By Diana Cheak (Reviewed by Tommy Wong & Eric Toh)

What is mediation?

Litigation is an adversarial process of resolving disputes in court. Unlike litigation which is based on a judicial and adversarial process, mediation is a form of alternative dispute resolution which is voluntary, informal and flexible. Mediation focuses on the needs and interests of the parties as opposed to legal positions and enforceable rights in a litigation process. In mediation, parties are encouraged to negotiate and mutually arrive at an acceptable solution for the resolution of the dispute. Upon agreement, there can be no further litigation of the matter. Mediation is a dispute resolution method that can save time and legal costs.

Advantages and benefits

One significant advantage of mediation is the guarantee of confidentiality. All disclosures, concessions, admissions and communication made during the entire process of mediation are strictly “without prejudice”, confidential and remain known only to the parties and the mediator. In other words, any documents, evidence, admissions or concessions disclosed or made during mediation by any party will be protected by the without prejudice privilege and cannot be referred to or used against them subsequently if settlement between the parties is not achieved. However, parties may waive the without prejudice privilege where both parties consent to the waiver.

The role of a mediator is to facilitate and find a solution for disputing parties. In a successful mediation, the decision is made by parties and terms for the solution are often recorded in the form of a settlement agreement, signed and agreed by the parties. This differs significantly from litigation where a judge is the decision-maker and parties are bound by a judgment. The terms of the settlement agreement are binding and enforceable between the contracting parties and in the event of breach, the defaulting party can be sued for breach of the settlement agreement.

Pursuant to section 2(a) of the Mediation Act 2012, mediation is widely applicable to various personal and commercial disputes save for the following disputes/court proceedings:

  • Constitutional law – issues under the Federal Constitution
  • Prerogative writs (Courts of Judicature Act 1964)
  • Temporary/permanent injunctions
  • Election petitions under Election Offences Act 1954
  • Proceedings under the Land Acquisition Act 1960
  • Judicial review
  • Appeals 
  • Revision
  • Native Court
  • Any criminal matter

Notwithstanding section 2(a) of the Mediation Act 2012, disputing parties are encouraged even by the courts to resolve their disputes by way of mediation as opposed to litigation. For example, the Practice Direction No. 4 of 2016 issued by the Chief Registrar of the Federal Court of Malaysia encourages mediation even at the appeal stage. 

More often than not, parties are more likely to accept and comply with the settlement agreement as mediation focuses on and addresses the needs and interests of the parties. Therefore, the dispute between the parties is more effectively resolved by way of mediation than litigation. In addition, mediation is a method that is more favourable to parties who wish to preserve family or business relationships. 

The Mediation Process

Parties may choose and jointly appoint a mediator from the list of Certified Mediators empanelled with the Malaysian Mediation Centre (a body established under the auspices of the Bar Council of Malaysia), the Asian International Arbitration Centre or any other mediator agreed by both parties. Parties may also appoint more than one mediator should the need arise. 

After the appointment of the mediator, parties are required to attend a pre-mediation conference where the mediator will meet the parties for the first time, explain the mediation process and disclose any potential or actual conflict of interest (if any). The mediator will also request parties to provide a summary of facts and relevant documents. At the end of the pre-mediation conference, parties are required to sign an agreement to mediate.

