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"Persuade Your Neighbors To Compromise, Whenever You Can. Point Out To Them How The Nominal Winner Is Often A Real Loser - In Fees, Expenses, And Waste of Time." Abraham Lincoln, American President I. Introduction Construction industry is regarded as an important industry not only because of its constantly evolving size but also because of its contribution to the national economy in terms of gross domestic product and large capital investment.2 Joint venture projects are a common feature of construction industry and it would be most useful in times of global economic downturn where parties tend to embark on joint venture projects to lessen the risks involved in their undertakings in the construction industry. Most joint ventures arise from express written agreements, but could also be inferred from the nature of the parties‟ conduct of the nature of the venture. As the rights and duties of parties to a joint venture are typically governed by the same principal that govern 'partnerships', each party to the joint venture has the power and ability to bind the other party personally to unlimited liability to third parties, unless of course, the joint venture has been incorporated as a separate business entity. Alternative dispute resolution is becoming a common recourse in the construction industry in the modern and global economy since the last decade. It is not the type of dispute but the different methods for dispute resolution is the focal point. Parties in the construction industry have always been worried about taking their disputes to the court of law because of the formalities, expenses, time, complexity, confrontational and delay in reaching a decision. These factors are the result of the adversarial system of justice applied in the courts. In the adversarial system, parties introduce each piece of evidence (whether oral, documentary or real), argument or point against each other to prove their case on a balance of probabilities before a judge, who pronounces a decision that usually leads to a win-lose decision. A method of adjudication in which active and unhindered parties, usually through their lawyers, contest with each other and present support in favor of their respective positions, usually through the examination and crossexamination of witnesses and the presentation of other evidence, to a neutral and independent decision-maker. In criminal cases, this is often called the accusatorial
Paper presented at the Fifth International Conference on Multi-National Joint Ventures for Construction Works, “Joint Venture Strategies to Meet the Construction Business Development Challenges of Global Economic Meltdown”, Kuala-Lumpur, Malaysia, October 21-22, 2009, International Islamic University Malaysia and Kyoto University In collaboration with GCOE Program of Kyoto University (Global Center for Education and Research on Human Security Engineering for Asian Megacities). 2 Hillebrandt, P. M. (1974). Economic Theory and the Construction Industry: The Macmillan Press Ltd.
system.3 The theory behind this underlying philosophy of adversarial process is that the truth of a dispute will surface and thereby justice will be done to compensate the aggrieved person. The adversarial process is also used to buy time and more often can bring an unfavourable settlement on the financially weaker party as this process must determine the winning and losing party.4 In Newacres Sdn Bhd v Sri Alam Sdn Bhd5 and Hartela Contractors Ltd v Hartecon JV Sdn Bhd & Anor.,6 Gopal Sri Ram JCA found that in view of the mutual trust and confidence between parties to a joint venture essential for a proper working of the relationship, where there was reliance by one party upon the skill or expertise of the other, there was a duty upon the other to use his best endeavours to ensure the success of the venture. Equity would imply such an obligation in the absence of an express term in the joint venture agreement.7 Resorting to the use of equity by the courts is often very much within the discretionary powers of the judges and it is not a matter of right of the parties in an adversarial proceedings. Alternative dispute resolution is not a new invention it has been around even before the adversarial system came about. Alternative dispute resolution advocate the principle that parties could resolve their disputes in a simpler manner with the involvement of a skilled third party, who is usually an experienced professional in the particular industry. The benefits that ensue from the involvement of a skilled third party includes improved and better communication, continued business relationships, effective management of the dispute, offering better options for settlement, less formal, private hearing, speed, reduced costs, and assurance of confidentiality. Skilled third party intervention ensures effective communication between parties and to focus on solving the problem to reach an amicable settlement. The pressures within the millennium construction industry, where construction is focused on fast track building and other construction projects is bound to create tension and of course disagreements over collateral and sub-contract terms and warranties. At times construction contracts are signed after the workmen had entered the site or worst still no contract is signed. In this situation, where there is no written contract between the parties to the joint venture, dispute resolution by the court is rather difficult. However, under the different types of alternative dispute resolution processes, the third party may be able to bring the parties together in a common arena regardless of the written contract because the third party can use his own technical knowledge, skill and experience in the construction industry to help the parties achieve a settlement of the dispute.
adversary system. (n.d.). In Legal Definitions. Retrieved November 14th, 2010, from http://www.yourdictionary.com/law/adversary-system 4 <a href="http://law.jrank.org/pages/468/Adversary-System-traditional-meaning.html">Adversary System - The Traditional Meaning</a> 5 Newacres Sdn Bhd v Sri Alam Sdn Bhd 3 MLJ 474 6 Hartela Contractors Ltd v Hartecon JV Sdn Bhd & Anor  2 CLJ 788 7 Equity is a system of law designed to furnish remedies for wrongs which were not legally recognized under the common law of England or for which no adequate remedy was provided by the common law.
