The Concepts Of Litigation & Arbitration
El-Adaway and Ezeldin (2007) have labelled both litigation and arbitration as traditional dispute resolution procedures. This methods particularly being used in construction industry long before the existence of other dispute resolution mechanism. Litigation is the oldest method of resolving disputes. This method involves a lengthy process, voluminous documentation, procedural and adversarial in nature (Feld and Carper, 1997; Merna and Bower, 1997). Because of it, disputes over large complex construction projects often result in costly and complex construction litigation (Pinnell, 1999). Cushman et al., (2001) stated that contractor are trying to avoid litigation although it is recognized by law, not only because the issue of cost, but also especially when they realized that by going to the court will affecting their business opportunities and company profits and could also affecting their present business relationships and other potential business clients and partners who would not going to do business with them anymore. Through litigation, there is no guarantee of privacy due to the publication of judgments in law journals. This is indeed true since litigation is a public process where stories underlying the disputes are made available for public viewing and media scrutiny (Speaight, 2010).
Speaight (2010) stated that litigation is a public process where stories underlying the disputes are made available for public viewing and media scrutiny.2.4.2 Common Alternative Dispute Resolution in MalaysiaArbitration is a method or process of dispute resolution carried out under the law of arbitration of any country in the world (Clause 3.4 Rules of the Institute of Arbitrators Malaysia). It is an adversarial private dispute resolution with final and binding resolution (Section 38 of Malaysia Arbitration Act 2005). Arbitration is a simplified version of a trial involving limited discovery and simplified rules of evidence. In comparison to other alternative methods of private dispute resolution, arbitration is one of the preferred method of dispute resolution mechanism in the Malaysian construction industry. This method is made available in all standard form of building contracts (Rajoo, 2008). Powell-Smith (1998) suggests that “arbitration is a process whereby the parties to a dispute agree to have it settled by an independent third party and to be bound by the decision he makes”.
Rajoo (1999) defines arbitration as “an alternative process of dispute resolution to litigation by which a neutral third-party (arbitrator) renders a decision after a hearing at which both parties have an opportunity to be heard”. There are a few legislations applicable to regulate arbitration in Malaysia. The Arbitration Act 2005 (Act 646) which come in force on 15 March 2006 is the primary legislation repealed the old Arbitration Act 1952 [Act 93], and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards Act 1985 [Act 320]. In practice, arbitration provisions are provided in the standard form of contract in Malaysia. For instance, clause 34.7 of PAM2006 standard forms of building contract provides for arbitration which incorporates the PAM Arbitration Rules (PAM, 2006). For PWD 203A, the provision provided to refer to arbitration within clause 66.0 which shall be governed by the Arbitration Act 2005 and the laws of Malaysia.
Although arbitration is considered as alternative dispute resolution method, the process of arbitration involved a lengthy process same as litigation. In arbitration, a neutral person called an "arbitrator" hears arguments and evidence from each side and then make decision of the dispute. Arbitration is less formal than a trial, and the rules of evidence are often relaxed. Arbitration may be either "binding" or "nonbinding." Binding arbitration means that the parties agree to accept the arbitrator's decision as final and give up on their right to a trial. Generally, there is no right to appeal an arbitrator's decision. Non-binding arbitration means that the parties cannot accept the arbitrator’s decision and free to request a trial.Due to adversarial nature of arbitration, other method to be seen as an alternative to arbitration in resolving dispute is mediation. According to Murdoch & Hughes (2008), mediation is defined as a means of settling dispute which involves an independent individual to assist the parties in dispute to reach a settlement. Cullinan (2006) mentioned that is a consensual and non-adversarial procedure which produces the final result and encouraged as a precondition process prior to litigation.
Generally there are two types of mediation process which is facilitative and evaluative approaches. This two types can be choose freely by the parties in dispute from both mediation process to suit the nature of disputes and attitudes of disputants (Bingham, 2009b). The mediator need to facilitate the process, evaluative and propose a settlement from the dispute by acting independently and impartially. In 1999, the Malaysian Bar has established the Malaysian Mediation Centre (MMC) to promote mediation “as a means of alternative dispute resolution and to provide a proper avenue for successful dispute resolutions” (Bar, 2008). In addition, the Asia International Arbitration Centre (AIAC) also provides mediation services and rules which allows the parties to freely choose their mediator or from its list of accredited mediators, or the director of the Centre shall assist in the appointment of conciliator/mediator if the parties failed to appoint a mediator.
The AIAC Mediation Rules are a set of procedural rules encompassing different aspects of the process of Mediation to aid parties in resolving both international and domestic disputes. With the AIAC Mediation Rules and the Malaysian Mediation Act 2012, AIAC seeks to promote mediation as a desirable commercial option for parties in Malaysia. The newly revised AIAC Mediation Rules 2018 is also aimed to tend all preferences of the parties, including but not limited to mediating investment-related disputes involving investor and States and/or State entities (AIAC, 2018)The Mediation Act 2012 (Act) was introduced by Parliament in 2012, and came into force on Aug 1, 2012. The aim of this Act is to promote and encourage mediation as a method of ADR and to facilitate the settlement of disputes in a fair, speedy and cost-effective manner. The Act does not apply to: (1) mediation conducted by courts; (2) mediation conducted by the Legal Aid Department; and (3) matters expressly excluded in its schedule (such as proceedings on the Federal Constitution, the remedy of temporary or permanent injunctions, and any criminal matter).
