Why Choose Mediation
For Dispute Resolution
& FAQs
In this article, we will take a general look at frequently asked questions about mediation which may be useful when considering mediation over litigation for dispute resolution.
Alternative Dispute Resolution (ADR) by Mediation
Mediation as an alternative dispute resolution (ADR) method to settle disputes is encouraged by our Malaysian Courts. In the recent Chief Judge of Malaysia's Practice Direction No. 2 of year 2022, ("CJ's Practice Direction No. 2 of 2022") the Chief Judge of Malaysia gave practice directions for mediation and its procedure for civil proceedings in the high courts and lower courts throughout Malaysia.
When it comes to mediation, common questions include "why mediate?", "is mediation suitable for my case?" and "does mediation actually work?". In this article, we will take a general look at all these frequently asked questions which may be useful when considering why parties might choose mediation over litigation for dispute resolution. Let's start by answering the question, what is mediation?
What is Mediation?
Mediation is a way for disputing parties to resolve their disputes through the help of a neutral facilitator called a "mediator". Voluntariness of both parties to participate in the mediation process is a key prerequisite to a mediation. It is an alternative to traditional methods of dispute resolution such as taking a dispute to court i.e. litigation.
The mediator does not and cannot give legal advice to the parties. The mediator also does not and cannot make a decision or give an award to any party. That is simply not their role. Think of mediators as an impartial third party whose job is to help parties in their communication and negotiation of a solution to their problems. The solution to the dispute must come from the parties themselves.
In the Mediation Act 2012 (Act 749), mediation is defined as “a voluntary process in which a mediator facilitates communication and negotiation between parties to assist the parties in reaching an agreement regarding a dispute”.
If a mediation is successful, parties can enter into a settlement agreement. If they have an ongoing case in court, the terms of their agreement can be recorded as a consent judgment.
Why Choose Mediation For Dispute Resolution?
There are many reasons why disputing parties may choose mediation. One reason is that mediation is a comparatively quicker and less expensive way to settle disputes compared to traditional dispute resolution methods.
Parties also retain a high degree of control on how the dispute will be resolved because if any resolution by mediation is reached, it will be an agreement that both parties mutually agreed upon and came up with. Parties can say that they “own” the outcome which can be a win-win solution. In contrast, parties who litigate must submit to the decision making powers of a third party who is the judge. There will be a “winner” and a “loser” as the judge must ultimately decide in favour of one party over the other.
Another reason for choosing mediation is that parties get to keep their dispute private and confidential as opposed to litigation which is public and tried in open court. Parties who mediate can also maintain their personal or business relationship with each other. On the other hand, parties who litigate are unlikely to have any goodwill left at the end of the adversarial process and therefore, a collaborative relationship will no longer be possible.
What Types of Matters Are Suitable For Mediation?
Mediation may be beneficial to resolve a myriad of civil conflicts such as business disputes, construction payment disputes, family disputes, landlord and tenant disputes and neighbour disputes.
However, the types of matters that are suitable for mediation are never closed as having a mediation is largely dependent on the parties' voluntariness to participate in the mediation process. Therefore, for conflicts that have not become court cases, having an impartial mediator to help facilitate the negotiations and to bridge the communication breakdown between parties can be useful.
As for cases that are already in the courts, the CJ's Practice Direction No. 2 of 2022 states that the courts must direct road accident cases to be referred to mediation before a trial is fixed. For civil cases, the courts can refer parties to mediation if (a) the judge is of the view that the case can be resolved through mediation and the parties agree to refer the case to mediation or (b) the parties request the court to refer the case to mediation.
According to the CJ's Practice Direction No. 2 of 2022, mediation can be held at any of the following stages of court proceedings which is arguably very wide:
(a) during case management before trial;
(b) during interlocutory applications;
(c) before full trial;
(d) when full trial is ongoing;
(e) after full trial but before a judgment is delivered;
(f) during the appeal stage; and
(g) at any stage or proceeding that is thought necessary.
What Disputes Are Not Suitable For Mediation?
