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The Rise of Mediation as an Alternative Dispute Resolution Tool

Mediation has been gaining prominence as an effective alternative dispute resolution tool in Malaysia especially with the enforcement of the Mediation Act 2012. Compared to litigation or arbitration, mediation is quick, efficient and inexpensive. Further, it is less confrontational as it provides a safe environment for confidential dispute resolution and conducted in private. Mediation is also popular as it acknowledges, addresses and deals with real and practical concerns of parties which may otherwise be considered irrelevant. It also allows parties to preserve relationships while reaching mutually beneficial resolutions. This is practically useful in protecting an organisation’s brand image and corporate reputation while not causing loss of customer or client confidence. 

There is no denying that the COVID-19 pandemic has changed the economic, business, financial and legal landscape. Travel restrictions and lockdowns, for instance, have restricted and delayed courts and arbitral proceedings and these institutions are currently overwhelmed by the backlog of cases whether already in motion prior to COVID-19 or as a result of it. With the exigencies of COVID-19, parties under immense pressure to soften the blow of the pandemic and resolve their disputes speedily should consider mediation.

Mediation has been applauded for its efficiency as compared to the normal route of litigation or arbitration as it assists parties to resolve their disputes through the following benefits:
  • Neutral mediator – As a neutral third party, a mediator can lead negotiations and assist parties to communicate constructively and recommend solutions which would mutually benefit all parties in reaching an amicable settlement; 
  • Swift resolution of disputes – Disputes can be resolved in a timely manner in contrast to litigation or arbitration as mediation is flexible and less procedural. It dispenses the inevitable need to use experts, often from multiple disciplines in addition to a number of witnesses for court proceedings;
  • Amiable approach – Due to its non-confrontational procedure, disputes are less likely to affect relationships between parties as resolution of disputes are mutually agreed upon by parties; 
  • Flexible solutions – Parties can resolve all outstanding issues once and for all since settlement agreement can be tailored comprehensively to address other related or potential issues in the future;
  • Confidentiality – Communications during the mediation process are strictly “without prejudice”, confidential and privileged and cannot be disclosed in any court or arbitration proceedings; and
  • Economical – Mediation is proven as less costly than litigation or arbitration.
Special COVID Mediation Centre

Under the Temporary Measures for Reducing the Impact of Coronavirus Diseases 2019 (“COVID-19”) Act, the Government of Malaysia has established a special mediation centre called Pusat Mediasi COVID-19 (“PMC-19”).  PMC is hoped to help resolve disputes where contractual obligations cannot be met due to the pandemic. Whilst mediation in Malaysia is generally governed by the Mediation Act 2012, mediation under PMC-19 is governed only by the COVID-19 Act and the rules governing the mediation process are the PMC-19 Mediation Rules.

In Peninsular Malaysia, the Malaysian Bar manages the PMC-19 on behalf of the government to assist individuals under the B40 and M40 categories as well as for micro enterprises and Small Medium Enterprises (“SME”s). Under PMC-19, the disputed sum is limited to RM500,000 and below and covers disputes relating to the following contracts[1]:
  1. Construction work contracts or construction consulting contracts and any other contracts relating to the supply of materials, equipment or construction workers; 
  2. Performance bonds or the equivalent issued pursuant to a construction contract or supply contract;
  3. Professional services contract;
  4. Lease or rental of non-residential immovable property;
  5. Event contracts for the provision of any venue, accommodation, facilities, transportation, entertainment, catering or other goods or services, including any business meetings, incentive trips, conferences, exhibitions, sales events, concerts, shows, weddings, parties or other social gatherings or sporting events, for participants, attendees, guests, patrons or spectators for the assembly or event;
  6. Contracts by a tourism enterprise; and
  7. Contacts relating to religious pilgrimages.
As mediation is proven to be a more efficient dispute resolution avenue, disputing parties are encouraged to adopt this alternative to resolve matters without involving court hearings through PMC-19.
The pandemic has definitely tested and reshaped the traditional dispute resolution mechanism.  When a dispute is resolved amicably through mediation, parties would benefit from the less costly and timely procedure. It is a mutually beneficial outcome with opportunities to preserve amicable relationships where the results may not have been achieved through litigation or arbitration.

If you are interested to become a mediator, visit the Malaysian Mediation Centre website.

[1] The Edge Markets. 2021. Govt Covid-19 Mediation Centre Opens Today <>