ADR INSTITUTIONS IN MALAYSIA

Malaysian Mediation Centre (MMC)

The Malaysian Bar Council in 1999 has established the Malaysian Mediation Centre
(MMC) to encourage Malaysians to settle their disputes through mediation
MMC is funded by the Bar Council, but those who use its services are required to pay the
requisite fees for mediation.
The mediators are drawn from a panel of trained and accredited lawyers, who are trained
as mediators, as well as professionals from other fields.
Initially, MMC had only about 27 mediators who were trained by members of the
Singapore Mediation Centre (SMC) and the Law Society of Singapore
Currently, the MMC has about 300 accredited mediators
To be become accredited mediator one must;

Practicing member of the Malaysian Bar of at least 7 years standing;

Completion of at least 40 hours of training conducted and organised by
centre; and
Passing of practical assessment conducted by the trainers

The trainers are Accord Group, LEADR of Australia, etc

Under this service, anyone may approach the Centre to request for mediation, and the
Centre would commence the process by appointing a mediator.
Parties may either themselves present their cases before the mediator or may be
represented by lawyers.
Parties if they wish, may call expert witness to be present during mediation session.
However, the appointed mediator cannot subsequently be called as a witness in court
proceedings.
The parties are not allowed to use any information given during mediation in any
subsequent legal proceeding.
The process may be withdrawn at any stage by the mediator or either party if it is felt that
no benefit may be derived out of it
The parties are bound by the settlement agreement signed by them.
Currently, the Centre mainly handling commercial and family disputes.
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Legal Aid Department (JBG)

By way of an amendment to the Legal Aid Act 1971, a Mediation Unit was introduced in
2006 in the Malaysian Legal Aid Department.
Part VA of the Act deals with provision of mediation services.
In September 2006, the Legal Aid Department appointed 24 mediators from its pool of
paralegals, sixteen of whom are women.
Majority of the cases handled by the Department are matrimonial matters such as,
maintenance of spouses or children, distribution of matrimonial property, claim for mutah
and divorce.
The introduction of the mediation service at the Legal Aid Department leads to a large
number of cases will be settled through mediation.
Section 29B of Legal Aid Act 1971 provides that any person, who is a party to a dispute
which is the subject of, or which is related to any proceedings specified in the Third
Schedule, may refer the dispute to a mediator.
This means that any subject matter as provided for in the Third Schedule can be mediated
upon by the in-house mediator of the Department.
Section 29(A) (2) of the Act states that each mediation session shall be conducted by one
or more mediators.
At the Department with the composition of mediators of whom the female mediators
outnumbering the male mediators, there is a likelihood of a mediation session being
comprised of both the female and male mediators

Mediation to be voluntary
Section 29C provides
(1) attendance at and participation in a mediation session is voluntary
(2) A party to a mediation session may withdraw from the mediation session at any time
(3) attendance at, participation in or withdrawal from a mediation session conducted under
this Act shall not effect any rights or remedies that a party to a dispute has
Settlement or agreement to be reduced into writing
Section 29D. No settlement or agreement shall be binding on the parties to a mediation
session unless it has been reduced into writing and signed by the parties to the settlement
or agreement

Confidential communications with a mediator

Section 29E. No person shall be compelled to disclose to the court any confidential
communication which has taken place between that person and a mediator

Mediator
Section 29F states
(1) the Minister may appoint any person as a mediator for the purpose of this part
(2) Every person appointed under subsection (1) shall be subject to the general direction
and supervision of the director general of Legal Aid and shall have no right to appear and
plead in any court in Malaysia
There is the need for the Bureau to enhance the knowledge and skills of the mediators
which would definitely require proper and adequate training.
According to Faridah Abrahim, the paralegals appointed have undergone training in
mediation which was conducted by Singapore and New Zealand mediators.
There is also the need for the mediators to be trained in the field of psychology or social
sciences.
Faridah Abrahim also emphasised on the importance to change the mindset of those
related officials such as, the legal officers, the paralegals, the judiciary and the legal
fraternity as a whole.
At present, mediation at the Bureau has been well accepted by the public as can be seen
from the increasing trend shown by the statistics of cases mediated from 2006 to 2008.

KLRCA
KLRCA was established as a result of the agreement which was achieved between AsianAfrican Legal Consultative Organization (AALCO) and the Government of Malaysia in
April 1979
It is independent from the Malaysian government
It offers administrative, support services, and other assistance for conducting arbitration,
conciliation/mediation, or domain name dispute resolution for the parties in dispute who
are engaged in trade, commerce and investment within the region
The inclusive function is to facilitate and assist the arbitral proceedings, including the
enforcement of awards

The governing rules for the arbitration in KLRCA are KLRCA Rules for Arbitration
which has adopted the UNCITRAL (United Nations Commission on International Trade
Law) Arbitration Rules 1976 with certain modifications and amendments

Mediation in KLRCA
KLRCA has its Conciliation/Mediation Rules
It refers to the UNCITRAL Conciliation Rules 1980 and many of the UNCITRAL
Conciliation Rules 1980 have been incorporated into the KLRCA Conciliation/Mediation
Rules
There are 27 rules which explain the procedural aspect of mediation
Once the parties decided to refer their dispute to mediation, they have to fill in an
appropriate form
Set up the date for mediation that suits them best
Mediator appointed needs to be someone who is very well versed in the area of dispute
The mediators are either experts in various professional and business fields, carefully
selected attorneys and retired judges

The Cost of Mediation in KLRCA

The Director of KLRCA shall fix the costs of the conciliation in accordance with the
schedule of fees annexed
The term costs includes;

The fee of the conciliator

The travel and other expenses of the conciliator
The travel and other expenses of witnesses requested by the conciliator
with the consent of the parties
The cost of any expert advice requested by the conciliator with the consent
of the parties
The expenses incurred by KLRCA in connection with the conciliation and
its administrative charges

