UAD4612- ALTERNATIVE DISPUTE RESOLUTION
(ADR) METHODS AND PROCEDURES
Lecture 1: ADR Principles and Practice
Prepared by Mr. HS Wong
© . No part of these lecture notes shall be reproduced or distributed in any manner whatsoever.

1.0 What is ADR?
Mediation
Conciliation
Arbitration
Adjudication
Negotiation
• These processes are different
from each other but they are
'philosophically linked' as they
constitute the main processes of
ADR.

• ADR can be utilised to resolve disputes ranging
from family to communal, political,
commercial, industrial and even interstates
disputes without resorting to court system.
• It is not intended to substitute the court
system but is an alternative to it.
• As an effective dispute resolution mechanism,
especially mediation and arbitration, also helps to
reduce the backlog of cases which are the result of
'litigation’.
• Resolving disputes through court system is costly,
time consuming and emotionally devastating.

As Jonathan J Sweet (mediator/arbitrator/litigator from San Jose, US)
has observed:
The court system has proven to be neither cost effective nor
timely in resolving disputes.Attorneys fees are costly, courts are
congested, criminal matters take priority over civil cases. Delays
in reaching trial are likely to consume years. Finally, when trial is
had, verdicts may be inconsistent with the parties' understanding
and unpredictable in result.

• Thus, the complex court procedures created
a multi-dimensional crisis which prompted
the jurists and legal experts to search for an
alternative to litigation.
• The search resulted in the discovery of
alternate forms, known as 'Alternative
Dispute Resolution', or its generic acronym
'ADR’.
• The advocates of ADR, which know include
members of the Bar and Bench, believe that
ADR processes, particularly mediation, may
help to resolve disputes and may solve the
backlog of cases problem.

• All sorts of civil disputes can be resolved
through the process of mediation. Thus,
mediation, as one of the processes, but not the
only process of ADR gives the disputing parties
greater power in resolving their issues by
themselves.
• It allows the disputing parties to discuss and to
develop creative solutions to their disputes that
are generally not possible in court or during
formal hearing and appeals.

The Concept of ADR
• ADR is commonly defined as dispute resolution processes and
techniques that fall outside the court system. However, please refer
to Practice Director No. 4 of 2016- Practice Direction on Mediation.
• Confucius that a proverb was couched to express his dissatisfaction to
the adversarial process “in death avoid hell, in life avoid law courts”.
• In Islam, mediation is an indispensable condition and is represented by
the word shafa’a.
• Whilst in Hinduism; the mediation process is reflective in the text of its
scriptures as well as in the concept of the panchayat.
• Chief Justice of the United States Supreme Court, Warren E Burger,
where he stated that:
• 'The obligation of our profession is to serve as healers of human conflict.
To fulfil our traditional obligation means that we should provide a
mechanism that can produce an acceptable result in the shortest possible
time with the least possible expense and with minimum of stress on the
participants. This is what justice all about’

The Concept of ADR
• ADR is commonly defined as dispute resolution processes
and techniques that fall outside the court system.
• ADR is a broad concept; which includes amongst others
negotiation, conciliation, mediation, arbitration, adjudication.
• These are useful tools that can be utilised by the disputants
to settle their disputes quickly, cheaply and consensually
without resorting to court proceedings which is time
consuming, expensive, disruptive and by its very nature
tends to drive the parties further apart, often irreparably
weakening their relationships.

SELECTED PROCESSES OF ADR
(1) NEGOTIATION
Negotiation (between 2 parties only)

SELECTED PROCESSES OF ADR
(1) NEGOTIATION
Negotiation (between 2 parties only)
• Negotiation is the fundamental form of ADR. It refers to a
bilateral negotiation between two disputants who are
desirous of resolving their disputes amicably.
• The involvement of a third party is not required as the
negotiation is conducted between the disputants only.
• As a process of resolving a dispute through discussion,
effective negotiation necessitates the fulfillment of certain
preparatory procedures before the substantial negotiation is
conducted by the disputants.

