Mediation: Its Practice & Procedure By LEE SWEE SENG LLB, LLM, MBA Advocate & Solicitor Notary Public, Trademark, Patent Agent Certified Mediator sweeseng@tm.net.my www.leesweeseng.com ©copyright

What is Mediation A wise teacher once said: “Blessed are the Peacemakers” – Matthew’s Gospel In a battle, be it legal or otherwise, there will be casualties and everyone is a loser. In a mediation, one seeks a win-win situation where a business relationship is still maintained.

The Definition Mediation: a structured negotiation process in which a neutral impartial third party, the mediator, independent of and acceptable to the parties, facilitates their agreement on a resolution of their dispute by assisting them systematically to isolate the issues in dispute, to develop options, and to reach a mutually acceptable resolution which accommodates the interests of all disputants as much as possible.

The Definition (cont) If requested, the mediator may suggest options for settlement but does not have authority to impose a settlement or its terms on the parties. Jay Folberg and Alison Taylor Mediation: A Comprehensive Guide to resolving Conflict without Litigation (Jossey-Bass, San Francisco, 1984); Christopher W Moore 77 The Mediation Process: Practical Strategies for Resolving Conflict (Jossey-Bass, San Francisco, 1986); New South Wales Law Society’s “Guidelines for Solicitors who Act as Mediators” (1 988) 26 Law Society Journal (6) 29.

Various Mediation Bodies Banking Mediation Bureau Insurance Mediation Bureau Malaysian Mediation Centre Marriage Tribunal / Conciliatory body (Law Reform (Marriage & Divorce) Act 1976

ITS PROCEDURE / PROCESS

Banking Mediation Bureau Banking Mediation Bureau (392222-H) (BMB) was incorporated under the Companies Act 1965 on 28.6.1996 to provide dispute resolution services between a consumer and commercial banks, finance companies or merchant banks. The BMB is funded by the above institutions and its services are provided free of charge to customers of these institutions. from http://www.bankinginfo.com.my

Banking Mediation Bureau (cont) Currently, BMB handles disputes involving monetary losses of up to RM25,000 in relation to the following areas: The charging of excessive fees, interest and penalty Misleading advertisements

Banking Mediation Bureau (cont) Unauthorised Automatic Teller Machine withdrawals Unauthorised use of credit cards Unfair practice of pursuing actions against a person who is a guarantor

Banking Mediation Bureau – How to refer a case First try to resolve the complaint with the banking institution by contacting the banking institution's customer complaints representative either through a phone call or a letter.

Banking Mediation Bureau – How to refer a case (cont) Send all the complaints to the Complaints Unit of these institutions, which have been specially set up to deal with customers' complaints. The customer can get the information on the Complaints Unit directly from your banking institution or from the Bank Negara Malaysia website.

Banking Mediation Bureau – How to refer a case (cont) Banking institution should respond to the complaint within two weeks of receiving it. More time may be needed for complex cases. After reviewing the complaint, the banking institution will give the customer a letter stating its decision with regard to the complaint. If the complaint cannot be resolved, a "deadlock letter" will be issued. This is a simple letter explaining the decision of the banking institution and the reason for its decision.

Banking Mediation Bureau – How to refer a case (cont) Write a simple letter to the BMB stating briefly the nature of the dispute together with a copy of the "deadlock letter" from the banking institution. Fill in a standard form prepared by the BMB to give the customer’s permission to his/her banking institution, to disclose to the BMB, any information on his/her account as required by section 99 of the Banking and Financial Institutions Act 1989.

Banking Mediation Bureau – How to refer a case (cont) BMB, with customer’s permission may obtain further information from their banking institution regarding their complaint and study the case, to see how best it can be resolved. BMB will investigate their case based on the facts presented objectively. BMB may conduct an interview with the customer or together with the banking institution, through a mediation process to resolve the dispute.