The mediation process can be divided into 5 stages:-

  1. The mediation process starts with an introduction by the mediator and the explanation of the nature and process of mediation. The mediator has to confirm that parties who are present at the mediation have the authority to enter into a settlement. This is especially important if the disputing parties are companies or organisations. Representatives of companies or organisations must have the authority to settle for and on behalf of their respective companies or organisations. The mediator will also impose certain ground rules to be followed by the parties throughout the mediation process. For instance, parties are encouraged to speak and address each other with courtesy and only one person is allowed to speak at a time. 
  2. In the first joint session, the mediator will identify the issues at hand and acknowledge the concerns, needs and interests of the respective parties. During this session, parties are encouraged to raise their disagreement/misunderstanding and explore various options and alternatives to resolve their dispute.
  3. After the first joint session, each party will have a private session with the mediator where they can discuss confidential and sensitive issues pertaining to the dispute with the mediator. This is usually where parties disclose issues which they are not comfortable expressing or disclosing to the other party in the first joint session. To ensure fairness, parties are given equal time and opportunity with the mediator in each private session.
  4. At the end of the private session, the mediator will invite both parties to attend the second joint session where options and alternatives solutions will be discussed between parties, focusing on the needs and interests of the parties. The mediator will assist and facilitate the parties to solve their disputes amicably and effectively. In the event parties are able to resolve their disputes, the mediator will advise parties to enter into a settlement agreement, where detailed terms for settlement shall be discussed between the parties. However, if mediation is unsuccessful between parties, the mediator will dismiss the mediation session. In instances where parties only manage to reach a settlement that resolves part of the dispute, parties have the option to resolve the remaining dispute by way of litigation or arbitration.
  5. Any agreement following a successful mediation may be recorded in writing by way of a settlement agreement. Parties will discuss the terms for the settlement agreement in detail, facilitated by the mediator. It is pertinent to note that the settlement agreement will bind both parties upon signing. Hence, it is always advisable to propose viable, achievable and practical terms for settlement. Upon signing of the settlement agreement, it is important to note that the settlement agreement is not subject to further appeal. In the event either party breaches any term in the settlement agreement, the aggrieved party may sue the defaulting party for breach of the settlement agreement.

When should I mediate?

There is no hard and fast rule when it comes to the question of when should you refer a dispute to a mediator. However, it is always recommended to resolve any dispute by way of mediation as early as possible to reduce unnecessary litigation costs and expenses and to increase chances of the dispute being resolved. Further, due to the adversarial nature of the litigation process, parties usually suffer from an irreparable breakdown in communication and compromised family or business relationships at the end of the litigation process. As such, early mediation may help save and repair the relationship of the disputing parties or offer a more amicable parting of ways. 

When there is a dispute, you are encouraged to hold a discussion with your appointed legal representative regarding the factual and legal issues arising from the dispute, the strengths and weaknesses of your case and the estimated costs and time involved if the dispute is to be litigated in court. One must always remember that it is always the right time to mediate, even at an advanced stage of litigation. The cost to mediate and the time involved in mediation are relatively lower and shorter than the cost and time spent to litigate a dispute in court. Hence, mediation is always a better option or rather a good option even if there is the slightest chance of settlement between disputing parties. Even if parties fail to reach an amicable settlement at the end of mediation, at least the parties are able to learn the strengths and weaknesses of their case from the failed mediation attempt and are able to reposition themselves subsequently. As mediation identifies underlying issues and allows personalised solutions, one may find that mediation offers more creative solutions and resolves issues that are important to the parties, apart from the underlying legal dispute.

Do I need a lawyer?

Strictly speaking, you do not require legal representation prior to a mediation and throughout the mediation process. However, it is strongly recommended that you consult a lawyer who supports mediation and is familiar with the mediation process to advise you regarding your mediation. In order to ensure that you have an effective mediation, you may want to consult your lawyer before the mediation to discuss your rights and responsibilities and the legal consequences of possible settlement terms that may derive from the mediation. Further, having a lawyer with you during the mediation session is equally important as you may want to consult your lawyer on the settlement terms or have your lawyer review the settlement agreement before you sign it. In the event you decide not to bring a lawyer with you during the mediation, at the very least, it is always recommended that you seek legal advice to find out about your rights and responsibilities before the commencement of the mediation, and again afterwards, prior to signing a settlement agreement.

Conclusion 

Mediation is always worth a try. At best, the mediation will result in an amicable settlement. At worst, the parties are better aware of their respective positions as they proceed with the dispute resolution process. Make the most of your mediation by consulting a lawyer familiar with the area of law applicable to your dispute, the mediation and the settlement process. 

 

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