Background
- The Respondent, Nazira binti Nasir, was employed by the Appellant, Alliance for Financial Inclusion (“AFI”), as its Manager of Human Resource.
- AFI dismissed her on 19.3.2021.
- She then lodged representations with the Director General of Industrial Relations (“DGIR”), alleging dismissal without just cause or excuse.
- The DGIR referred the dispute to the Industrial Court.
- AFI applied to strike out the claim, asserting immunity from the Industrial Court’s jurisdiction as an international organisation under the IOPIA.
- The Industrial Court dismissed the application, finding that AFI is not immune.
- The High Court dismissed AFI’s appeal, but on a different ground. It held that the question of immunity raised factual disputes that could only be resolved at trial, and remitted the matter to the Industrial Court to determine that question.
- AFI appealed to the Court of Appeal, arguing that its IOPIA immunity was absolute and covered the claim.
Court’s Findings
The Court of Appeal dismissed AFI’s appeal. It upheld two of the Industrial Court’s three reasons and affirmed the High Court’s decision, though not its reasoning.
The Court of Appeal held that:
- Immunity is functional, not absolute – Paragraph 1 immunity protects only acts necessary for an international organisation to carry out its objectives and functions. It is not blanket immunity from all legal proceedings.
- AFI was bound by the jurisdiction clause in the employment contract – Under the Respondent’s employment contract, AFI expressly agreed that the employment relationship would be governed by Malaysian law and subject to the exclusive jurisdiction of the Malaysian courts. The Court held that AFI could not resile from this agreement, and held this was “sufficient to dispose this appeal” on its own.
- The dismissal was not an act protected by functional immunity – The Court rejected AFI’s argument that disciplining employees was an administrative function protected by immunity. Disciplining the Respondent, a Human Resource Manager, for alleged misconduct did not further AFI’s organisational objectives. Nor was it shown how the Industrial Court’s determination of her claim would compromise AFI’s independence. The dismissal was therefore not protected by functional immunity.
Key Takeaways
International organisations in Malaysia cannot assume that immunity excludes employment disputes from the jurisdiction of the Malaysian courts.
Practical points for employers who are international organisations:
- Review the applicable immunity provisions. Assess the scope of any privileges and immunities conferred under the IOPIA and the relevant regulations. Do not assume immunity covers every employment dispute.
- Pay attention to host country agreements. The host country agreement may affect the scope of immunity, particularly where it contemplates that the organisation may have to defend itself in legal proceedings.
- Ensure consistency in employment contracts. Review governing law and jurisdiction clauses carefully, particularly for international organisations operating under a specific statutory framework.
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This article was written by Leow Ho Eng (Senior Associate) from Donovan & Ho’s employment law practice.
Donovan & Ho is a law firm in Malaysia, and our employment practice group has built a reputation for providing strategic employment advice to local and global organisations. Our team of employment lawyers provide advice on employment law and industrial relations including review of employment contracts, policies and handbooks, advising on workforce reductions, and managing dismissals of employees for poor performance or misconduct. We also represent clients in unfair dismissal claims and employment-related litigation.
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