Banking Mediation Bureau – How to refer a case (cont) BMB will then make a decision based on its own assessment, taking into account the law and banking practices. The decision of the BMB is binding on the banking institution but not on the customer. Customer can choose either to accept or reject the decision of BMB. If they do not accept, the decision is deemed cancelled and they are free to take any other steps with respect to the dispute, including legal proceedings.

In a Nutshell (from http://www.bankinginfo.com.my) unfairly treated. Frequently, such complaints are due to lack of information and understanding of the product or service provided. It is important for you to read the small print, understand the nature of any risks involved and check carefully the information on benefits and charges involved before committing to the product or service. LODGE YOUR COMPLAINT WITH THE BANKING INSTITUTION FIRST If you have a complaint about the products or services offered by your banking institution, you should first try to resolve the complaint with your banking institution. It makes sense to go back to the banking institution first, since the institution can easily check its records to see what has happened and to set things right. HOW TO MAKE A COMPLAINT AGAINST A BANKING INSTITUTION You can make a complaint by directly contacting the banking institution's customer complaints representative either through a phone call or a letter. If you complain by phone, remember to take notes and keep details of the name of the person you spoke to, the date and time you called, as a record of your complaint. Normally, you will need to follow-up your phone calls with an official letter of complaint. A written complaint is also preferable, especially if the matter is complicated. You can either use a standard complaint form provided by the banking institution or write a letter of complaint addressed to your banking institution. Whichever form you choose, you should remember to keep things clear, simple and include all essential information. WHERE TO SEND YOUR COMPLAINT You should send all your complaints to the Complaints Unit of these institutions, which have been specially set up to deal with customers' complaints. You can get the information on the Complaints Unit directly from your banking institution. Details of the Complaints Unit for commercial banks and finance companies can also be obtained from the Bank Negara Malaysia website at www.bnm.gov.my. RESPONSE TIME Your banking institution should respond to your complaint within two weeks of receiving it. However, more time may be needed for complex cases but your banking institution should inform you how much longer they will need to resolve your complaint. After reviewing your complaint, the banking institution will give you a letter stating its decision with regard to your complaint. If your complaint cannot be resolved, a "deadlock letter" will be issued to you. This is a simple letter explaining the decision of the banking institution and the reason for its decision. BANKING MEDIATION BUREAU Banking Mediation Bureau (BMB) was set up to provide dispute resolution services between a consumer and commercial banks, finance companies or merchant banks. The BMB is funded by the above institutions and its services are provided free of charge to customers of these institutions. Currently, BMB handles disputes involving monetary losses of up to RM25,000 in relation to the following areas: The charging of excessive fees, interest and penalty Misleading advertisements Unauthorised Automatic Teller Machine withdrawals Unauthorised use of credit cards Unfair practice of pursuing actions against a person who is a guarantor If your banking institution cannot resolve a complaint to your satisfaction in any of these areas, you may contact the BMB to look into your case. You have six months to forward your complaint to the BMB from the date of the "deadlock letter". HOW TO REFER YOUR CASE TO THE BMB You can write a simple letter to the BMB stating briefly the nature of your dispute together with a copy of the "deadlock letter" from your banking institution. You will need to fill in a standard form prepared by the BMB to give your permission to your banking institution, to disclose to the BMB, any information on your account as required by section 99 of the Banking and Financial Institutions Act 1989. You do not have to use a lawyer to put your case to the BMB. HOW BMB WORKS The BMB, with your written permission, may obtain further information from your banking institution regarding your complaint and study the case, to see how best it can be resolved. The BMB will investigate your case based on the facts presented objectively. The BMB may conduct an interview with you or together with the banking institution, through a mediation process to resolve the dispute. BMB will then make a decision based on its own assessment, taking into account the law and banking practices. The decision of the BMB is binding on the banking institution but not on you. You can choose either to accept or reject the decision of BMB. If you do not accept, the decision is deemed cancelled and you are free to take any other steps with respect to the dispute, including legal proceedings. However, if you do accept the BMB's decision, you may lose your right to proceed with legal action against the banking institution. COMPLAINTS PROCEDURES IN A NUTSHELL (TABLE 1) TIPS TO MAKING A COMPLAINT To allow your complaint to be handled in a speedy and efficient manner, outlined below are some of the points for you to remember when writing a complaint. You should: Write clearly in black or blue ink State your case clearly and give all the relevant facts in a sensible order Avoid unnecessary details and repetition Include any reference numbers, for example account number, customer reference number or card number Attach any documents relating to the complaint. Send only copies and retain the originals Keep a record of your letter Give your contact numbers where you can be reached THE ROLE OF BANK NEGARA MALAYSIA (BNM) IN DEALING WITH YOUR COMPLAINTS As a regulator of the Malaysian banking industry, BNM's role is to ensure that banking institutions conduct their businesses in an appropriate manner and within standard banking practices. If your complaint does not fall under the scope of the BMB, and you are not happy with the decision and explanations given by your banking institution with regard to your complaint, you may wish to seek the assistance of BNM. You can use BNM's standard complaint form which is available at all banking institutions. Remember to submit your complaint with a copy of the "deadlock letter" from your banking institution. Printer-friendly Format

