The Mediation Process in Malaysia
A. What is Mediation?
Mediation is a voluntary, solution-oriented form of alternative dispute resolution. This is where the parties to a dispute agree to resort to mediation, they may seek the assistance of an independent and impartial third party, a Mediator, who will facilitate communication and negotiation between the parties to aid them in reaching a mutually beneficial and satisfactory agreement regarding the dispute.
A few distinctive features of mediation are outlined below:
1. Mediation is voluntary
1.1 When may parties mediate?
Mediation is voluntary in the sense that parties may choose to commence mediation proceedings at any given time. The significance of this discretion is that parties may choose to mediate even after court proceedings have been brought. In fact, according to sections 1 and 3 of the Practice Direction No. 4 of 2016 on Mediation (hereinafter referred to as ‘PD No.4 2016’), the Chief Justice of Malaysia has directed that all judges of the High Court, Sessions Court and magistrates, as well as their deputy and assistant registrars respectively, should encourage parties to settle their disputes before the court by way of mediation at the pre-trial stage or at any stage.
1.2 On what terms may parties mediate?
The parties may collectively decide the terms of the mediation proceedings.
Forums for Mediation
The parties may choose the forum through which their dispute is mediated. Section 5 of PD No.4 2016 outlines the following modes of mediation: “(a) by judge-led mediation, (b) by Asian International Arbitration Centre (hereinafter referred to as ‘KLRCA’); or (c) by other mediators agreeable by both parties”.
It is notable that different mediation forums are governed by different rules.
(a) Firstly, judge-led mediation is governed by the rules set out in Annexure A of PD No.4 2016. Significantly, this directs that, the original judge hearing the case shall pass the case to another mediating judge. The mediating judge will not see the parties without their lawyers’ presence. Nonetheless, it is notable that the parties may choose to vary these terms by agreement.
(b) Secondly, should the parties wish to do so, they may elect to mediate in accordance to the AIAC’s Rules of Mediation, in which case the Plaintiff’s solicitor will be required to issue a notice in writing to the AIAC upon the direction of the court within seven (7) calendar days (see: Annexure B of PD No.4 2016).
(c) Where the parties elect to personally appoint their mediator, they may choose from a list of certified mediators furnished by the Malaysian Mediation Centre of the Bar Council of Malaysia (MMC), or any other mediator agreed upon by both parties (see: Annexure C of PD No.4 2016). When a mediator from the MMC has been chosen, the mediation proceedings will be bound by the MMC Code of Conduct and the MMC Mediation Rules. (see: Mediator’s Rules and Code of Ethics, Malaysian Mediation Center website)
Other terms upon which the parties may wish to mediate against may also include the proportions of the costs of mediation to be borne by each party, as well as the confidentiality of mediation communications. The latter will be discussed further below.
Upon coming into agreement on the terms of the mediation proceedings, the parties will outline these terms in a mediation agreement.
1.3 Are parties obliged to come to a settlement?
The parties are not obliged to come to a settlement where they are unable to reach a mutually beneficial outcome.
Where mediation is unsuccessful, the mediator will dismiss the mediation session and it is then open to the parties to resolve the remaining dispute by way of litigation or arbitration.
However, where mediation is successful, the parties may record the agreement in writing in the settlement agreement. Once signed, the settlement agreement will be final and binding on both parties (see: Section 14(1) Mediation Act 2012). Should either party fail to comply with the terms of the settlement agreement, the aggrieved party may have recourse to the default by bringing an action in court for breach.
2. Mediation proceedings are “without prejudice” / privileged
2.1 The general rule
A key feature of mediation proceedings is the confidentiality of the process. According to section 15(1) of the Mediation Act 2012, all mediation communications may not be disclosed and are to remain private between all parties and the mediator involved.
Additionally, section 16(1) of the Mediation Act 2012 asserts that any mediation communications are strictly protected by ‘without prejudice’ privilege – such communications may not be subject to “discovery or be admissible as evidence in any prior proceedings”. This means that any matters discussed during the mediation process may not be raised or revisited in future legal proceedings.
2.2 The Exceptions
Nonetheless, such guarantees of confidentiality and privilege are subject to several exceptions as outlined in s 15(2) and s 16(2) of the Mediation Act 2012. Excerpts of these sections are as follows:
“s 15(2) … mediation communication may be disclosed 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 this Act 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”
“s 16(2) … the mediation communication is not privileged if –
(a) The privilege is expressly waived in writing by the parties, the mediator and the non-party;
(b) It is a public document by virtue of the Evidence Act 1950 [Act 56];
(c) It is a threat to inflict bodily injury or commit a crime;
(d) It is used or intended to be used to plan a crime, attempt to commit or commit a crime, or to conceal a crime or criminal activity or an ongoing crime or ongoing criminal activity;
(e) It Is sought or offered to prove or disprove a claim or complaint of professional misconduct or malpractice filed against a mediator; or
(f) It is sought or offered to prove or disprove a claim or complaint of professional misconduct or malpractice filed against a party, non-party, or representative of a party based on their conduct during any mediation session.”
The most notable exception to confidentiality and privilege, as highlighted in purple above, is that parties may agree to consent to disclosure, or to expressly waive privilege in writing. In such cases, mediation communications will not be confidential or privileged.
B. Why should you mediate?
Mediation is a preferred method of alternative dispute resolution as it is inexpensive compared to the exorbitant costs of litigation or arbitration.
Mediation is also comparatively more efficient. According to the MMC, most mediations can be concluded within a working day, and may be contrasted with protracted litigation proceedings which may stretch on for years.
Mediation is a non-hostile means of resolving a dispute.
When parties choose to litigate their cases in court, the court system places them in adversarial positions. The conclusion of litigation proceedings results in absolute wins or losses for either party. As such, by the end of litigation, the relationship between both parties will usually have deteriorated beyond repair.
In contrast, mediation produces amicable resolutions which are likely to be in the best interest of both parties. Thus, mediation is the preferred form of alternative dispute resolution for those whom are concerned with preserving their relationships.
Please click here for the Operating Procedure for Mediation at the Court Mediation Center
Chew Qian Yu Roxanne
The London School of Economics and Political Science (LSE)