In Malaysia, mediation usually ends up with the parties in a legal dispute having to compromise on some of their rights.

In my view, whenever a court compels parties to mediate – as happens quite frequently in many jurisdictions – such instruction may amount to an abuse of administrative power. Thus, courts should only encourage and facilitate mediation between opposing parties as a voluntary option.

A mediation clause can also be inserted into a contract.

If one exists, any party who files a court action in breach of the clause, may be directed by the court on the application of the other party to exhaust the mediation process first before proceeding with the suit. In some cases, the court may even strike out the lawsuit.

However, the court may hear the suit if it finds that the subject matter of the dispute is not one fit and proper to be disposed of by mediation.

However, not all matters can be mediated. Some cases may involve “public” rights, interests or concerns. Generally, if a dispute is not arbitrable it cannot be the subject matter of mediation and a mediation settlement agreement is unlikely to be enforced through the court process.

The Sulu Award is one instance where the arbitrability of the dispute was clearly not satisfied, rendering the award bad in law for enforcement.

Corporate litigation, especially those mediated and settled without shareholders’ approval, may lead to allegations of fraud, tortious acts and crimes on the part of directors involved in the process. One way to avoid such accusations is for the matter to be dealt with via arbitration.

However, arbitration in its current form is an expensive exercise.

More affordable arbitration can be achieved if the government adopts the university cum court annexed arbitration for court matters. The mechanism is flexible enough to also cater for pro bono mediators and arbitrators to be appointed to hear small claims and other matters within the civil jurisdiction of magistrates’ courts.

In my view it is an abuse of power and unconstitutional for any court to make mediation of a lawsuit compulsory. Our constitutional framework does not allow the court to abdicate its role to hear a dispute unless parties voluntarily agree to a mediation or arbitration.

Whether the terms of a privately mediated agreement are honoured depends on the goodwill of parties to the dispute. It is not enforceable like a court judgment or an arbitration award.

If the parties to a mediation agreement do not honour its terms, they must go through a litigation process to secure judgment before seeking to enforce it. In Malaysia today, that may take up to five years, inclusive of appeals.

Thus, mediation has its pros and cons.

It is beneficial when both parties receive proper legal advice, are fully aware of their legal rights, and show a genuine intention to honour the terms of any settlement reached.

Under such conditions and in the hands of an experienced mediator, mediation can be expeditious and cost effective. It also removes altogether the evil of litigation stress.

However, unlike a judge or arbitrator, a mediator does not look at the parties’ grievances according to law. Neither does the mediator read documents related to the dispute, or hear the testimony of witnesses and submissions of counsel.

Instead, the mediator simply plays the role of a wise person trying to facilitate a settlement without discussing the legal merits of the dispute.

One danger of these informal sessions is that parties may in the course of mediation unconsciously expose the strengths of their case, or worse, its weaknesses, which the opposite party may take advantage of if no settlement is achieved and the matter proceeds to trial.

In addition, parties to private mediation agreements may not have proper legal advice and representation. This may result in them resolving a case based on a third party’s limited view of the dispute or even as a result of compulsion due to the unequal bargaining power or ignorance of their strict legal rights.

English courts in the past few centuries have given recognition to arbitration agreements entered into voluntarily, provided neither the arbitrator nor any of the other parties have breached the rules of natural justice.

Mediation agreements, however, do not enjoy the same exalted status. Despite this, the court reserves its discretion to enter consent judgment if satisfied that an acceptable compromise is reached under the English law.

In Halsey v Milton Keynes (2004), the English Court of Appeal had ruled that parties cannot be compelled to mediate their dispute. Difference of opinion exists on this issue among stakeholders of alternative dispute resolution. In fact, some of these issues are likely to be ventilated by a judgment of the same court soon in the case of Churchill v Merthyr Tydfil County.

It is debatable whether the English courts will want to abrogate its function to hear disputes simply to ease their caseload, taking into consideration that the judicial system is paid from public revenue. Such a drastic step may destroy the legitimate expectation of litigants.

The Malaysian Mediation Act 2012 has its roots in the UNCITRAL Conciliation Rules 1980, which many countries have adopted for voluntary settlement of disputes.

In my considered view countries which have adopted the UNCITRAL model for mediation and arbitration are wasting public funds by ignorantly supporting a cumbersome litigation process and contributing to the backlog of cases.

These countries, including Malaysia, have failed to study the financial impact of the existing dispute resolution system on state coffers and litigants themselves, including on healthcare given the resultant litigation stress suffered, which is often ignored.

I hope and pray common sense prevails soon in all these countries.

I invite the Madani Government to allow my team to introduce my concept for arbitration and mediation for matters filed in court and allow us to establish a global model for all countries to clear their litigation backlog and the attended woes it brings.

The views expressed are those of the writer and do not necessarily reflect those of FMT.