• In the negotiation process, identification of issues by the
disputants is important to see whether they can find a
common definition of the situation and whether they have
shared interest in solving them.
• The identified issues are to be assembled in a
comprehensive list to be used as the agenda of the
negotiation.
• The preparation for negotiation process also requires the
determination of the location, time and duration of the
session as well as the parties to be involved in the
negotiation.
• The negotiators may also anticipate what they want to
achieve, agree on principles that will guide the drafting of the
resolution of the issues.

• Negotiation should be conducted in good faith and with
the sole desire to achieve settlement of the dispute.
• The disputants may compromise to achieve the
resolution of the dispute for without compromise it is
unlikely to ensure the success of the negotiation.
• Thus, mutual understanding is one of the factors in
achieving the desired result, that is, the solution of the
dispute.
• Although the parties may bargain, exchange information
and may use some form of influence to get a better deal
yet the easy way to make negotiation fruitful is to try for a
negotiated settlement.

• So long negotiation result in 'win-win' situation it will
achieve its desired result.
• Principled / Cooperative Negotiation v. Competitive
Negotiation
• The 'win-win' approach to negotiation is the 'principled
negotiations' which is the alternative to the competitive,
power based negotiation process.
• The former approach is the preferred one while the latter is
not because it may either cause the collapse of the
negotiation or may result in a 'win-loss situation' where
one disputant wins the other loses.

• The win-win approach to negotiation is also termed as
'cooperative' approach which is the opposite of
'competitive' approach. A good outcome is ensured from
the cooperative negotiation but not from the competitive
negotiation.
• The cooperative approach requires the commitment of
both disputants to cooperate rather than compete for if
they compete there would be no outcome but even if there
is an outcome it would not be a fair one.
• The disputants may compete with each other to protect
their interest but they should do so with negotiation skills
and effective communication.
• No force or the threat thereof should be used to exert
influence for this may result in anger and resentment. The
exertion of influence must be through persuasion.

• To be persuasive, negotiators must have the ability to
listen, communicate clearly and effectively, and knows
how to establish a good working relationship, understand
the people and interests involved as well as the relevant
facts is better able to influence the decisions of others.
• Adoption of an extreme position of at the start of the
negotiation even if softened later may not be the most
affective tactic.
• Negotiation should be started with the spirit of
cooperation and must be focused on maintaining future
relationships.
• Conducting negotiation with such a spirit would enable the
parties to find a fair solution to their problem and at the same
time maintaining their future relationships.

A competitive negotiation style follows the model of “I win, you
lose.” Competitive negotiators tend to do whatever it takes to
reach their desired agreement – even when it comes at the
expense of another person or entity. They are results-oriented
and focused on achieving short-term goals quickly. Their desire
for success motivates them, though the process of negotiation
can blind them to potentially harmful impacts.
Competitive negotiators use all tools possible to boost their
negotiation success, including:
Their position within a company structure
Their personality and humor
Aggression
Their economic prowess
Their company’s strength and size
Their brand’s visibility and influence

A competitive negotiation style is beneficial when you need to reach a
short-term agreement quickly. If the terms of an agreement are critical
and must be complied with, a competitive negotiator will be your
secret weapon. If the second negotiator is also competitive, having
another competitive negotiator on your team will be able to counter-
balance their aggression.
Competitive negotiators work best in a highly competitive industry or
for once-off sales, such as selling a home or a car. However, for
negotiations with another highly competitive body, it is best to blend
negotiation styles to avoid gridlock between two competitive
negotiators.
These types of negotiators may focus more on winning than reaching
a mutually beneficial agreement with the other party. Business
relationships might break, and a company’s reputation may tarnish if a
negotiation style is too competitive and crosses the line into bullying.

SELECTED PROCESSES OF ADR
(2) CONCILIATION
• Conciliation is an alternative out-of-court dispute resolution
instrument.
• Conciliation is a voluntary, flexible, confidential, and interest
based process.
• The parties seek to reach an amicable dispute settlement
with the assistance of the conciliator, who acts as a neutral
third party.
• These proceedings are rarely public.

