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Legally Speaking
MEDIATION has long been embraced in Malaysia as a form of alternative dispute resolution (ADR). Several professional institutions such as the Malaysian Mediation Centre and the Chartered Institute of Arbitrators provide mediation services using their respective codes of ethics and rules.
The Mediation Act 2012 (Act) was recently introduced by Parliament, and came into force on Aug 1, 2012 with the aim of promoting and encouraging mediation as a method of ADR and to facilitate the settlement of disputes in a fair, speedy and cost–effective manner.
This article discusses the salient provisions of the Act, and how the Act could have been improved to encourage a wider adoption of mediation as a form of ADR.
The Act
"Mediation" is defined under the Act to mean a voluntary process in which a mediator facilitates communication and negotiation between parties to assist them in reaching an agreement. The Act does not apply to: (1) mediation conducted by courts; (2) mediation conducted by the Legal Aid Department; and (3) matters expressly excluded in its schedule (such as proceedings on the Federal Constitution, the remedy of temporary or permanent injunctions, and any criminal matter).
The Act does not oblige parties to mediate before litigation or arbitration. Also, parties may choose to mediate simultaneously with any civil court action or arbitration. Where proceedings have already commenced, mediation does not act as a stay or extension of proceedings.
Steps to commence mediation
First, a person may initiate mediation by sending to the other party a written invitation to mediate, specifying the matters in dispute. The Act sets out how an invitation will be deemed accepted or rejected by the other party. Upon commencement of mediation, parties must enter into a written mediation agreement, which: (1) contains an agreement to mediate; and (2) deals with matters such as the appointment of a mediator and costs.
The mediator
Only a person who: (1) possesses the relevant qualifications, knowledge or experience in mediation through training or formal tertiary education; or (2) satisfies the requirements of an organisation which provides mediation services, can be appointed as a mediator under the Act. A mediator is required to disclose, before accepting the appointment, any known facts that a reasonable person would consider likely to affect his impartiality as mediator in the outcome of the mediation.
A mediator must act independently and impartially, with a view to assisting the parties to reach a satisfactory resolution of the dispute and suggest options for the settlement of the dispute.
A mediator will not be liable for any act or omission in the discharge of his functions as a mediator unless the act or omission is proved to have been fraudulent or involves wilful misconduct.
Confidentiality
A mediation is conducted privately. In the same vein, the Act also prohibits the disclosure of any oral or written statement made during or in relation to a mediation, subject to some exceptions. This essentially provides a significant boost for mediation in addressing the issue of confidentiality; one of the primary concerns of litigants in a mediation process.
Settlement agreement
Upon the conclusion of a mediation and the reaching of an agreement, the parties must enter into a binding settlement agreement. If proceedings have been commenced in court, the settlement agreement may be recorded before the court as a consent judgment or judgment of the court.
How the Act could be improved
Although the introduction of the Act is a first step in the right direction, the Act is not devoid of flaws and shortcomings. The Act has been widely seen as being merely a reproduction of existing procedural rules of certain professional mediation institutions. Primarily, stakeholders familiar with the mediation framework in Malaysia have long hoped for legislation to regulate the practice of mediation by mediators and the standardisation of competency requirements with minimum qualifications for mediators, whether or not through an accreditation system where an authority is given the power to revoke or confer accreditation. The Act has not addressed these points.
Most glaringly, whilst the Act preserves the voluntary process of mediation, it falls short of making mediation mandatory in certain appropriate instances. By giving parties the right to commence mediation simultaneously with any civil action or arbitration, it allows litigants to explore multiple simultaneous dispute resolution routes without promises of having disputes resolved expediently, which does not make economical sense and defeats the purpose of ADR.
Conclusion
Despite its apparent failings, the Act does introduce a few laudable improvements, one of which is the guarantee of confidentiality of mediation processes, as well as allowing any settlement agreement to be recorded before the court as a consent judgment or judgment of the court. If the Act could be amended to address the foregoing concerns, it may be more successful in promoting mediation as a preferred form of ADR.
Contributed by Lee Kher Huan of Christopher Lee & Co. (www.christopherleeco.com).