Advantages & Disadvantages OF ADR AND ITS Processeses TEMP PDF

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Assignment 1 : Advantage and Disadvantage of ADR (Alternative Dispute Resolution) and its process. Alternative Dispute Resolution (ADR) is a term used to describe several different methods of resolving legal dispute without going to court. ADR involves settling a civil legal dispute a method other t...

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Assignment 1 : Advantage and Disadvantage of ADR (Alternative Dispute Resolution) and its process.

Alternative Dispute Resolution (ADR) is a term used to describe several different methods of resolving legal dispute without going to court. ADR involves settling a civil legal dispute by a method other than a decision before a court. In Malaysia ADR is only applicable for civil cases. The purposes of ADR are to provide an alternative settlement outside an open court which is private and less time consuming while giving the opportunity to the parties in dispute to decide on their terms of settlement and to reduce the backlog of cases in the courts. However, there are some advantages and disadvantages of ADR. Advantages of ADR:  It is more flexible. As it involves only the parties with an interest in the matter and their representatives therefore the parties are free to discuss the issue as according to their needs and purposes.  Increased settlement. As it is based on the parties mutual agreement, they may decide on their own on which settlement can fulfil their needs in which settlement value could be as what they wish for as in contrast with the court decision.  Improved satisfaction with outcome or manner in which the dispute is resolved among disputants. The approach that is taking place are interest-based approach where it focus on win-win approach where both parties can have the most benefit from the matter.  Reduced time in dispute. The parties have full control in setting the time to solve the dispute and do not have to wait for a long queue as compared to the court systems.  Reduced cost and stress in relating to the dispute resolution. Since everything is dealt between the dispute parties themselves, the can manage all the cost and related matter in shorter time and therefore reduce any unnecessary legal cost and also the stress of trial.  Increase compliance with agreed solutions. As the terms only involve the parties in dispute, both parties can lay down their wishes which can be discussed in more informal way and therefore the chances of satisfaction result is higher.  It can be kept confidential. It is up to the parties whether they can make it private or public over their dispute therefore they can opt for confidentiality to be in place. Disadvantages of ADR:  No guarantee of resolution (except in arbitration). As it is only an alternative to resolve issue outside court, it may not be able to reach to any solution and both parties can retrieve at any point of time from any of the ADR process.  Decisions of arbitration generally are final (lack of ability to appeal). As compared to the court systems, there is no way of hearing appeals from any party. All decision is based on what is agreed.  The parties have no choice since the contract stated that it would be the only way for dispute resolution. Once the decision is made that is the only solution that could be accepted.  Beware of limitation period while the dispute in ADR process. There is some datelines that need to be complied that the settlement need to be done within the certain period of time.  There is no binding precedent. Any decision made is not having any precedential value.

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The rules of evidence are not applicable. As it is based on negotiation and not as in normal court litigation, any evidence may not be any used as it has to fulfil both dispute parties’ terms and conditions.

There are 4 processes of ADR which are:  Negotiation: It involved two parties discussing and compromising to obtain an agreed solution. It is a voluntary, bilateral or multilateral, non-adjudicative and an informal means of resolving a dispute, whereby the people involved communicate directly with each other to try and reach an agreement. Negotiations can be conducted with or without the assistance of a third party, such as solicitor. Functions of third party are only to clarify the issues and matters and only helping the parties. The dispute parties themselves are the one who settle the dispute and usually it is a win-win situation. It is usually used in trade dispute such as Section 13 of Industrial Relations Act 1967 and Section 18 of Bankruptcy Act 1967. Negotiation should be seen as the first step in resolving dispute. If this method fails, other types of ADR should be considered. 

