Fact: Mediation has been proven effective in other jurisdictions, provides tremendous savings in terms of time and costs, and yet has not entirely been adopted by construction industry players in Malaysia. Why?

Could it be that there is a lack of understanding about mediation? Perhaps so. This is because the word “mediation” has been used too loosely and many misunderstand mediation to be simply a “talk shop”. The fact is that a proper mediation process, under the guidance of a properly trained and experienced mediator, is very much more than a “talk shop”.

There are skills involved in mediation that requires a combination of in-born talent and training. It is not a fish market where parties come and haggle over a price. Yet unfortunately, many parties who have been exposed to some basic form of mediation would walk away precisely imagining mediation to be such a “fish market” negotiation.

The fact that Malaysia practices court-annexed mediation, with due respect, has not helped the process of understanding mediation. This is because oftentimes parties (pretend to) agree to mediation just because it is suggested by the judge. There was no intention to mediate in the first place.

Additionally, the court mediators may be trained, but because their workload is so tremendous, many times the process ends up as a mere “what can you offer” vs “what are you willing to take” kind of discussion.

A proper mediation may well take a few days, yet it is rare that a court annexed mediation would afford parties more than a few hours at most. The problem is that once parties are exposed to this form of mediation, it is difficult for them to imagine that mediation can be in any other form. Furthermore, the court annexed mediation is free of charge, so why would anyone pay a private mediator to carry out mediation for a fee.

Secondly, there may be concerns about the mediator as well. The construction industry in Malaysia is very much a well-connected fraternity. If the mediator is one who is entrenched in the construction industry, then can this person be accepted as being entirely neutral? Would parties be comfortable sharing openly with this person who is entrenched in the industry? Can parties truly trust the confidentiality of the process?

However, if one were to rely on a mediator from “outside” the construction industry, then there will be concern as to whether this mediator has the sufficient knowledge of construction industry practices to properly facilitate discussions.

It’s a “damned if you do, damned if you don’t” kind of situation. To my mind, a senior architect, engineer or QS, preferably one who is retired or close to retirement, may well be the best candidate to mediate construction disputes. That is provided this person is properly trained in the mediation process, and preferably someone who is naturally inclined as a peacemaker. A few names come to my mind, but unfortunately we do not have many of these candidates around.

But even with a less than ideal mediator, and even with a less than ideal mediation process, the fact is that mediation can and has proven to work. That is because both these scenarios are not the biggest stumbling block to the success of mediation.

What then is the biggest stumbling block to the success of mediation? It is the parties themselves.

Parties have to be (honestly) willing to mediate. They have to come to the mediation table recognizing that it is not a “win all” situation for them. They need to recognize that they are not entirely in the right. They are not coming into the room simply to be magnanimous to the other party. No mediation can work when one party walks into the room with that attitude.

In the last mediation in which I was a mediator, it involved a public listed company. The problem is that the directors of the company were not in the room. Instead, they sent their senior managers to be their representatives.

Guess what? These are the same senior managers who have been submitting reports to the board of directors, saying that their company was totally right and all fault was on the other side. So yes, they had a mandate to settle, but they were not there to properly talk. In fact, they cannot possibly talk with an open mind, because it would mean having to explain to their directors that all their previous reports had been biased.

So whilst we made some headway in making them see that there were legitimate issues raised by the other side, ultimately these senior managers shut down the conversation. At the end of the day, all they wanted to hear was “how much are you willing to compensate”. Having any other conversation would simply be against the personal interests of the representatives in the room.

Hence, the company may have been honestly willing to mediate, but they processed all their input and information through the lens of their senior managers who had personal interests to protect. That doomed the mediation from the start.

Time and again, as a mediator and counsel, I see so often it is the parties themselves who sabotage the mediation process. Sometimes parties’ representatives sabotage the process even when going through with the litigation or arbitration may not yield the best outcome. That is most unfortunate especially if the companies eventually face a negative outcome in dispute resolution.

Fact: Mediation is effective, but only if properly carried out. For parties who face disputes, I urge you to forget about mediation as you have experienced it in the past and give private mediation a shot. Towards this end, the MBAM Mediation Centre which is now under the auspices of CIDB is a good forum to refer your disputes. Who knows? You may well be introduced to “a whole new world, a new fantastic point of view”.

Don’t Litigate, Mediate!

Written by: Chan Kheng Hoe ([email protected])