6. Joint venture projects are becoming a common feature of the Malaysian construction industry. port and airport construction. Vol. the Petronas Twin Towers. June 2008.II. country‟s investment policies.9 The rapid expansion of construction activities following industrialisation programmes has intensified the participation of foreign contractors. political stability. No. “An Assessment of Risk Management in Joint Venture Projects (JV) in Malaysia”. economic growth and a relatively low cost of labour. Asian Social Science. Multimedia Super Corridor and The Sepang Formula One Circuit and various other mega projects were successfully realized with joint ventures. infrastructure projects. international firms were attracted mainly because of opportunities stemming from the country‟s planned economic growth. pp 135-152 . Joint Ventures in the Construction Industry Joint ventures are established to take advantage of the economic.org/journal.html 9 Mohammed. The reason for the growth in the joint venture dealing are 8 Hamimah Adnan. Malaysia‟s opendoor policy to foreign participation is evidenced by the large amount of payments made by the Malaysian Government for contracts and professional services. 4. Bakun and Pergau Dam. The government for Malaysia has also encouraged and supported local contractors to participate in regional and global markets based on their expertise and experience of construction of buildings.5.8 In Malaysia‟s case. Asia Pacific Building and Construction Management Journal . Vol. power generation. political and social conditions prevailing in a particular economy especially at global level. especially in developing countries and Malaysia is also keen to benefit from this opportunities. Joint ventures are established to take advantage of the economic. political and social conditions prevailing in a particular economy. Construction organizations have extensively resorted to using international joint ventures as a mechanism to participate in the construction markets around the world. The Malaysian Government‟s encouragement and incentives of such arrangements could also be considered as a significant factor in the development of joint venture projects. availability of raw materials. The number of international construction joint ventures is growing worldwide at an unprecedented pace. www. Construction joint ventures in Malaysia are popular and have involved multinational construction firms and local government in order to achieve their individual objectives.ccsenet. Major projects such as Kuala Lumpur International Airport. Construction joint ventures in Malaysian are becoming increasingly popular both in multinational construction firms and local government in order to achieve their individual objectives. highways. There are already established joint ventures between two or more local indigenous contractors and also between indigenous local and foreign contractors. Many international companies choose to invest in Malaysia mainly because of its political stability. relatively cheaper labour costs and other available resources. S (2000) Risk Assessment in bidding for international projects – the Australian experience. Foreign firms are often require to bid on large infrastructure projects with local partners and a joint venture bid must have at least 30% bumiputera (indigenous Malay) participation. good transportation system and also various incentives offered by the government.
The provision will be enforceable in contract.due to the increasing magnitude. and interests of the parties to the joint venture. David Proverbs (eds). The key provisions in any joint venture contracts inter alia include the followings:11 Clearly defined business objectives The agreement must prescribe the purpose of the joint venture. “Critical Success Factors In Malaysian Construction Joint Venture Projects”. business capacity.com/?expert= Mark_Warner . technology transfer or economies of scale. 1st to 2nd September 2003 organised by School of Engineering and the Built Environment University of Wolverhampton.org/site/download _feed .et. accessed on 10th November 2010 11 Mark Warner.rics. Degree of participation and the management roles of each joint venturer. specific government policy.al.Key Drafting Issues. internet edition. the nature of the business. Prescribe the roles. duties and responsibilities of parties and degree of participation of each party to the joint venture. method and percentage of profit and risk and loss sharing in the joint venture. and the terms of the contract must be clearly drafted to define the roles accurately. Joint Venture Agreements . An international joint venture is a separate legal organizational entity representing the partial holdings of two or more parent firms. Proceedings Of The RICS Foundation Construction And Building Research Conference.aspx? fileID=2332&fileExtension=PDF. complexities and risks associated with major construction projects that requires organizations with diverse strengths and weaknesses to form joint ventures to collectively bid and execute projects (Kumaraswamy. Contribution of capital and ownership rights/Division of the profits and losses. 2000). in which the headquarters of at least one is located outside the country of operation of 10 Parties seeking to enter into joint ventures must be careful and often ensure that they seal contracts which will be beneficial to both. liabilities. management responsibilities. Set out the contributions and other resources each party has. http://EzineArticles. Dispute Resolution Mechanism 10 Hamimah Adnan. Thus. Roy Morledge. a joint venture is a procedure used to respond to specific business phenomena such as access to new markets. http://www.
