Mediation In Malaysia
Mediation In Malaysia

Mediation In Malaysia

Ever thought of the fact that every court action would cost you a large amount of legal costs as well as lengthy time spent inside and outside the courtroom?

Worst still, some litigants win over the disputes but lose future business partners and family relationships due to the win-lose nature of our court system.

Mediation is an alternative way to resolve legal disputes other than going to the law courts or arbitration centres.

It is a voluntary and informal process which involves an impartial third party as the mediator, who plays the role of assisting parties in reaching a mutually satisfactory resolution.

Mediation Act 2012 is the governing statute in area with its legislative intents aiming to

“… promote and encourage mediation as a method of alternative dispute resolution by providing for the process of mediation, thereby facilitating the parties in disputes to settle disputes in a fair, speedy and cost-effective manner and to provide for related matters”.

The cardinal rules of mediation are as follows:-
  1. Disputing parties may choose to submit to mediation at any time.

In other words, parties may resort to mediation either before or during the court proceeding. In fact, it is the Practice Direction No. 4 of 2016 (Practice Direction on Mediation), issued by the Chief Registrar of the Federal Court of Malaysia, which mentioned that judges may encourage parties to settle their disputes even after a trial has commenced.

  1. Disputing parties may decide the terms of mediation.

Preferably, parties may come out with a mediation agreement in writing and signed by both parties setting out the terms of mediation. For instance, in respect of which mediation forum to go, parties’ choice of mediator, as well as express term that mediation communications is to be treated with utmost confidentiality and privilege from court proceedings.

  1. The mediator shall have no decision-making power whatsoever.

Mediator shall only play the role in facilitating communications and negotiations between parties and in identifying their needs, and developing options amongst them for amicable solution.

  1. All disclosures, communications and even admissions made under a mediation session are strictly “without prejudice” or privilege.

It is not subject to discovery or be admissible in evidence in any proceedings unless parties consented to it.

Forum for mediation during the subsistence of court/arbitration proceedings:-

It shall be noted that regardless of choice of forum, parties must fix a return date of not more than one month from the date the case referred to mediation to report to the court on the progress and outcome of mediation, according to Practice Direction No. 4 of 2016.

  • Judge-led mediation

This is a mediation forum using judges as mediators to help disputing parties in litigation to find a solution.

This is free and one of the most popular forums based in Kuala Lumpur Court Mediation Centre.

The court may, either on its own motion or upon the request of any party, give such direction for parties to mediate any action that has been instituted in the court.

The governing rules will be the Practice Direction No. 4 of 2016 (Practice Direction on Mediation) and the Rules of Court 2012 and not the Mediation Act 2012.

One of the fundamental rules being that parties have the right to have their lawyers’ presence before the mediation judge unless agreed otherwise.

In practice, it is quite common that hearing judges may request the parties to meet in their chamber and suggest mediation to the parties if judges found that the dispute may be amicably resolved.

  • Kuala Lumpur Regional Centre for Arbitration (“KLRCA”)

Alternatively, should parties wish to do so, they may seek mediation in accordance with the KLRCA’s Rules of Mediation.

Should parties agree during the court/arbitration proceedings, and upon the direction of the Court, the plaintiff’s lawyer is bound to give a written notification to KLRCA within seven (7) days and thereafter to be followed by the KLRCA’s mediation process.

It is to be emphasized that in the event that parties have commenced an arbitration proceeding at KLRCA, they can still resort to mediation because pursuant to section 32 of Arbitration Act 2005, a settlement outcome of mediation shall terminate the arbitration proceedings accordingly.

  • Malaysian Mediation Centre (“MMC”)

If parties prefer a rather flexible avenue of mediation, for instance they wish to have their choice of mediator, they may choose a mediator from the list of certified mediators furnished by the MMC. Parties may even appoint multiple mediators to resolve their dispute if they wish to do so.

In addition, parties may even decide on whether the chosen mediator is to be bound by the MMC Code of Conduct and the MMC Mediation Rules. If the parties prefer to be bound by such code and rules, the Plaintiff’s lawyer shall give written notification to MMC within seven (7) days upon the direction of the Court and MMC will then proceed with mediation process upon receiving such notification.

Forum for mediation prior to the commencement of court proceedings:-

If the parties have not initiated the court or arbitration proceedings, mediation could be carried out at relevant institutions such as KLRCA, MMC or Legal Aid Department.

Client’s legal objective

Before initiating a civil action for settlement of a dispute, we facilitate the parties to understand their rights and interests as well as the legal objectives sought to be achieved. Some circumstances may be not suitable for mediation, and mediation will not be fruitful if parties have no genuine intention in settlement. Furthermore, mediation is also not viable for dispute requiring a legal ruling from the court; or involving application of protective order, injunction or specific performance; or serious criminal offences.

After all, if mediation is applicable, it causes no harm to the parties and may benefit the parties in terms of time and cost. We are of the view that legal actions such as claims for personal injuries, defamation, matrimonial disputes, commercial or contractual disputes as well as intellectual property are cases which can be easily settled by mediation.

About the author:

This article was written by Chia Swee Yik, Partner of this Firm (+6016 2148 218, chia@chialee.com.my) (assisted by legal intern, Kong Chee Wah), who have assisted some clients to settle their disputes out of court via a mediation forum. Feel free to contact him if you have any queries.