Advantages in arbitrating at KLRCA

The Director of KLRCA has the statutory authority to appoint arbitrators independently
from any court interference
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Malaysia is a signatory to the 1958 New York Convention on the Recognition and
enforcement of Foreign Arbitral Awards which enables KLRCAs arbitral awards to be
enforceable in countries that are also signatories to the Convention
KLRCA is internationally recognized as a neutral, efficient and reliable dispute resolution
service provider
It has a panel of experienced domestic and international arbitrators from diverse fields of
expertise
KLRCA administers and monitors arbitral proceedings, including any challenges against
the arbitrator
It assists in the enforcement of arbitral awards
Costs of arbitration proceedings are comparatively lower than other arbitral institutions

Financial Mediation Bureau (FMB)

Background
Assists in resolving disputes and complaints between customer and any of the financial
institutions and insurance companies in Malaysia
Before, there existed two bureaus; Insurance Mediation Bureau and Banking Mediation
Bureau
The Bureaus were modeled on the lines of the British Ombudsman System
A neutral person mediates between the financial institutions and the public, whenever a
dispute is referred to the Bureau
Both the BMB and IMB were established as companies limited by Guarantee
Members of BMB were the commercial banks, finance companies, merchant banks and
development banks

Financial Mediation Bureau (FMB)

As the service of the industry is being enhanced to achieve world class quality, there must
be provision of adequate avenues for redress to enable the consumers to resolve conflicts
through equitable process
The creation of an integrated Bureau is necessary for the resolution of a broad range of
consumer issues.

The consumers thus, have an efficient and effective dispute resolution forum available at a
convenient one-stop centre i.e., FMB

Legal Basis
FMB is a Company Limited by Guarantee.
The memo and articles of Association set out;

The jurisdiction
Appointment of mediator and his/her powers
The role and composition of the Board of Director
Levy/fee collection from its members
The mediator sets the level playing field for an amicable resolution of the
dispute

However, if the parties are unable to resolve the dispute, then the mediator makes an
award

The Membership
The Bureau has been set up by 89 members comprising of;

Commercial Banks
Merchant Banks
Development Banks
Islamic Banks
Insurance Companies
Takaful Operators
Credit/charge Card providers

There is no levy or fee charged to the complaint/customer and the services rendered are
absolutely free

Function of the Bureau

The mediator encourages communication between the parties and helps them explore the
option of settlement
Generally, the parties arrive at an amicable settlement
In the case of deadlock, the mediator makes an award taking into consideration the
evidence, the prevailing industry practices and the law
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The role of mediator changes into a decision maker - it is a hybrid between mediation and
arbitration
Award is binding on the financial institution but not on the complainant
The complainant must indicate whether he or she accepts or rejects the award
If accepted the institution is bound by the award
If rejected, either party may take such action as they deem expedient to resolve the dispute
e.g., file an action in the civil court

Management of the Bureau

FMB is managed by the Board of Directors comprising of 9 directors: 5 independent
directors one of whom shall represent the Consumer Association and 4 directors
representing the Banking and Financial industry
The appointment and removal of the Mediator lies with the BOD
The Administration and Communication Division is led by a Director of Operations who
is assisted by a Manager
The Director looks after the administration and finances of the Bureau such as collection
of levy and carry out the publicity
Mediators are free from administrative duties

Jurisdiction
Has jurisdiction to mediate on all claims not exceeding RM100,000 relating to;

Personal loans
Housing loans
ATM
Cash deposit machine - CDM
Credit/charge card
Hire purchase
Saving and current account
Fixed deposit, general, specific, investment account
Remittances - Remittance is any form of money transfer or payment done
from your working country to home country. Usually the currencies and
the banks are different and hence while remitting you need to look for the
best currency exchange rate and time taken for the transfer as well.
Read more: http://wiki.answers.com/Q/What_is_remittance#ixzz28fkVphie
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Electronic banking
Internet banking
Islamic banking and all the services provided thereby

May also refer to FMB - The complaints in relation to fraud cases involving payment
instruments, credit cards, charge cards, ATM cards and cheques not exceeding RM
25,000

Insurance and Takaful

The mediator has power to entertain complaints and disputes as follows:

Motor and Fire Insurance/Takaful policy (Maximum RM 200,000)

3rd Party Property Damage TPPD (maximum RM5,000)
Other types of insurance policies such as personal accident, medical and
travel insurance (maximum RM100,000)

There is no provision for appeal process in the Memorandum and Articles of

Association.
Thus, once the award is made, there is no appeal

Exclusion
The FMB will not consider complaints, disputes or claims relating to:

general pricing,
product policies or services of the members,
credit decisions (approval, rejection and rescheduling of loans),
fraud cases (other than for fraud cases involving payment instruments,
credit cards, charge cards, ATM cards and cheque for which the limit is not
more than RM25,000),
cases which are time barred or more than 6 years
and cases that have been or are referred to the court and / or for arbitration.

Mediation Session
Once the documents and statements from both parties are available, the mediator holds the
mediation

The parties are seated facing the mediator so that at no time they may feel marginalized or
that one party is being favoured
Parties are encouraged to interact in a friendly, polite and congenial atmosphere
Use a white board to explain any particular point which may require graphic illustration so
that both parties understand it
Also to write down the actual terms of settlement

Decision/award
Decision made by FMB is binding on the financial services provider
The complaint has two options; either to accept the decision or to reject
If he accepts the award, he might lose the right to proceed with legal action against FMB
members
If he is not happy with the decision he can proceed with the legal action and the decision
shall not be disclosed to any subsequent court proceedings or arbitration

Prepared by
Dr Nora Abdul Hak