III. A Systematic Approach to Risk Management for Construction. technology and social. Indemnification Indemnification provision of a joint venture agreement must be in place to indemnify the persons in the joint venture against liability. .emerald-library. Confidentiality/Intellectual Property The parties must set out clearly the need to protect the confidential information and other aspects relating to management of intellectual property that that is contributed during the formation of the joint venture or developed during the joint venture contract duration. This mechanism is necessary to avoid litigation and resolve any types of deadlock and set out the the party responsible for resolving disputes. A. However.com/ft. despite all the precautions taken by the parties.Dispute resolution mechanism for resolving any disputes that may arise between the joint venturers should be incorporated. economic. disputes are unavoidable and parties may have to refer the dispute for resolution. It is not within the purview of this article to delve in length on the nature of joint venture agreements instead it will focus on the problems faced in resolving disputes using adversarial methods and the possibility of using alternative dispute resolution methods for amicable settlement of disputes arising from joint venture construction contracts. Conventional Methods for Resolving Disputes in Construction Joint Ventures 12 Mills (2001). challenging and of course very rewarding. Retrieved 15 August 2009 from http://www. risky. Termination of the Joint Venture Joint ventures are often entered into for one or more projects and may not last forever. The parties must provide when the joint venture will terminate and the manner of dissolving and dealing with assets and other related matters.12 The construction industry is exposed to various predictable and unpredictable risks. however. Risk is inherent in every construction project and normally assumed by the parties in a joint venture owner unless it is transferred to or assumed by another party for fair compensation. The construction industry is one of the most dynamic. Among the risks posed to the construction industry are political. Mills.
Gilbert-Ash Northern  AC 689. what they say when read objectively and not in the way advocated by either party who are generally only concerned with their own subjective intentions arrived at in retrospect. In Modern Engineering (Bristol) Ltd v. The court in determining the rights of the parties interprets the construction contract in accordance with the law which postulates what the words in the contract means. within the context of practical completion of the work: „I think the most important background fact which I should keep in mind is that building construction is not like the manufacture of goods in a factory..1)58 BLR 1 at p. Decisions have to be made from time to time about such essential matters as the making of variation orders. with claims and disputes on construction projects frequently the rule rather than the exception. EME Developments16 described the differences. Gilbert-Ash Northern.com/activities /DRP-SteenConstrresolutioninconstructionwithinfomaster. The size of the project. Steen.” Lloyd LJ is correct in his observation. executed by both parties and contract sealed in accordance with the governing law. Esq. the expenditure of provisional and prime cost sums and extension of time for the carrying out of the work under the contract. the use of many materials and the employment of various kinds of operatives make it virtually impossible to achieve the same degree of perfection that a manufacturer 13 Richard H. differs from other manufacturing processes. Courts are brought in to interpret construction contracts when the need arises.15 Lord Diplock described a building contract as: „an entire contract for the sale of goods and work and labour for a lump sum price payable by instalments as the goods are delivered and the work done.njsba. at p.‟ The carrying out and completion of this contract whether made using a standard form contract or others.125 . “Alternative Dispute Resolution in the Construction Industry” Accessed from Internet on 20th August 2009 at http://www. HHJ Newey OR in Emson Eastern v.1)14 Lloyd LJ said: “It seems to be the practice in the construction industry to employ consultants to prepare a claim almost as soon as the ink on the contract is dry.13 In McAlpine Humberoak Ltd v McDermott International Inc (No.pdf 14 McAlpine Humberoak Ltd v McDermott International Inc (No. site conditions. as disputes within the construction industry are unavoidable despite the existence of a well drafted.717B 16 Emson Eastern v.The construction industry has become known as one of the most adversarial and problemprone. 24 15 Modern Engineering (Bristol) Ltd v. EME Developments (1991) 55 BLR 114 at p.