ROLE OF BANK NEGARA MALAYSIA (BNM) As a regulator of the Malaysian banking industry, BNM's role is to ensure that banking institutions conduct their businesses in an appropriate manner and within standard banking practices. If a complaint does not fall under the scope of the BMB, and the customer are not happy with the decision and explanations given by their banking institution with regard to their complaint, they may wish to seek the assistance of BNM. They can use BNM's standard complaint form which is available at all banking institutions and submit it together with their "deadlock letter" from their banking institution.

Insurance Mediation Bureau The Insurance Mediation Bureau (223555-A) was incorporated under the Companies Act 1967 by members of Persatuan Insuran Am Malaysia on 23.8.1991 to provide an independent and impartial method in resolving disputes between insurers and policyholders. The independence of the Mediator is guaranteed by the council of the Bureau whose membership consists of people representing public and consumer interests and representatives of the members of the Bureau. The Mediator can investigate and decide on a complaint, dispute or claim between the Insured and the Insurer. http://www.piam.org.my

Insurance Mediation Bureau How to make a complaint? If the insured feel that their insurers have turned down their claim unreasonably, they can approach the Bureau for assistance. However, before they do that, their complaint must : Be referred to the senior management of the insurance company to give them the opportunity to resolve it,

Insurance Mediation Bureau Be referred to the Mediator within six months upon them receiving the final decision of the insurer Concern the insured personally and, Relate to a policy issued in Malaysia

Malaysian Mediation Centre (MMC) The MMC is a body established under the auspices of the Bar Council with the objective of :- promoting mediation as a means of alternative dispute resolution and provide a proper avenue for successful dispute resolutions. Source: MMC

Malaysian Mediation Centre – The Process Pre-Mediation Process – where parties sign a mediation agreement indicating their submission to mediation; Preliminaries – an introduction to mediation Mediator’s Opening – ground rules are laid down by the mediator for the session; Mediators are provided with a brief statement of facts. No prior in-depth knowledge of the issues at dispute are required; Joint session – parties are invited to state their respective cases in each other’s presence;

Malaysian Mediation Centre – The Statistics Cases referred for mediation 2001 2002 2003 2004 as at 1 .11.04 2 26 7 8 7 Source : MMC

Malaysian Mediation Centre – No of Mediators No. of Mediators (as at 1.11.2004) Total : 101 KL – 44 Selangor – 14 Negeri Sembilan – 3 Johor – 14 Penang – 17 Perak – 5 Kelantan – 1 Melaka – 1 Kedah – 2 Source : MMC

Malaysian Mediation Centre – The Process Caucuses – optional and usually exercised to enable the parties to vent emotions and to speak freely. Allows mediator to pick out common issues and hidden messages; Settlement Agreement – parties sign a settlement agreement witnessed by the mediator. Parties are at liberty to pursue court action should outcome be unsatisfactory. Either parties’ solicitors may draw up agreement or mediator may do so if assistance is required.

