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Mediation to resolve pandemic disputes?
Published on: Monday, March 08, 2021
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Mediation to resolve pandemic disputes?
During this Covid-19 pandemic the government has set up Pusat Mediasi Covid-19 (“PMC-19) to deal with any contractual disputes as a result of the lockdown under the Prevention of disease Act. The PMC-19 offers free mediation to members of the public.  Their mediation services can be accessed online via the following link. Many people still do not know what is mediation and therefore do not know how to take advantage of this offer by the government.  I will attempt to explain this process in layman terms. Mediation is a process which is very different from the court process that we know.  A mediator must complete a 40 hours course and pass the assessment before he or she can act as a mediator. Unlike a judge, a mediator does not decide or rule on a case. The mediator will help the parties to talk about their grievances and narrow down the issues.  The mediator is not there to give legal advice or to impose any solutions on the parties. The mediator is trained to manage difficult confrontations and focus the parties on reaching a win win settlement. The mediator will help the parties to generate possible solutions.

Mediation is voluntary.  Parties must consent to the mediation before the process can take place. The parties who attend must be able to make decision on the issues at hand.  If the party is representing a company, he or she must have clear authority to enter into a settlement agreement otherwise time will be wasted.

Mediation is a confidential process.  No one can reveal or use any statements made during the mediation for any purposes.  Notes taken during mediation will be shredded to maintain confidentiality.   Parties to the mediation can be accompanied by their lawyers.  The role of the lawyers is to prepare their clients and to advise them on their legal rights.  The lawyers can also assist with documentation and to draft the settlement agreement if settlement is reached.  The lawyers normally do not speak on behalf of their clients. The parties are encouraged to tell their side of the story in their own words.

Mediation process

There are a few stages in mediation.  Parties will first meet together in a joint session whereby the mediator will lay the ground rules and ensure that the parties understand the process.  During this session the parties will be given equal time to present their case. The mediator will note down the issues and express them in simple and neutral manner to facilitate further discussion. This allows the parties to understand each other’s perspective. After the joint session, the parties will be moved to a private session with the mediator.  The parties will take turn to talk to the mediator in private and confidential setting. During this session the mediator will check with the parties separately if there are any matters or concerns which have not been dealt with or if there are facts that had been held back during the joint session for some reasons that they cannot disclose during the joint session. The mediator will encourage the party to come up with possible solutions and talk through the solutions with them.  The mediator will refrain from making any decisions for the parties. After the private sessions with both parties, they will meet together in another joint sessions to talk about the options for settlement. Further private sessions can be held if necessary to reframe the options.  If both parties can reach a settlement, the mediator, or if lawyers are present, will assist to draft the terms of settlement. The settlement agreement is binding on both parties and can be enforced.

Benefits of mediation

Mediation is a better alternative to resolve disputes compare to the Court because it is much cheaper in terms of cost. The parties will share the cost of mediation.  Currently the rate offered by PMC-19 is RM2000.00 for the first 4 hours.  The government through Bahagian Hal Ehwal Undang-Undang will bear the cost of the first 4 hours. The next 4 hours will cost an addition RM4,000 which will be borne equally by the parties.  By comparison, to file a simple application in Court will surely cost much more than that. If the decision of the judge is not favourable to one party, possibility of appeal is there. The appeal process will cost more money and time. Besides costing much less, mediation is also a much a quicker process in terms of time.  Most cases are resolved within 4-8 hours. Court cases can drag on for months or years.  Not to mention the stress and anxieties that followed the Court process due to uncertainties. Mediation also preserves relationships. If a win win settlement is reached, the parties can still work together for mutual benefits.  Adversary system like the Court normally makes the parties enemy of each other. The court will have to rule in favour of one party. It is also very risky to leave the decision making in the hands of one person, the judge, who may or may not see your point or agree with your arguments.

Finally, here are some information regarding Pusat Mediasi Covid-19 (“PMC-19”) for your attention.  Any cases that do not qualify for PMC-19 mediation can be referred to the Mediation Centre Sabah (“MCS”) that is run by the Sabah Law Society. Mediation through PMC-19

Mediation through the PMC-19 is only available for disputes valued at a sum not exceeding RM500,000.00 between two contracting parties in respect of any inability to perform contractual obligations arising from any of the contracts covered (see below).

The Government of Malaysia will bear the cost of mediation services for individuals under the B40 and M40 categories as well as for Micro enterprises and Small Medium Enterprises (SMEs) as follows:

B40 (household income of RM4,849.00 and below)

M40 (household income of RM4,850.00 to RM10,659.00)

Micro enterprises with a sales turnover of less than RM300,000.00 or less than 5 full time employees

SMEs in the manufacturing sector with a sales turnover from RM300,000.00 to less than RM15 million or full-time employees from 5 to less than 75 people

SMEs in the services and other sectors with a sales turnover from RM300,000.00 to less than RM3 million or full-time employees from 5 to less than 30 people.

Parties who are not eligible for the subsidy under the PMC-19 may still go through the mediation process at a prescribed payment rate of RM2,000.00 (RM1,000.00 per party) for the first 4 hours.

Bankrupts or companies that have been wound up may also apply for mediation services under PMC-19 but are required to obtain approval from the Director of the Department of Insolvency.

Types of Contract Disputes Covered

Any dispute in respect of the inability of any party to perform any contractual obligation arising from any of the following categories of contracts due to the measures prescribed, made or taken under the Prevention and Control of Infectious Diseases Act 1988 to control or prevent the spread of Covid-19 may be settled by way of mediation:

Construction work contract or construction consultancy contract and any other contract related to the supply of construction material, equipment or workers in connection with a construction contract

Performance bond or equivalent that is granted pursuant to a construction contract or supply contract

Professional services contract

Lease or tenancy of non-residential immovable property

Event contract for the provision of any venue, accommodation, amenity, transport, entertainment, catering or other goods and services2

Contact by a tourism enterprise as defined under the Tourism Industry Act 1992 and a contract for the promotion of tourism in Malaysia

Religious pilgrimage related contract.

Hire Purchase Agreement

Credit sales contract

The PMC-19 commences its operations from 16 November 2020. The services provided by the PMC-19 include a start to finish mediation scheme as well as a framework for appeal. An application for mediation services under PMC-19 can be submitted online in the PMC-19 system at http://www.pmc19.gov.my/ requiring one to only do the following:

successfully passing the COVID-19 Relatedness Assessment;

submitting complete information; and

submitting the Agreement to Mediation Form signed by both parties within the stipulated timeframe.

The processing period for mediation services through PMC-19 is 14 working days from the date of receipt by PMC-19 of a complete set of application documents. The process includes one mediation session of four hours but may be extended to four sessions if the disputed sum is within RM150,000.00 to RM500,000.00 and the mediator thinks that the mediation requires additional sessions.

Upon conclusion of a mediation and the reaching of an agreement by the parties regarding a dispute, the parties are to sign a written settlement agreement which is to be authenticated by the mediator. This settlement agreement shall be binding on parties.

Enforcement of settlement agreement

In the event of a breach of a settlement agreement, the affected party may bring the matter to Court for non-compliance of the settlement agreement.

WL Chan

Co-ordinator for Mediation Centre Sabah

Sabah Law Society

 





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