The advantages of using the standard form contracts are convenience. Architects. Much-needed changes take a long time to bring into effect.18 Some advantages of the standard form contracts are: The standard form is usually negotiated between the different bodies that make up the industry. complex and often difficult to understand. 2nd Edition Palgrave Macmillan. Lord Reid said in Modern Engineering that where the parties enter into detailed building contracts there were „no overriding rules or principles covering their contractual relationships beyond those which generally apply‟. Contractors or other professional bodies or institutions at national or international level. But in fairness one should add that it is sometimes the courts themselves who have added to the difficulty by treating building contracts as if they were subject to special rules of their own. engineering or construction contracts. LAYSIANSTITUTE OF ARBITRATORS A construction contract is best described as a complex web of competing interests. 17 18 Beaufort Developments (NI) Ltd v. The standard form contracts are contracts drafted by and approved by professional bodies such as Lawyers. whether they are described as building. familiarity. Some disadvantages of standard form contracts are: The forms are cumbersome. Gilbert-Ash (NI) Ltd  UKHL  1 AC 191 Refer John Adriaanse (2007) Construction Contract Law The Essentials. they are resistant to change. Because the resulting contract is often a compromise. Parties are assumed to understand that risk allocation and their prices can be accurately compared. Gilbert-Ash (NI) Ltd17 where he stated that: „Standard forms of building contracts have often been criticised by the courts for being unnecessary obscure and verbose.can. cutting the cost and time in drafting the agreements.‟ Another reason for the complexity of the disputes within the construction industry is the heavy reliance on the use of standard form contracts. . As a result the risks are spread equitably. The use of the standard form contracts has its advantages and disadvantages. Engineers. Tender comparisons are made easier since the risk allocation is same for each tenderer.‟ There is no special body of rules that applies to such contracts. This principle was supported by Lord Lloyd of Berwick in Beaufort Developments (NI) Ltd v. A particular problem in construction contracts is that there is little interest in building longterm relationships. Using a standard form avoids the cost and time of individually negotiated contracts. It must be a rare new building in which every screw and every brush of paint is absolutely correct.
. (London.1.2. A. sometimes even unmeritorious ones. 22 Bevan. Parties to litigation proceedings have to prove their case before a judge who will be burdened with the task of handing down a win or lose judgment.21 IV. Bhd. leading to early settlement in appropriate cases whilst saving time including court‟s time as well as 19 Observation by the Federal Court of Malaysia in Intelek Timur Sdn. and pose serious risks for all parties to a construction project. Retrieved 7 August 2007. Parties' energies and resources are thus diverted from what should be the mutual objective of the enterprise that is to construct a project efficiently and at a fair and reasonable cost to the mutual benefit of both parties.com/activities /DRP-SteenConstrresolutioninconstructionwithinfomaster.22 Alternative dispute resolution is a term. 23 Ibid.co. Litigation and arbitration processes can be costly. Centre for Effective Dispute Resolution. Development of Alternative Dispute Resolution Alternative dispute resolution or some calls it appropriate dispute resolution has achieved prominence in many legal systems because of the realisation that litigation does not always lead to a fair result. which refers to various procedures developed in the United States over the last 15 years or more in an attempt to overcome some of the weaknesses in the litigation and arbitration processes.uk/ index. a clear majority of owners of construction projects rely heavily on alternative dispute resolution to prevent or resolve construction claims and disputes.. Bhd.pdf 21 Grossman. as the other choice for resolving disputes. either or both parties will have recourse to lawyers or claims consultants for advice on how to protect themselves or advance their causes.htm&display=print. (2002).23 Thus. A. from http://www. “Alternative Dispute Resolution in the Construction Industry” Accessed from Internet on 20th August 2009 at http://www. The term of conditions in the contract is not easy to understand and interpretation between parties can give rise to disputes. Esq. The different alternative dispute resolution methods developed have one thing in common. that is the aim of blunting the adversarial attitude and encouraging more openness and better communication between the parties to a dispute. As problems arise. Construction Disputes after Latham and Egan [Electronic Version]. multiple alternative dispute resolution techniques are designated by contract.njsba. before the dispute reaches full blown up proportions. at p. time-consuming and at times unpredictable.. v Future Heritage Sdn.cedr. Sweet & Maxwell. Alternative Dispute Resolution. Disputes are unavoidable and parties often tend to create unpleasant situation for each other.19 Cost overruns and schedule delays can be the subject of expensive and protracted claims and litigation.20 However. 1 MLJ 401 20 Richard H. 1992) at p. the adverse impact of old-fashioned litigation and arbitration processes adopted in the early days has led to the introduction of alternative dispute resolutions. Steen. besides being costly and time consuming. Frequently. with binding arbitration the forum of last resort if other techniques are unsuccessful. As a result.php?location=/library/ articles/construction02.
