Is suing the only option to resolve a legal issue without going to court in Malaysia?

Credit: The Star Malaysia

It is a common belief that you sue someone when you have a legal problem with them. The problems can range from anything like a monetary dispute to a misunderstanding between yourself and your neighbour. One of the legal issues that has been covered in the news is the USJ 25 Sri Maha Mariamman temple. In that case, the court had awarded a consent order to the developer, MCT, to develop the land. This gave rise to a dispute between the temple board of trustees and MCT, which resulted in the temple fracas. To ensure the smooth resolution of this, the Attorney-General of Malaysia, Tommy Thomas, offered to mediate the parties. You may then wonder what a mediator does or what their role entails, but other alternatives to resolve cases out of Malaysian courts include negotiation and arbitration. This falls under alternative dispute resolution (ADR).

What is ADR?

ADR works to encourage more communication between the parties and providing a safe, independent platform for them to voice out their frustrations. By having a secure environment, this would give the parties a chance to have their voices heard and balance the power imbalance that arose as a result of the dispute. It is a method to encourage parties to sit down together with an independent person to discuss and arrive at a mutually agreeable outcome without burdening the Malaysian court system. On top of that, if you don’t have the funds to hire a lawyer to fight for your case in court, ADR may also be the best alternative. The parties are also able to avoid wasting time and money that is usually associated with suing someone. The three commonly known ones are mediation, negotiation, and arbitration with the governing laws being Mediation Act 2012 and Arbitration Act 2005. 

If you are unable to hire your own lawyer, do read: What to do if you can’t afford a lawyer in Malaysia? for more information on legal representation. 

Resolving disputes through mediation

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Mediation may be rarely used in Malaysia, but it is now governed by the Mediation Act 2012 (MA). The term has been defined under Section 3.  

So, what does this all mean? It means that there is a third person overseeing the mediation process between the parties and ensuring that there is a level of mutual respect. If the atmosphere becomes too tense in the room or if the parties use derogatory terms with each other, the mediator has the power to interrupt the discussion or suggest that the parties take a break to retune their emotions.

How does it work then? 

First of all, there needs to be a mutual consent by both parties to voluntarily appoint a mediator. Consent is important here because the mediator has to be someone that both parties have agreed on. The mediator can be a practicing lawyer or someone from the industry that the dispute concerns with. They also have to be someone impartial and independent of the parties involved. You can’t ask your parents, family members, or even friends to mediate the dispute. The next stage would involve the mediator arranging a time and place for the process to take place. Once that has been done, you and the other party will meet the mediator. The mediator will introduce themselves, the manner in which the mediation is to be conducted, and the agenda of the mediation. This would include the use of both traditional and hybrid methods if it guides the parties to a resolution, seeing that the ultimate goal of the discussion is for the parties to arrive at a mutually beneficial outcome that they will adhere to.


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If they suspect that there would be a conflict of interest arising from their relationship with the parties or from the facts of the dispute, they are required to make a full disclosure to the parties involved beforehand. If the mediator is unable to fully discharge their duties, they should withdraw and advise the parties to appoint someone else as a replacement. This is because the mediator’s full disclosure would make a strong difference between a fair and an unfair mediation. If there is no conflict of interest, the process then begins with the mediator asking preliminary questions before passing the floor to the parties and letting them speak with each other. 

Mediation can also be extended to companies, but things can become slightly complicated for them as the stakes are higher. Imagine if you represent a company who has found out that your business rival has stolen your trade secret. You would rather resolve it privately than go to court at the risk of affecting your reputation, right? Companies have a clause in their contracts to reflect their agreement to appoint a chosen mediator in the event of a dispute before they sign it. This is to prevent any further misunderstandings that could arise in the future, which is also reflected in Rule 2(1) of AIAC Mediation Rules 2018 (MA). 
 

This can be defined as adhering to the terms of the mediation agreement that you and the other party has signed before the dispute. If this has happened to you, you won’t have the freedom to appoint a mediator until you have submitted your request to the Asian International Arbitration Centre (AIAC). This is to ensure that a suitable mediator could be assigned to hear your matter in accordance with the prior agreement.

What happens if the mediation is still unsuccessful? Fear not, Section 4 of MA does not stop the parties from considering the option of suing.
 

If you are a party and want to proceed to sue the other party if and when mediation has failed, you might want to have a read of this article: How do you even start suing someone in Malaysia?
 