SELECTED PROCESSES OF ADR
(2) CONCILIATION
• Conciliation is a voluntary proceeding, where the parties
involved are free to agree and attempt to resolve their
dispute by conciliation.
• The process is flexible, allowing parties to define the
time, structure and content of the conciliation
proceedings.
• They are interest-based, as the conciliator will when
proposing a settlement, not only take into account the
parties' legal positions, but also their commercial,
financial and / or personal interests.
• The ultimate decision to agree on the settlement
remains with the parties.

Benefits of Conciliation
• Conciliation ensures party autonomy.
The parties can choose the timing, language, place,
structure and content of the conciliation proceedings.
• Conciliation ensures the expertise of the decision
maker.
The parties are free to select their conciliator. A
conciliator does not have to have a specific
professional background. The parties may base their
selection on criteria such as; experience, professional
and / or personal expertise, availability, language and
cultural skills. A conciliator should be impartial and
independent.

Benefits of Conciliation
• Conciliation is time and cost efficient.
Due to the informal and flexible nature of conciliation
proceedings, they can be conducted in a time and
cost-efficient manner.
• Conciliation ensures confidentiality.
The parties usually agree on confidentiality. Thus,
disputes can be settled discretely and business
secrets will remain confidential.

SELECTED PROCESSES OF ADR
(3) MEDIATION
Mediation ( a third party and two disputants)
• Mediation is the most important form of ADR. It is a conflict resoIution
method in which a mediator helps two people negotiate voluntary
solution to their dispute.
• Mediation can help to clear the backlog of cases. Its importance has
been felt in Malaysia where even some former and current members of the
judiciary proposed for its advancement in the country.
• Even the ex-Attorney-General of Malaysia, Tan Sri Abdul Ghani Patail, has
advocated for the development of mediation as the host form of ADR.
• Court annexed mediation is becoming ‘mandatory’ in Malaysian Court
now. (See Mediation Act 2012)

SELECTED PROCESSES OF ADR
• In some countries, like Singapore, the courts have encouraged disputants
to use court-based mediation at the preliminary stage of a suits, this in turn
has resulted in a successful reduction of backlog of cases.
• Mediation as a form of ADR is in advance position in so many countries,
US, UK, Australia etc.
• Malaysia too is taking steps towards the advancement of this important
concept.
• Malaysia needs mediation as a process of resolving disputes in the same
was as other countries. This is because the backlog of cases in Malaysia
is serious. Mediation is rooted in Islam and other religions in Malaysia.

• As Dato’ Cecil Abraham has observed:
• “The fundamentals of mediation, that is, the encouragement of settlement
by the assistance of a third party, has been a practice of the East for
centuries and the roots can be traced back to the teachings of Islam,
Hinduism, Buddhism, Christianity and the teachings of Confucius.
Malaysia, a country with multitude of faiths and religions has been a host
for the practice of mediation amongst its recipients. In Islam, mediation is
an indispensable condition and is represented by the word [Wasaata…]
whilst in Hinduism; the mediation process is reflective in the text of its
scriptures as well as in the concept of the panchayat. So great was the
emphasis of harmony and the resolution of dispute in an amicable manner
to Confucius that a proverb was couched to express his dissatisfaction to
the adversarial process 'in death avoid hell, in life avoid law courts.”

• The best way to avoid litigation is to settle disputes out of court,
preferably through the process of 'mediation’.
• To promote mediation as a means of alternative dispute resolution and to
provide a proper avenue for successful dispute resolution the Bar Council
of Malaysia, on 5 November 1999, established the Malaysian Mediation
Centre (MMC).
• The MMC offers mediation services to disputants who are willing settle
their disputes. When one party is desirous of using mediation to resolve
their disputes, the MMC assists that party by writing to the opposing party
to enquire as to whether they would want to resolve the dispute by
mediation. If the reply is a no, then MMC writes back to the party who has
requested for mediation and informs them accordingly.

• The MMC provides mediation training for those interested in
becoming mediators and accredits and maintains a panel of
mediators. The MMC mediators are subject to a code of conduct
which provides for a strict compliance of impartiality and
confidentiality. Not everyone can be a mediator at the MMC.
• To be qualified as a mediator at the MMC a person must be a member of
the Malaysian Bar or any other qualified people recognised by MMC
and must have completed at least 40 hours of training conducted and
organised by the Centre and must also pass a practical assessment
conducted by the trainers.