on the 31st October 1997 in Aberystwyth Wales. mini-trial and judicial reference. Dec 1991. “Alternative Dispute Resolution in Environmental Protection.” unpu blished paper presented at Conference on New Directions in Environmental Dispute Resolution. 27 Ibid. in which citizens do not receive fair justice under the formal legal system. Resolutions are based on principles and terms that are determined to be equitable for each particular case rather than on uniformly applied legal standards. Vol. 26-27 at p.. which will enable parties to a dispute reach a compromise. than proceeding to formal adversarial litigation in a court of law. pp.24 Alternative dispute resolution enables disputing parties to choose flexible methods. The concept has generated interest as a method to resolve conflicts and has been used in other areas of law especially commercial and labour. .1. Characteristics of Alternative Dispute Resolution The typical characteristics of alternative dispute resolution methods are: Flexibility and informality Alternative dispute resolution processes are less formal than judicial processes and lack the extensive written documentation of formal proceedings. Alternative dispute resolution in actual fact is not a process that is alternative to court proceedings it will only be an alternative to the litigation process when the circumstances render it necessary. This becomes particularly important in societies. mediation. Rowan Robinson.” WIS LAW. Alternative dispute resolution also includes any other technique. litigation may follow suit.. “The Proper Role of Alternative Dispute Resolution(ADR) in Environmental Conflicts. C. Otherwise it may be complementary or sequential as in the event the alternative dispute resolution technique is a failure.26 Parties in a particular situation are free to create and alter standard techniques to enable them to reach a fair settlement that best suits their individual needs. Equity Alternative dispute resolution is more concerned with equality than the rule of law.A.25 referred in Stukenborg C. such as mediation to reach a settlement rather. early neutral evaluation.providing a conducive atmosphere for the parties to work together even after the settlement of a dispute.” in University Of Dayton Law Review. 24 25 Ibid.1306. at p.25 The five common types of alternative dispute resolution techniques are arbitration.1305-1339 at p. pp.27 V. 19:3. They increase access and facilitate solutions for citizens who are intimidated by or unable to participate in more formal judicial systems. J. “Alternative Dispute resolution in the Environmental Arena. 26 Sinderbrand.
Malaysia. Malaysia. COBRA 2008. Alternative dispute resolution techniques. enduring decision efficiently and with compromise. 30 CIDB. Mediating Environmental Conflicts: Theory and Practice 21 (1995). Construction Management and Economics. Alternative dispute resolution models can emphasize the importance of reconciliation and relationships over “winning” in dispute resolution. In addition to fostering more direct participation by the parties. 757-765. disputants design their own settlements and therefore are required to engage in direct dialogue with one another in the interest of reconciliation. costly. CIDB Standard Form of Contract for Building Works: Construction Industry Development Board Malaysia. Walton Blackburn & Willa Marie Bruce. PAM. . Dublin Institute of Technology. alternative dispute resolution encourages timely resolution of controversial issues and will likely yield more satisfying results to all parties involved. Conditions of Contract for Civil Engineering Works: The Institution of Engineers.29 Arbitration is a common and familiar mechanism among the stakeholders of the construction industry. Alternative dispute resolution is an important option in countries where: • Case backlogs or complex procedures impair court effectiveness. (1989). Conditions of Contract for Civil Engineering Works: The Institution of Engineers. adversarial (win-lose) and damaging to the relationships of the parties concerned. though. et. 17. Survey of construction lawyers‟ attitudes and practice in the use of ADR in contractors‟ disputes. Mutually agreed-upon outcomes allow for creativity and increased satisfaction with judicial processes (thereby increasing court responsiveness to local conditions and compliance with court judgments). owing to the incorporation of arbitration clause in the standard forms of Malaysian construction contracts. This participation is essential to lasting and solid resolutions.al. Non-Suitability of Arbitration as Dispute Resolution Techniques for Resolving Disputes in Joint Ventures Arbitration is a popular alternative dispute resolution method being used in the construction industry in Malaysia for quite a long time. most of the standard forms of contract currently include a formal series of steps to be taken to resolve any disputes through arbitration. However. or • Small informal systems can better reach a geographically dispersed population. Direct participation and communication between disputants With alternative dispute resolution.30 Use of arbitration in resolving disputes arising between parties in a 28 VI. • Illiterate and/or poor people cannot afford to navigate conventional legal channels. 4-5th September 2008. “Viability of Dispute Avoidance Procedure in the Malaysian Construction Industry”. (1989).28 The strongest motivation to using alternatives to litigation. IEM. (2000). P. 1998 cited by Mohd Suhaimi Mohd Danuri ibid. some studies have identified the disadvantages of arbitration. is saving financial resources. IEM. (1999). Brooker. 29 Mohd Suhaimi Mohd Danuri. such as mediation allow multiple parties to voice their concerns to reach an amicable. Arbitration has been used as delaying tactics. For instance. paper presented at the RISC Construction and Building Research Conference.