Marriage Tribunal / Conciliatory Body (Law Reform (Marriage and Divorce) Act Section 106 make it a requirement of reference to conciliatory body before petition for divorce. A ‘conciliatory body’ means :- a council set up for the purposes of reconciliation by the appropriate authority of any religion, community, clan or association; a marriage tribunal; or Any other body approved as such by the Minister by notice in the Gazette

Marriage Tribunal / Conciliatory Body (Law Reform (Marriage and Divorce) Act A conciliatory body to which a matrimonial difficulty has been referred shall resolve it within six months; and shall require the attendance of the parties and shall give each of them an opportunity of being heard and may hear such other persons and make such inquiries as it may think fit and may, if it considers it necessary, adjourn its proceedings from time to time.

Marriage Tribunal / Conciliatory Body (Law Reform (Marriage and Divorce) Act If a conciliatory body is unable to resolve the matrimonial difficulty to the satisfaction of the parties and to persuade them to resume married life together, it shall issue a certificate to that effect and may append it its certificate such recommendations as it thinks fit regarding maintenance, division of matrimonial property and the custody of minor children.

The Practice Modeled after the mediation training guide produced by LEADR

Model of Mediation in Pre-mediation: The Preliminary Conference The Past-Understanding and Exploration Opening Parties Opening Statement Exploration of Issues Private Sessions

Model of Mediation in Pre-mediation: The Preliminary Conference The Future-Problem Solving & Resolution Private Sessions Joint Negotiations Session(s) Agreement/Closure

Preliminary conference At preliminary conference Introductions – both of Mediator and the parties Roles: Mediator Parties Advisers Process of mediation Discuss joint & Private sessions No interruptions Complainant speaks first, then Respondent

Preliminary conference At preliminary conference Agreement to mediate : Authority to settle Confidentiality as far as the law allows Privileged information Enforceability of Settlement Agreement Termination of Mediation Process

Preliminary conference At preliminary conference Outline of disputes Time,date, venue for mediation Parties Attending Summary – confirmed in writing

MEDIATION : The first joint session – the 5 essential steps The mediator’s opening statement The parties’ statements Summarising Identification of issues (setting the agenda) Exploration of issues

Mediator’s Opening Statement : OBJECTIVES Engender confidence in the process and in the Mediator Explain role of Mediator Ensure parties understand process and know what is to be expected Set guidelines for conduct of mediation

Mediator’s opening statement: Brief and concise Serves to put people at ease Allow parties to ask questions during and at the conclusion of opening statement Balanced approach to parties Simple language

Mediator’s opening statement : CONTENT Welcome and introduction – how are people to be addressed? Role of the mediator – no advice on solutions Agreement to mediate Brief explanation of the process – joint and private sessions Time constraints? Authority to settle Confidentiality Guidelines Goal of mediation – mutually satisfactory solution Commitment to begin

The first joint sessions: Parties’ statements Which party should speak first? Encourage brief statement (“nutshell”, idea of topics”) How to begin? – “Briefly, what has brought you to the table today”? Listening (not questioning). No probing. Everyone at the table to be offered opportunity to speak Generally, minimal note taking

The first joint sessions : Summarising – WHY? Mediator to Check that what was heard was what was intended Help them to hear each other Provide early acknowledgement of concerns Show they have been heard

The first joint sessions : HOW? Mediator to Listen first – to ALL parties’ statements Attribute ownership of ideas to them – eg, “you have told us that…”; “In your view…” Use their language as far as practicable Provide a summary – not a transcript

Setting the agenda Listen first (don’t rely only on information received prior to mediation) Neutral and mutual Mediator takes the lead Use bullets – don’t number Use whiteboard Don’t “over-consult” on framing Check list with parties

The first joint session: Issue Exploration Allow parties to determine where to begin Treat each issue separately (as far as possible) Provide an opportunity for each issue to be discussed Facilitate direct communication Clarifying questions, not probing Note any options which emerge

