Much Ado About Nothing?

A review of the Mediation Act 2012 by Shannon Rajan

 

INTRODUCTION

After more than 5 years in the Malaysian legislative pipeline, the much anticipated Mediation Act 2012 (“the Act”) came into operation on 1 August 2012.

The Act has been criticised by certain quarters as being a redundant piece of paper. This article discusses the main provisions of the Act and considers whether the aforementioned criticism is justified.


THE OBJECT AND PURPOSE OF THE ACT

The objective of the Act is 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.” The Parliament formulated an exceedingly modest purpose of the Act by failing to adopt uniform laws relating to the accreditation, qualification and professional standards of mediators, and perhaps less controversially, implement mandatory mediation in Malaysia.

Many mediators in Malaysia belong to professional institutions, such as the Malaysian Mediation Centre and the Chartered Institute of Arbitrators, and are required to adhere to the code of ethics and other related standards of their institution. There is no uniformity and consistency of accreditation, qualification and standards between these organisations and the Parliament’s failure to introduce legislative consistency concerning the same can only be viewed as a missed opportunity to promote and encourage mediation in Malaysia.     


THE DEFINITION AND APPLICABILITY OF MEDIATION

Section 3 defines “mediation” as a voluntary process in which a mediator facilitates communication and negotiations between parties to assist the parties in reaching an agreement regarding a dispute.  Although the independence and neutrality of the arbitrator are not included in the definition of mediation, such omission is not material as all appointed mediators are obliged to confirm their independence and neutrality under the Act.        

The Act does not apply to matters which are set out in Section 2 and the Schedule. These matters include, but are not limited to, disputes as to the effect of any provision of the Federal Constitution, prerogative writs, the issue of injunctive relief, election petitions and land acquisition proceedings.    


COMMENCEMENT OF MEDIATION

Section 4(1) read together with Section 4(2) provides that parties may initiate mediation under the Act at any time and that mediation will not operate to stay, extend or prevent the commencement of any civil action in court or arbitration.

 

The procedures for the commencement of mediation are set out in Section 5 and are as follows:-

  1. a person may initiate mediation by sending a written invitation to mediate to the person with whom he has a dispute;
  1. the written invitation must briefly specify the matters in dispute;
  1. upon receipt of the written invitation, the person with whom he has a dispute may accept the same in writing; and
  1. a mediation shall only be commenced if the person who initiates it has received the acceptance of the written invitation from the person with whom he has a dispute.

 

The written invitation is deemed to be rejected if the person initiating the mediation does not receive a reply from the person with whom he has a dispute within 14 days from the date he sent the written invitation or such other period of time specified in the invitation.

The Act has placed somewhat onerous procedural requirements for parties to comply with in order to commence mediation and they are counter-productive to the object and purpose of the Act. For instance, a verbal agreement for mediation appears to be insufficient for the purposes of the Act.

Some other problems that may arise from the procedures are as follows:-

  1. as the Act does not define a “written” invitation, it is unclear whether it includes electronic communication such as e-mail and short messaging service (SMS);
  1. an acceptance is ineffective if a person has accepted, in writing, a written invitation within the period stipulated in the invitation, but his acceptance is received by the other person after the expiration of the stipulated period; and
  1. there is no saving provision which allows parties to mutually waive the requirements under Section 5 to preserve the commencement of mediation.


Section 6 requires the parties to enter into a mediation agreement upon the commencement of mediation to record inter alia the parties’ agreement to submit their disputes to mediation, appoint a mediator and bear the costs of mediation.  


APPOINTMENT OF MEDIATOR

Sections 7(1) to 7(3) provide that the parties shall (if necessary, with the assistance of an institution) appoint a mediator who possesses the relevant qualification, special knowledge or experience in mediation or satisfies the requirements on an institution. 

Section 7(4) stipulates that, unless the parties agree otherwise, there shall be a sole mediator while Section 7(6) prescribes that the appointment of any mediator is to be valid only upon his written consent. 

The appointed mediator has a mandatory obligation under Section 7(7) to disclose, prior to accepting the appointment, any known facts that a reasonable person would consider likely to affect his impartiality as a mediator, including a financial or personal interest in the outcome of the mediation. From the wordings of this section, there appears to be no continuing obligation on the mediator to disclose any matters affecting his impartiality and neutrality after the mediation has commenced.