India. vol. There are detailed rules dealing with the subject. 2005. by invitation from the parties from amongst experienced. 2005. which are not found in such details in other traditional legal systems.construction joint venture project may not be the best choice. see also generally D. Hong Kong Law Journal.34 The essence of mediation is the common-sense idea that the intervention. independent and trusted person can be expected to help the parties settle their quarrel by negotiating in a collaborative rather than adversarial way. 2005 and the Executive Committee of the American Arbitration Association on September 8.38 31 CIDB. “Traditional Chinese Philosophy and Dispute Resolution”.35 In the past. 1991) at p. rather than having a settlement imposed on them by a formal body such as a court. consider alternatives and reach an agreement everyone can live with. 2005. “Alternative Dispute Resolution in the Context of Islamic Law”. of an experienced. 37. 2005 and the Executive Committee of the American Arbitration Association on September 8. “Law of Arbitration 1996”. Justice RC Lahoti. civilizations such as Chinese36. by invitation of the parties.1. Wong (2000). Hindu37 or Islam always preferred compromise over confrontation. Bobby K. London 1996) at p. 36 See. Using Mediation Techniques for Resolving Disputes in Joint Venture Construction Projects Mediation. Agreement and Conditions of Building Contract (Private Edition Without Quantitites): Pertubuhan Akitek Malaysia. Mediation Concept and Technique in Support of Resolution of Disputes (National Law School of India University. (2000). vol. pp. develop options. ICA Arbitration Quarterly. CIDB Standard Form of Contract for Building Works: Construction Industry Development Board Malaysia. Islamic law contains detailed rules to regulate it.PAM. No. the Board of the Association of Conflict Resolution on August 22.3-4. unlike other traditional legal systems which recognize amicable settlement of disputes in a generalized manner. 38 Syed Khalid Rashid.33 The essence of mediation is the common-sense idea that the intervention. 37 See.31 The subsequent discussion will examine the use of mediation as a better choice of alternative discussion method. Sampath. the Board of the Association of Conflict Resolution on August 22. VII. (2004) 7 VJ 95- . another method of alternative dispute resolution is a process in which an impartial third party facilitates communication and negotiation and promotes voluntary decision making by the parties to the dispute. 3. p. 2005. 34 Michael Noone.32 Mediation can be briefly stated as a process to resolve disputes where people get together with the assistance of a mediator (an impartial third party) to isolate issues. Part 1. (1998). Islamic law presents alternative dispute resolution as the basic tenet of civil justice. 304-319.K. 32 The preamble of the 2005 version to the Model Standard of Conduct for Mediators that was approved by the American Bar Association‟s House of Delegates on August 9. 5 35 Ibid. Mediation is also being used in Malaysia in resolving disputes. while Quran and hadith give it a unique legitimacy and divine approval. 1 (April-June 1999). Mediation – Essential Legal Skills Series (Cavendish Publishing Limited. 33 The preamble of the 2005 version to the Model Standard of Conduct for Mediators that was approved by the American Bar Association‟s House of Delegates on August 9. However. independent and trusted persons can be expected to help the parties settle their quarrel by negotiating in a collaborative rather than adversarial way.