The private sessions – WHY? Break from intensity of joint session exploration “Time out” for reflection Provide opportunity for discussion of additional, confidential information/topics Explore issues in more depth

The private sessions – WHY? Deal with strong emotions Explore and evaluate options for all parties Reality test options Prepare for final negotiations

The private sessions – WITH WHOM? Speak with each party and their ‘team’ in turn Can speak to lawyers separately Usually do not break lawyers and clients

The private sessions – HOW? Remind parties of confidentiality – at end of joint session AND at beginning of each private session Time management –tell them in joint session what is expected (max 30 minutes) Who first? – Balanced treatment Ensure opportunity for equal time Exploration before solutions

The private sessions – HOW? (cont) Anything which hasn’t yet been said Don’t write on whiteboard Allow full expression of feelings and emotion Explore new and existing agenda topicsReality test positions and options What would happen if unable to reach an agreement – BATNA, WATNA check Summary

Joint Negotiation Session(s) - purpose Focus on resolution – the future To generate and evaluate range of settlement options To reality-test and fine-tune the final agreement To draft final agreement

Joint Negotiation Session(s) - tips Fatigue and pessimism can set in Should normalise the situation and encourage parties to remain focused Parties tempted to ask mediator to act as messenger New options can emerge and should be evaluated

Successful outcomes in mediation Isolation of issues Partial resolution on some of the issues Agreement on issues which remain in dispute Agreement on all issues Satisfaction of needs of parties Understanding of the Needs of each other Relationship maintained Relationship enhanced

Insurance Mediation Bureau – Practical Eg From : General Insurance Association of Malaysia In practice, eg: Scenario 1: The Insured vehicle sustained damages in an accident. It was discovered that the engine of the vehicle had been changed to another with the same cubic capacity. The Insured had, at the material time, submitted the relevant documents to the JPJ notifying the change of the engine and it was subsequently endorsed on the registration card.

Insurance Mediation Bureau – Practical Eg (cont) The Insurers repudiated liability on the claim for indemnity for damage to the insured vehicle on the ground that "the engine has been changed and the same was not disclosed to us".

Insurance Mediation Bureau – Practical Eg (cont) The Mediator at the Bureau noted the following condition that applies to the Insured's whole policy: "7. This policy will only be operative if - (v) You have taken all reasonable precautions to maintain Your Vehicle in an efficient roadworthy condition". To fulfil this condition, it is therefore imperative that the Insured should change the engine of the insured vehicle if it is found to be defective or malfunctioned.

Insurance Mediation Bureau – Practical Eg (cont) The Mediator also pointed out that there was relevant provision in the Guidelines on Claims Settlement Practices concerning the matter:- "An insurer should not deny any claim merely on grounds of technical breaches of warranty or policy condition which are not material or connected to the circumstances of loss, unless fraud is suspected."

Insurance Mediation Bureau – Practical Eg (cont) In the matter under reference the engine was changed to another with the same cubic capacity. Moreover, the JPJ had been formally notified and the necessary endorsement had accordingly been made in the record. There was no question of the new engine being overpowered that could affect the judgement of the underwriters to underwrite the risk neither was there any evidence of fraud.

Insurance Mediation Bureau – Practical Eg (cont) In view of the above, the Mediator held that the Insured's decision in changing the engine of the Insured vehicle to another with the same cubic capacity was a technical breach which was not material to the circumstances of loss. Accordingly, the Insurers were liable to indemnify the Insured for the damages to the insured vehicle.

Mediation Rules Agreement of Parties Initiation of Mediation Request for Mediation Appointment of Mediator Disqualification of Mediator Mediation Agreement Representation

Mediation Rules Date, Time and Place of Mediation Authority of Mediator Settlement Agreement Privacy Confidentiality No Stenographic Record, Audio-Visual Recording of Formal Record

Mediation Rules Stay of Proceedings Termination of Mediation Exclusion of Liability (Waiver) Interpretation and Application of Rules Expenses Stamping of Agreement

Mediator Code of Conduct Acceptance of Assignment Impartiality Confidentiality Settlement Withdrawal Fees Evaluation

Confidentiality Code US position : Uniform Mediation Act s 8 : Unless subject to the [insert statutory references to open meetings act and open records act], mediation communications are confidential to the extent agreed by the parties or provided by other law or rule of this State.

