Navigating Dispute Resolution in Malaysia 

When disagreements arise between parties, whether individuals or businesses, it is essential to understand the available avenues for resolving conflicts in a fair and efficient manner. In this article, we will explore the various methods of dispute resolution in Malaysia, providing insights into the legal framework and procedures involved. 

Throughout this article, we will delve into three primary methods of dispute resolution commonly employed in Malaysia: court proceedings, arbitration, and mediation. Each method has its own distinct characteristics, advantages, and considerations. Understanding the options available to you and the factors influencing your choice of dispute resolution method is crucial in reaching satisfactory outcomes. By examining the pros and cons of each approach, we aim to equip you with the knowledge needed to make informed decisions when navigating the resolution of your disputes. 

Here’s a comparison of court proceedings, arbitration, and mediation as methods of dispute resolution using a table format for easy reference: 

CriteriaCourt ProceedingsArbitrationMediation
Process Parties present their case to a judge or a panel of judges who hear evidence, legal arguments, and make a binding decision. Parties present their case to one or more arbitrators who act as decision-makers. The arbitrator(s) review the evidence, hear arguments, and make a binding decision. A neutral third party, the mediator, facilitates communication and negotiation between the disputing parties. The mediator helps them explore potential solutions and reach a mutually acceptable agreement. 
Control Parties have limited control over the process and outcome as the decision rests with the judge(s). Parties have limited control over the process and outcome, as the decision rests with the arbitrator(s). Parties have more control over the outcome as they actively participate in crafting the resolution. 
Decision-Making The judge(s) make a final and binding decision based on the law and evidence presented. The arbitrator(s) make a final and binding decision based on the evidence and arguments presented. The mediator does not impose a decision but assists the parties in finding their own solution. 
Representation It is not mandatory for a private individual to engage a lawyer, as the individual can represent themselves in court proceedings. However, companies must engage an advocate and solicitor of the High Court to represent and act for them. Parties to arbitration proceedings are commonly represented by lawyers. However, as arbitration proceedings do not come within the purview of the Legal Profession Act 1976, parties may choose to be represented by lay persons or foreign lawyers. It is not mandatory to have legal representation prior to mediation and throughout the mediation process. 
Legally Binding Court judgments are legally binding and enforceable through the legal system. Arbitration awards are generally enforceable under national and international laws. The mediated agreement is voluntary and only becomes legally binding if the parties choose to formalize it. 
Confidentiality Court proceedings are generally open to the public. Confidentiality in arbitration may vary depending on the rules and agreements of the specific arbitration proceeding. Mediation proceedings are usually confidential, which allows parties to have open and frank discussions. 
Cost and Time Court litigation can be time-consuming and expensive due to formal procedures, multiple hearings, and legal representation. Arbitration can be more time-consuming and expensive than mediation, especially if multiple hearings and expert witnesses are involved. Mediation is generally less time-consuming and less costly than arbitration or court proceedings. 
Relationship Focus Formal proceedings may strain relationships between parties. Neutral process with less adversarial than litigation. Mediation is often chosen when preserving or improving the relationship between the parties is important. 
Expertise Judges are legal professionals with expertise in interpreting and applying the law. Arbitration allows parties to choose arbitrators with specialized knowledge in the subject matter of the dispute. Neutral third-party mediator facilitates communication and negotiation. 
Appeal Possible to file an appeal to a higher court to challenge the judgment. There is no appeal against an award made in Malaysia under the Arbitration Act 2005. The only challenge that can be made is an application to the High Court to set aside the award. Such an application has to be within 90 days of the receipt of the award. The grounds for setting aside such an award are limited to fraud, or breach of the rules of natural justice or where the award is contrary to public policy of Malaysia. No formal appeal process as the agreement is voluntarily reached. In the event the mediation is not successful, parties may proceed to pursue their respective rights in litigation or arbitration. 

Resolving disputes in Malaysia can be a complex process, but understanding the available options is essential for achieving fair and satisfactory outcomes. We hope this article has provided you with valuable insights and empowered you to make informed decisions in resolving future disputes. 

Author: Daryl Khor (LL.B Hons) London, CLP 

Date: 18.5.2023 

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