seeking the good pleasure of Allah.abanet. The followings are amongst the advantages of mediation:41 Voluntary involvement The agreement to mediate can come from the parties.42 Active participation in good faith 118 39 Al Qur’an Surah An-Nisa: Aya 114 40 Al Qur’an Surah Al-Hujuraat: Aya 9 41 Derived from various sources. but if it complies. The party should not feel pressured to be or stay involved. However. Any party may end the process at any time. accessed from Internet on 25th August 2009 at http://www. generally refer. The basis of the sulh can be found in the Quranic injunction amongst those are: “In most of their secret talks there is no good: But if one exhorts to a deed of charity or justice or conciliation between men.org/publiced/courts/mediation_advantages. a mediators‟ responsibility is to assist the parties in settling their dispute and be fair and equitable to all parties if it is a binding mediation. then fight ye (all) against the one that transgresses until it complies with the command of Allah.”40 Sulh recognizes the values that all parties bring to the table. Managing Quality of ADR for Commercial Disputes (Australasian Dispute Resolution Journal.com/advantages_of_mediation.constructiondisputescdrs. Vol. and be fair: for Allah loves those who are fair (and just). or be offered by the Judge. then make peace between them with justice. either directly or with the help of a neutral third party. American Bar Association.182 .html Construction Dispute Resolution Services. Psychologist mediators have said that preparation not only assists with the logistic of the process but can also help the parties become psychologically prepared as well. accessed from internet on 25th August 2009 at http://www. Preparation of the parties for the alternative dispute resolution process is critically important. 42 Maureen Garwood. On the alternative.htm. (Secrecy is permissible): To him who does this. There are many advantages to mediation over other forms of alternative dispute resolution (ADR) or civil litigation. which literally means “to end a dispute” or “to cut off a dispute”.”39 “If two parties among the Believers fall into a quarrel. Below are some of the major advantages that mediation and binding mediation offers to the construction industry as an alternative dispute resolution option. and provides for those parties to treat each other and their ideas with respect.The principles of mediation are closely related to those of Sulh. make ye peace between them: but if one of them transgresses beyond bounds against the other. We shall soon give a reward of the highest (value). 3 1999) at p. parties must be cautious reminded that a judge‟s responsibility is to interpret and make a decision on point of law.
This openness can increase the chances of a satisfactory resolution. Each party must have at least one representative who is consistent in that role throughout the mediation process. Self-motivated Mediation assumes that the parties are competent and informed and able to reach agreements that suit their needs. Active participation with communication by all parties is essential if you are going to reach an effective agreement. Independent and impartial mediator The mediator acts as a facilitator. The mediator may meet separately with any party or parties and may be offered information which is to be kept confidential from other parties. The mediation process is conducted without prejudice to the dispute and shall not be referred to or relied upon in any other proceedings in the Court. communicator. in out of court mediations no formal record is kept. in each other. as parties may not believe the other side can be „reasonable‟. Confidential process All discussions that take place in mediation must be completely confidential. creating the right environment for the process to be effective. Control of the dispute and the terms of settlement remain in their hands.Effective mediation is conducted face-to-face. The party may want to talk about business or personal relationships with the other parties. A resolution will only occur if the parties agree. and in the process. motivator. The involvement of people with the authority to make settlements on behalf of others is essential. Mediation requires good intentions on the part of all parties. The representative of each party must be fully authorized to participate. Flexible outcomes It is open for the parties to discuss matters outside the appeal. though sometimes the emphasis is better placed on good business and empowerment than goodwill. The affected party may agree on outcomes that the Court itself is unable to secure such. The mediator does check that all parties fully understand what they are agreeing to. Inclusive All parties must be present and all parties must agree to the process. He or she must be independent of both the parties and the Judge who will review any agreement you reach. except an agreed decision (called a consent order) that if it is approved by the Court and forms part of the public record. . offer opinions or coerce parties into agreement. Normally. and scene setter. The mediator must not give legal advice. Mutual respect The process allows the parties (including the mediator) to develop a degree of trust and confidence in themselves.