Whilst mediation can be effective in resolving disputes, not all disputes are suitable for mediation. Mediation may not be suitable where parties require the wide powers of courts to grant certain relief which only a court can grant or when relief is needed on an urgent basis. An example are cases where prohibitive injunctions are needed urgently to protect the status quo or where mandatory injunctions are needed to compel a party to do certain things.
There may also be cases where parties need the courts to decide a legal issue or to interpret the law or statutory provisions. Mediation may also not be suitable where parties need to legally assert their rights in court before the expiry of a certain date or otherwise be barred from doing so in the future due to the statute of limitations (e.g. when the time limit to start an action in court is almost expiring).
Mediation will also not work where one or both the disputing parties are not participating in the mediation in good faith. A mediation will not work if at least one of the parties is not sincere in reaching an amicable settlement and has ulterior motives which could include gathering and exploiting information exchanged to size up the strength of the other party's case if it went to court or simply to buy time.
Are There Any Limits To The Confidentiality Of The Mediation Process?
Even though mediation emphasizes the confidentiality of what is discussed between parties during mediation including what is disclosed privately by any party to the mediator, there are some exceptions to the confidentiality of the mediation.
A general exception to confidentiality of the mediation is that it does not extend to disclosures received by the mediator on potentially illegal or criminal acts committed by parties or intended to be committed by parties. A mediator will under no circumstances condone or become a party to criminal or potentially illegal acts that any party to the mediation has carried out or wishes to carry out.
Therefore, if there are criminal investigations into the matter by the authorities, mediators may have to disclose what they know to the authorities because illegal acts are not protected by confidentiality of the mediation. Section 15(2) of the Mediation Act 2012 (Act 749) also lists out situations when confidential communication in a mediation may be disclosed namely, if:
(a) the disclosure is made with the consent of the parties;
(b) the disclosure is made with the consent of the person who gives the mediation communication;
(c) the disclosure is required under the Mediation Act 2012 or for the purpose of any civil or criminal proceedings under any written law; or
(d) the disclosure is required under any other written law for the purposes of implementation or enforcement of a settlement agreement.
How Can I Get A Mediator?
Parties who wish to mediate have a few options when choosing a mediator. As mediation is a purely voluntary process, parties have the freedom to appoint either a private mediator or a mediator from an institution that provides mediation services.
For cases that are already in the courts, the CJ's Practice Direction No. 2 of 2022 has listed three types of mediation that parties can choose from:
(1) Judge-led mediation: this service is provided by the courts where a judge or court officer acts as the mediator;
(2) Mediation by an institution that provides mediation: e.g. Asian international Arbitration Centre (AIAC), Malaysian Mediation Centre (MMC), Securities Industry Dispute Resolution Center (SIDREC), Mediation Centre Sabah, Sabah Law Society (MCS) and AAS Mediation Services, Advocates Association of Sarawak (AMS); or
(3) Mediation by a private mediator that is agreed between parties: the appointed private mediator must fulfill the criteria of (a) being appointed with the agreement of all parties and (b) having the qualification as a mediator, having specialised knowledge or experience in conducting mediation and fulfilling the terms and qualification that are set by the mediator's associated institution as provided under the Mediation Act 2012.
What Are The Key Features Of The Singapore Convention On Mediation?
The Singapore Convention on Mediation is a treaty that was signed in August 2019. Mediating parties from countries that signed the treaty can have the settlement agreement enforced as a judgment. The proviso is that it only applies to cross-border matters, i.e. international settlement agreements to resolve a commercial dispute. The treaty allows parties to invoke their settlement agreements with confidence.
Prior to the treaty, mediated settlement agreements were just agreements that lacked the assurance of being truly binding and enforceable across borders. The treaty helps to ensure that settlement agreements arising from mediation can be enforced in countries that have ratified the Convention.
On 25 February 2020, Singapore and Fiji were the first two countries to deposit their instruments of ratification of the Convention. The Convention entered into force on 12 September 2020 after Qatar became the third country to ratify. Malaysia is also a signatory to the Convention.
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