• Conciliation vs. Mediation
• The main difference between conciliation and mediation
proceedings is that, at some point during the conciliation, the
conciliator will be asked by the parties to provide them with a
non-binding settlement proposal.
• A mediator, by contrast, will in most cases and as a matter of
principle, refrain from making such a proposal.

• Conciliation vs. Mediation

SELECTED PROCESSES OF ADR
(4) ARBITRATION
• Arbitration is a form of alternative dispute resolution (ADR), used in place
of litigation (going to the traditional courts) in the hope of settling a dispute
without the cost and time of a court case.
• The Asian International Arbitration Centre or AIAC was previously known as
the Kuala Lumpur Regional Centre for Arbitration.
• The Centre was the first in the world to adopt the UNCITRAL Rules for
Arbitration as revised in 2013 and has its own set of procedural rules which
governs the conduct of the entire arbitration proceedings from its
commencement to its termination.

SELECTED PROCESSES OF ADR
• The AIAC provides a neutral and independent venue for the conduct of
domestic and international arbitrations and takes pride in having
progressive rules that make arbitration more time and cost effective.
• The AIAC also organizes various courses, training programmes and forums
on the different avenues of ADR covering niche areas such as sports
arbitration, domain name dispute resolution and Islamic finance.
• In has expanded its rules to cater to the growing demands of the global
business community with the introduction of the AIAC Arbitration Rules, the
AIAC i-Arbitration Rules, the AIAC Fast Track Rules and the AIAC
Mediation Rules.
• Refer to https://www.aiac.world

Arbitration Act 2005 (Laws of Malaysia Act 646)
• Date of Royal Assent 30 December 2005
• Date of publication in the Gazzette 31 December 2005
• English text to be authoritative P.U. (B) 61/2006
• Latest amendment made by Act A1569 which came into operation on 8
May 2018

SELECTED PROCESSES OF ADR
(5) ADJUDICATION
• The consistent growth of the construction industry in the past few years
driven mainly by government projects as part of the Economic
Transformation Programme (“ETP”), has continued to rise to many
construction-related disputes. Some problems in the construction industry
include speculative development without sufficient financial capital, the
extensive period of time and the high cost of existing dispute resolution
mechanisms, and the unequal bargaining powers between parties have led
to abuse. These problems bring undesirable effects to the industry,
consumers and ultimately the economy. Insolvent subcontractors and
abandoned projects are just some of the many consequences.

SELECTED PROCESSES OF ADR
(5) ADJUDICATION
• Construction Industry Payment and Adjudication Act 2012 (“CIPAA 2012”)
(Act 746). The purpose of this Act is to facilitate regular and timely
payment, to provide a mechanism for speedy dispute resolution through
adjudication and to provide remedies for the recovery of payment.
• This Act will apply to every construction contract made in writing relating to
construction work carried out wholly or partly within Malaysia and will
include a construction contract entered into by the government.
• “Construction” here carries a wide meaning and covers a wide array of
works in different areas, even including the oil and gas industry and
telecommunications. The Act does not, however, apply to a construction
contract entered into by an individual for any construction work in respect
of any building which is less than four storeys high and which is wholly
intended for his occupation.

SELECTED PROCESSES OF ADR
(5) ADJUDICATION
• The passing of this new Act has brought about a new form of alternative
dispute resolution alongside the existing mechanism such as arbitration
and mediation. Adjudication has a judicial element in that the adjudicator
hears both sides and decides the dispute. The main thing that distinguishes
arbitration and litigation from adjudication is that arbitration and litigation
are usually the last options resorted to only when parties are ready to
terminate the contract. In contrast, adjudication is about getting a quick
neutral decision on disputes relating to payments commonly arising in
construction projects. It is a summary procedure and an interim solution
which in theory should not stop or delay the progress of the contract or
works.

• CONCLUSION
• ADR methods are becoming extremely popular and differing variations of
ADR are being created on year to tear basis.
• This chapter only focuses on the 4 main types but students are reminded that
there are many other types as well which should be looked into if the student
is keen in majoring in ADR.
• However for the purposes of this subject being at the UG level, mastering the
4 types will suffice.