43 See. but did not play an active role in the administration of the legal process. arbitration of construction disputes and various other contracts have been in existence.45 The Sultan was the reference point and the pillar of justice. 44 McDonald J. suggested in this context. allowing him to apply his own sense of fair play. Alternative Dispute Resolution. The most common method of settlement is for the Penghulu to invite the parties to meet in his house. "The Application of Alternative Dispute Resolution Techniques to Environmental and Planning Disputes. which is a symbol of forgiveness and conciliation. 1975) at p.129. 3 (Jun. No. “Malaysian Community Mediation. 45 See James A. The „equity‟. 1999). 43. The village headman called Penghulu handles disputes involving people from different families or villagers in the same area.43 VIII. 1992. attempts to resolve quarrels amongst relatives were settled with the help of village elders. which confers on the mediator and / or arbitrator broader powers. For example. Integrating “equity” and “mediation” into international commercial arbitration to make it more economical and just. Syed Khalid Rashid. Vol. He had ministers who controlled the government and dispensed justice in serious matters. 46 Syed Hussin Ali. Protecting parties rights All verbal offers and discussions that take place during the course of mediation do not affect the rights of parties.44 Alternative dispute resolution may also promote resolution whereby the parties to the dispute may continue to liase with each other to resolve disputes amicably. Fairness and equity All parties must be given a fair hearing and have equal access to information.136-140 Mc Donald has examined the benefits and drawbacks of ADR techniques. pp. Finality of agreements Where agreements are reached they are final. Oxford University Press. and treated as binding on the parties who have agreed. Alternative dispute resolution is not a new concept in Malaysia."  ENV. Alexander Bevan. Malay Peasant Society and Leadership.46 The respect for the Penghulu is an important factor influencing the parties who approaches him to resolve their disputes. and Ronda Roberts Callister. participation in mediation does not prejudice the existing legal rights of the parties. Wall Jr.343-365. pp. the issues remain unresolved and must be brought to Court. LIABILITY. . The Penghulu then serves drinks and some light refreshments to encourage the parties to eat together.” The Journal of Conflict Resolution. However. justice and good conscience. (Singapore. Sweet & Maxwell. Opportunities for Promoting Use of Alternative Dispute Resolution in Construction Industry in Place of Adversarial System in Malaysia The literature on alternative dispute resolution demonstrates that its proper role in dispute resolution can be supplemental and an experimental tool to help reduce the time and costs involved in traditional litigation. carries a narrower meaning than amiable compositi on.134-146 at pp.
L. At the Penghulu's level.. L. The Arbitration Act 2005 (Act 646) governs the laws and procedures relating to arbitration and mediation in Malaysia.47 Mediation has been used at the lowest possible level in the attempts to resolve quarrels.48 Therefore. the Penghulu's efficiency in resolving conflicts have been formally recognised and a Penghulu court has been established in 1948 when the organisation of the courts were formalised. harmony and confidentiality.T.T.Law. especially when the available resources are limited and the dispute is complex. The use of alternative dispute resolution processes in resolving disputes in joint venture construction projects is an attempt to overcome the shortcomings of litigation and arbitration. especially when the available resources are limited and the dispute is complex. Mediation works for most disputes but of course not for all disputes. 1997) at p. "Malaysia. (Sydney. The Kuala Lumpur Regional Centre for Arbitration was established in 1978 to encourage international mediation and arbitration mostly in the area of commercial disputes. (ed.282. Conclusion Resolving construction disputes amicably without causing harm to parties who are in joint ventures is a difficult task. 50 Malaysian Institute of Arbitrators accessed from internet on 20 th August 2009 at http://www.miarb. It fares well in case of urgency and in the maintenance of relationships. Butterworths. complex procedures that involve sequential use of a range of arbitration techniques and arbitration can destroy the originally designed positive effects. Society and Pluralism in East Asia. I wish to submit that particularly in Malaysia that it is indeed a grave need to espouse mediation in court system and for the movement to provide in rules for the court as has been made by many other developed nations.com/ .Mediation has been a preferred option in dispute settlement in Malaysia as history shows. The mediation movement can be useful for early resolution of disputes." in Poh. friends. However. If they are then able to agree on the terms of a settlement.49 Informal approaches to resolve conflicts are made through intermediaries who could be relatives. However. at p. complex resolution procedures that involve 47 48 Ibid.) Asian Legal Systems . business associates or professional arbitrators. 49 Poh.50 Resolving construction disputes is a difficult task. The use of alternative dispute resolution in resolving disputes between parties in joint venture construction projects is an attempt to overcome the shortcomings of litigation and arbitration. The alternative dispute resolution methods can be useful in resolving construction disputes in Malaysia if it is implemented with the relevant procedural guidelines. The Malaysian Institute of Arbitrators is a professional body established to disseminate knowledge to and educating the public on private dispute resolution processes and attitudes and thus working towards a harmonious society. It brings the parties together physically and requires them to negotiate with each other. they will be in a much more harmonious position than disputants who have gone through a litigation or arbitration process and been subject to a judgment or award.119. especially in terms of time and cost. it is submitted that it will not be difficult to promote alternative dispute resolution for settling environmental disputes since traditionally mediation has been the first option for Malaysians who are not averse to litigation if matters remain unresolved.
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