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Mediation: It involves an impartial third party who listens and directs discussion but does not suggest outcomes. Malaysian mediation was derived from the Eastern principles which were further modernized by the Western legal system. Mediation method is quicker, charges less and is more proficient as it provides judges plenty of time for the cases to be tried and lessen the backlog. Similarly to arbitration, mediation is typically a voluntary process (unless there is a provision which made it compulsory for the parties to be involved i.e statutory mediation) that provides an open forum to the parties involved to settle their disputes on their own without going to court but with assistance of a mediator, which has to be in the stand of neutral. Mediation can settle matters in a wide area such as the legal, commercial, community, workplace and family matters. Mediation Act 2012 (MA 2012) – was enacted and it came into force on 1st Aug 2012 with the main objectives to encourage and promote the mediation to facilitate the dispute settlement in an impartial as well as time and cost effective way. Section 3 MA 2012 defines mediation as a voluntary process with the present of a mediator to provide assistance for the parties to settle a dispute. Section 2 MA 2012 specifies that the MA is inapplicable upon 3 grounds – i) mediation carried out by courts such as court-annexed mediation, ii) matters not explicitly comprised by its schedule, for instance constitutional proceedings, judicial review, appeals, election petitions, criminal cases etc, iii) mediation held by the Legal Aid Department. Section 7(2) MA 2012 provides the appointment of mediator where the mediator appointed should have the relevant qualifications, related knowledge or experience in mediation acquired through training or proper tertiary education and required to fulfil the mediation institution’s requirements. Section 7(7) MA 2012 indicates that a mediator, before accepting such appointment, is obliged to disclose any known facts that a person may reasonably anticipate to likely disrupt him to conduct the mediation in an unbiased manner. There are several institutions governing the mediation processes in order to provide assistance and guidance towards fair settlements to all the parties engaged such as Malaysian Mediation Centre (MMC), Persatuan Insuran Am Malaysia (PIAM), Housing Buyers Tribunal (HBT) and Tribunal for Consumer Claims (CCM). Conciliation: It involves a third party who may make suggestion to the dispute parties. The conciliator meets the parties in dispute separately and attempts to resolve their differences. In Malaysia, domestic matters and industrial relations disputes are required to undergo statutory conciliation or mediation before court proceedings take place. Conciliation procedure is an informal method in resolving disputes as there are no

witnesses, cross examination or opening and closing arguments at the conciliation session. The conciliator dictates his role at the beginning of the session and might invite the parties and department agency or municipality representative to give opinions. The conciliator will encourage the parties to negotiate and if necessary will assist to hold discussion and try to reach a settlement. During the conciliation session the conciliator might suggest or agree to discuss some points privately with one party or with other representatives. The conciliation session has no duration and it might be postponed so that the parties are able to acquire documents, consult an expert or consider offers which are given. The parties may engage lawyers to speak on their behalf. There are some matters that require conciliation before they can pursue their case for litigation : i)Statutory conciliation as the Industrial Relation Act 1967, Law Reform Act (Marriage and Divorce) 1976 and Islamic Family Law Act (Federal Territories) 1984 that provide provisions for statutory conciliation, ii) Industrial disputes – Section 20 Industrial Relations Act 1967 stipulates that if the person considered him/herself as being dismissed without just cause and excuse, then he or she may within 60 days make representation to the Director General of Industrial Relations (DGIR) and before the case is brought to the Industrial Court the parties in dispute are required to attend conciliation or mediation to resolve their issues, iii) Matrimonial disputes- Law Reform Act (Marriage and Divorce) 1976 and Islamic Family Law Act (Federal Territories) 1984 that governs family disputes of Non- Muslims and Muslims respectively. 

Arbitration: It involves an independent third party who actually makes suggestions and actually imposes a decision on the parties. It is like the traditional litigation where the parties will refer their claims to a third party known as arbitrator who is normally an expert in the field of dispute involved who has to be on the neutral side, hears the arguments of both parties in order to settle their dispute in a fair manner. It is a voluntary process where it is only conducted if there is an agreement between the parties in dispute. However, in the settlement, the decision will be made only in favour of either party involved in the dispute resolution. The settlement concluded and agreed by both parties at the end of the arbitration’s process is binding and enforceable by the courts. In Malaysia ADR method of arbitration is governed by the Arbitration Act 1952 which applies to arbitrators who started practicing prior to 15th March 2006 and the Arbitration Act 2005 (AA 2005) which is also known as the Principal Act, applies to those who started practising as arbitrators after 15th March 2006. Both Acts grant jurisdiction to the High Court, deals with matters related to arbitrator’s powers, the appointment of arbitrators, domestic arbitration, provided for international arbitration and matters related to recognition and enforcement of award and others. The Kuala Lumpur Regional Centre for Arbitration (KLRCA) provides the Rules for Arbitration in settling disputes which allows flexibility in proceedings. It gives discretion to parties pertaining to arbitrators’ choice, place of arbitration and procedural rules applicability. When a dispute arises, the parties in dispute may request and submit their dispute for arbitration the followed by the appointment of arbitrator either by agreement of both parties or by arbitrational institution or court. Upon appointment the first meeting is on arbitrator’s request. An arbitrator will then issue the direction and conduct the initial hearing and discuss the scope of arbitration agreement with the parties in dispute. Arbitration could be subjected to judicial review when the decision made by the arbitrator is not laid down or within the parties’ arbitration agreement. The arbitrator is obliged to choose one of the offers or resolutions agreed that was submitted by the parties as the arbitrator has no power to impose any other decisions that are not stipulated in the agreement.

Conclusion – The ADR is definitely a good alternative prior to bringing the case to court as the advantages would benefit parties in dispute....