TERMINATION OF APPOINTMENT

The parties may terminate the appointment of the mediator under Section 8(1) if the mediator has infringed the requirements of Sections 7(2) and 7(7) or obtained his appointment through fraud or is unable to serve as a mediator for the mediation. Section 8(2) allows the parties to terminate the appointment of a mediator for any reason whatsoever and requires them to inform the mediator of their reasons for the termination.  


THE MEDIATION PROCESS

Section 9 highlights the role of the mediator, which inter alia includes facilitating mediation, determining the method of mediation and suggesting options for the settlement of the dispute. It is interesting to note the choice of words used in the provision i.e. “suggest options” as opposed to generate options, which may be in reference to other processes such as early neutral evaluation and binding and non-binding evaluation.

Section 11(1) provides that the mediator shall conduct the mediation privately and he may meet with the parties together or separately. Section 11(2) permits any party (with the consent of the mediator) or the mediator (with the consent of the parties) to appoint a non-party to assist in the mediation.

A mediator may end the mediation under Section 11(3) if he is of the opinion that further efforts at mediation would not contribute to a satisfactory resolution of the dispute between the parties.


CONCLUSION OF MEDIATION

Section 12 provides that mediation shall conclude upon:-

  1. the signing of a settlement agreement by the parties;
  1. the issuance of the mediator’s written declaration that further efforts at mediation would not contribute to a satisfactory resolution of the dispute;
  1. the issuance of the parties’ written declaration that the mediation is terminated; or
  1. the withdrawal from a mediation by death or incapacity of any party.


Section 13 stipulates that the parties shall enter into a settlement agreement when an agreement is reached regarding a dispute. The agreement must be in writing, signed by the parties and authenticated by the mediator. 

Section 14 provides that a settlement agreement is binding on the parties and the same may, if proceedings have been commenced in court, be recorded as a consent judgment or judgment before the court.


CONFIDENTIALITY, PRIVILEGE AND IMMUNITY

To augment the mediation process, Section 15 prohibits a person from disclosing any mediation communication and Section 16 declares that such communication is privileged and is not subject to discovery. These safeguards are subject to the exceptions set out in the respective provisions.

To safeguard a mediator, Section 19 exempts a mediator from liability for any act or omission in the discharge of his function as mediator save where the act or omission is fraudulent or involves wilful misconduct.


CONCLUSION

The Act is largely a regurgitation of the procedural rules of various institutions relating to mediation. It does not contain any provisions to regulate the practice of mediation by mediators or establish standards of competency (including minimum qualifications) for mediators or establish an accrediting authority to confer and revoke accreditation in appropriate circumstances.

The Malaysian Parliament has also shied away from introducing mandatory mediation, which would have relieved the court system of the pending cases in the dockets and placed Malaysia alongside with other nations with modern and sophisticated mediation process.   

The Act is not completely devoid of merits. It contains some provisions that would promote mediation in Malaysia. It expressly provides for the enforceability of a settlement agreement that is signed at the conclusion of a successful mediation and protects from liability, a mediator who has properly discharged his duties as such.

Despite its shortcomings, it would be unduly harsh and premature at this juncture to conclude that the Act is much ado about nothing.

 

Writer’s e-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

 

 
ACCOLADES & AWARDS

Skrine Retains Who’s Who Legal Accolade for Malaysia

On 15th May 2017, the Who’s Who Global Awards was held in London, United Kingdom and Skrine was conferred the Award:

Malaysia Law Firm of the Year 2017

Skrine previously received this Award in 2013, 2014, 2015 and 2016.

>> READ MORE

SKRINE Clinches Top Honours at ALB Malaysia Law Awards 2017

On 6th April 2017, the Asian Legal Business Malaysia Law Awards was held and SKRINE was named

Malaysia Law Firm of the Year 2017

SKRINE also bagged 5 other awards

>> READ MORE

Asialaw Profiles 2017

The Asialaw Profiles has ranked Skrine as Outstanding Firm and particularly highlighting the following practice areas:

Outstanding Firm

  • Competition & Antitrust
  • Corporate/M&A
  • Dispute Resolution
  • Energy & Natural Resources
  • Intellectual Property
  • IT, Telco & Media
  • Project & Infrastructure

>> READ MORE

PDPA NOTICE

English | Bahasa Malaysia