TERMINATION OF CONTRACT ON THE GROUND OF NATIONAL INTEREST IN MALAYSIA

Abstract

A government contract is very different from a private contract. It is notable that Government procurement contracts are peculiar in the sense that they have a special clause on termination whereby the Government is vested with special power to terminate a contract on a national interest basis. Under the said clause, the Government as an employer of a contract may end the contract by giving not less than thirty (30) days without any obligation to provide any reason if the Government considers that such termination is essential for national interest, national policy or national security. However, what constitutes national interest in the said clause is equivocal, dubious and subjective. This article explores the uncertainty and ambiguity of the concept of national interest under the contract document and insufficiency of law regarding the termination of contract under national interest basis. This article will provide a detailed analysis of case authorities and legal precedents about termination of contract on a national interest basis. In the meantime, this article will provide proactive measures that can be taken to mitigate the emergence of legal issues that arise due to ambiguity of concept of national interest.