Resolving disputes through negotiation

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Negotiation is basically the same as mediation, only with slight differences. Think of it as a board of directors having a discussion on whether to liquidate the company assets or not. Some are in favour of this whereas the rest of the directors are not. An outsider – in the form of an industry expert – may be brought in from outside the company to manage the situation. This person would even have to write their recommendations in a report that would be tendered to the directors. Negotiation works in the same manner except that the expert is the negotiator and his recommendations are the options that the parties can choose to incorporate in their discussions. 

As there are no laws governing negotiation in Malaysia at the current moment, it is used more for contractual terms during the offer and acceptance stage rather than to resolve a dispute. This approach is usually enlivened when parties are unable to successfully mediate among themselves. The mediator would then recommend the best option for the parties, which may include continue with another type of dispute resolution method or to head straight for litigation. If the parties are still willing to resolve the dispute amongst themselves, then the mediator adopts the approach of negotiation. This is when the mediator becomes known as a negotiator and become actively involved with the parties in this process. If the parties have reached a deadlock and are unable to proceed further with their discussions or brainstorm for more agreeable solutions, the negotiator is able to step in and suggest suitable alternatives to them. They would then have the power to advise the parties to consider looking at the dispute from a divergent viewpoint. The parties could also consider compromising in an attempt to arrive at an amicable and beneficial solution. 
 

Resolving disputes through arbitration

Arbitration has two types in Malaysia, which is domestic and international arbitration. Both of these terms have been defined under Section 2(1) of Arbitration Act 2005 (AA).
 

What this means is that the location of the dispute would decide the type of arbitration type. If most of the transactions done by the companies involved are in Malaysia, then it is counted as a domestic one. 

While arbitration is still under the realm of alternative dispute resolution, it has the most similarities to a court case. You are required to attend the hearing – either as a self-represented party or with your lawyer. This will be conducted by a sole arbitrator or a panel of arbitrators to hear your dispute. It is different from suing someone because you have the freedom to voluntarily choose the arbitrator instead of having a judge assigned to your case like in a trial. Similar to both the mediation and negotiation processes, you also have the opportunity to share the impact of the dispute on your life to the decision maker. The decision maker – the arbitrator in this case – will factor and weigh the arguments presented by both parties before arriving at a decision. This is known as an award, which is legally binding on the parties and may include costs that are to be awarded as compensation.
 

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Arbitration is more likely to be enlivened by companies, not individuals. This is because companies are involved in complicated disputes that they want to resolve without going to court. They also do not want to deal with the public scrutiny that may be associated with a trial. As a result, an arbitration agreement may even be included as a contractual term in their contracts to ensure that there is a smooth dispute resolution.
 

ADR may sound like a better alternative to suing someone in court.

As ADR is done in a respectful and voluntary environment, you are in control of how the process works. If you feel that the atmosphere in the room is becoming extremely tense, you can request for a time-out from the mediator. If you are in fear of the other party due to the nature of the dispute, such as family violence, the mediator may be able to conduct the process through the phone. Due to the nature of ADR, you’ll have the space to relate your version of events and how the dispute has personally affected you without the stress of a courtroom in Malaysia. 

Yet there is a drawback to ADR in the form of its scope of application. ADR may only be applicable to cases that do not fall within the realm of criminal law or family violence for two reasons. If ADR is permitted for criminal law and family violence cases, it may not take into account the level of the victim’s sufferings and the public interest in seeing the offender pay for their crime. There would be public accountability when the case is heard in a court instead of an independent person. 

Although mediation is a voluntary option for people like you and me to choose in Malaysia, the court can also order the parties to engage in a court-enforced mediation before the matter proceeds to trial. If this is something that interests you, the Bar Council of Malaysia has founded the Malaysian Mediation Centre in its attempt to encourage mediation as a tool for dispute resolution. There is also a panel of accredited mediators that you can hire to help with your dispute. Another option would be to visit the Asian International Arbitration Centre. It has a wider scope of ADR in the sense that they have a list of mediators and arbitrators and a schedule of hiring fees for each service. 

P.S. If you are unable to engage the services of the private mediators or arbitrators, fear not. Universiti Kebangsaan Malaysia (UKM) provides a pro bono mediation service, which has been covered by AskLegal in a previous article: PRO-BONO LEGAL AND MEDIATON SERVICE AT UNIVERSITI KEBANGSAAN MALAYSIA.