Confidentiality Code EU’s position : Whilst confidentiality is generally regarded as an essential feature of ADR proceedings, there will be circumstances in which it is not required, or cannot possibly be achieved. In each Member State, there are rules which govern the conduct of professionals involved in settlement negotiations. In some jurisdictions and situations, this will be a matter of public law.

Confidentiality Code EU’s position : Article 10 provides for a general duty of confidentiality in the sense that “all information relating to the conciliation proceedings shall be kept confidential, except where disclosure is required under the law or for the purposes of implementation or enforcement of a settlement agreement”.

Confidentiality Code EU’s position : Article 10 provides for a general duty of confidentiality in the sense that “all information relating to the conciliation proceedings shall be kept confidential, except where disclosure is required under the law or for the purposes of implementation or enforcement of a settlement agreement”. Source: EU Green Paper http://www.arbitrators.org/Institute/Downloads/EU_Green_Paper.PDF

Confidentiality Code Australia’s position : Position varies depending on the sort of ADR process and the applicable legislation. For example, the Federal Court of Australia Act 1976 (Cth), s 53B provides that evidence of anything said or any admission made at a mediation referred under the Act is not admissible in any court. Source: http://www.austlii.edu.au/

Confidentiality Code Australia’s position : Amendments to the Family Law Act 1975 in 1996 provide that evidence of anything said or any admissions made at a meeting conducted by a court mediator, a community or private mediator or a counsellor is not admissible in any court (s 19N). However, confidentiality is relaxed where there are reasonable grounds for suspecting that a child has been abused, or is at risked of being abused. (s 67ZA(1)(c) and (2)). Source: http://www.austlii.edu.au/

Confidentiality Code Australia’s position : MEDIATION ACT 1997 - SECT 9 : Admissibility of evidence: (a) a communication made in a mediation session; or (b) a document, whether delivered or not, prepared— (i) for the purposes of; (ii) in the course of; or (iii) pursuant to a decision taken or undertaking given in; a mediation session; is not admissible in any proceedings except in accordance with section 131 of the Evidence Act 1995 of the Commonwealth. Source: http://www.austlii.edu.au/

Confidentiality Code Australia’s position : Some exceptions under section 131 of the Evidence Act 1995 are: (j) the communication was made, or the document was prepared, in furtherance of the commission of a fraud or an offence or the commission of an act that renders a person liable to a civil penalty; or (k) one of the persons in dispute, or an employee or agent of such a person, knew or ought reasonably to have known that the communication was made, or the document was prepared, in furtherance of a deliberate abuse of a power. Source: http://www.austlii.edu.au/

Protection Australia’s position : MEDIATION ACT 1997 - SECT 11 Protection from defamation 11. The same privilege with respect to defamation as exists in relation to judicial proceedings exists in relation to— (a) a mediation session; or (b) a document or other material— (i) produced at a mediation session; or (ii) given to a registered mediator for the purpose of arranging or conducting a mediation session. Source: http://www.austlii.edu.au/

Protection Australia’s position : MEDIATION ACT 1997 - SECT 12 Protection of mediators 12. A registered mediator has, in the performance in good faith of his or her functions as mediator, the same protection and immunity as a judge of the Supreme Court. Source: http://www.austlii.edu.au/

Conclusion The concept of mediation is meant to be simple, ie settlement negotiation with the assistance of a neutral third party. However, like the development of law, there are still more to be achieved vide the implementation of legislation and rules.

THE END Assisted by: Sally Kee LLB (Hons) (London), of Lincoln’s Inn, Barrister Advocates & Solicitor High Court of Malaya