An Overview of Mediation under the Pusat Mediasi Covid-19
20 November 2020
The Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (Covid-19) Act 2020 (“the Act
”), which came into operation on 23 October 2020, sets out the provisions relating to Mediation in Section 9.
Any dispute in respect of the inability of any party to perform any contractual obligation arising from any of the categories of contracts specified in the Schedule to Part II of the Act (“Scheduled Contracts
”) due to the measures prescribed, made or taken under the Prevention and Control of Infectious Diseases Act 1988 to control or prevent the spread of Covid-19 may be settled by way of mediation.1
- Construction work contract or construction consultancy contract and any other contract related to the supply of construction material, equipment or workers in connection with a construction contract
- Performance bond or equivalent that is granted pursuant to a construction contract or supply contract
- Professional services contract
- Lease or tenancy of non-residential immovable property
- Event contract for the provision of any venue, accommodation, amenity, transport, entertainment, catering or other goods and services2
- Contact by a tourism enterprise as defined under the Tourism Industry Act 1992 and a contract for the promotion of tourism in Malaysia
- Religious pilgrimage related contract.
The Minister (Legal Affairs) is given the power to, inter alia
, determine the mediation process, including the appointment and role of a mediator, and the conduct of mediation.3
Upon conclusion of a mediation and the reaching of an agreement by the parties regarding a dispute, the parties are to sign a written settlement agreement which is to be authenticated by the mediator.4
This settlement agreement shall be binding on parties.5
Covid-19 Mediation Centre
In a Media Statement on the Act issued by the Prime Minister’s Department on 23 October 20206
, further directions were given on the conduct of mediation under the Act. Specifically, eligible disputes under the Act may be resolved through the Pusat Mediasi Covid-19 (“PMC-19
, that is the Covid-19 Mediation Centre, established under the Prime Minister’s Department.
The core functions of the PMC-19 are, amongst others, to receive and process nationwide online applications for COVID-19 related mediation and to co-ordinate the implementation of the COVID-19 mediation process nationwide with the appointed Mediation Service Providers (MSP)8
Mediation through the PMC-19 is only available for disputes valued at a sum not exceeding RM300,000.00 between two contracting parties in respect of any inability to perform contractual obligations arising from any of the Scheduled Contracts.
The Government of Malaysia will bear the cost of mediation services for individuals under the B40 and M40 categories as well as for Micro enterprises and Small Medium Enterprises (SMEs). The qualifications of the categories are set out below9
- B40 (household income of RM4,849.00 and below)
- M40 (household income of RM4,850.00 to RM10,659.00)
- Micro enterprises with a sales turnover of less than RM300,000.00 or less than 5 full time employees
- SMEs in the manufacturing sector with a sales turnover from RM300,000.00 to less than RM15 million or full-time employees from 5 to less than 75 people
- SMEs in the services and other sectors with a sales turnover from RM300,000.00 to less than RM3 million or full-time employees from 5 to less than 30 people.
However, parties who are not eligible for the subsidy may still go through the mediation process under the PMC-19 at a prescribed payment rate of RM2,000.00 (RM1,000.00 per party)10
. Furthermore, bankrupts or companies that have been wound up may also apply for mediation services under PMC-19; however they are required to obtain approval from the Director of the Department of Insolvency11
The Mediation Process
The PMC-19 will commence operations from 16 November 202012
and is only subject to the Act and not the Mediation Act 201213
. The services provided by the PMC-19 include a start to finish mediation scheme as well as a framework for appeal. An application for mediation services under PMC-19 can be submitted online in the PMC-19 system14
and requires fulfilment of the following criteria:
- successfully passing the COVID-19 Relatedness Assessment;
- submitting complete information; and
- submitting the Agreement to Mediation Form15 signed by both parties within the stipulated timeframe.
The processing period for mediation services through PMC-19 is 14 working days from the date of receipt by PMC-19 of a complete set of application documents16
. The process includes one mediation session of four hours but may be extended to four sessions if the disputed sum is within RM150,000.00 to RM300,000.00 and the mediator thinks that the mediation requires additional sessions17
An appeal against a decision made through PMC-19 is to be made online and a decision on appeal will be notified via e-mail within 21 days from the date of receiving the appeal18
Enforcement of settlement agreement
In the event of a breach of a settlement agreement, the affected party may bring the matter to Court for non-compliance of the settlement agreement19
. The binding nature and effect of a settlement agreement made through the PMC-19 is similar to a settlement agreement made in compliance with the Mediation Act 2012. Interestingly, whilst disclosure of mediation communication is required for the purposes of enforcing a settlement agreement reached under the Mediation Act 201220
, only the consent of both parties to the mediation under PMC-19 is required before disclosure is permitted in Court proceedings or for other use21
At the time of writing, the PMC-19 Mediation Rules have yet to be issued. However, the guidance given thus far is available on the PMC-19 website and further enquiries may be submitted by email to email@example.com
The Government subsidy available through the PMC-19 process provides an incentive for eligible parties to settle their disputes by way of mediation. The practical implementation and effect remain to be seen but it is hoped that this mechanism will provide a swift and effective resolution of disputes in the face of the Coronavirus outbreak and the consequential movement control measures in place.
Alert prepared by Shannon Rajan (Partner) and Laarnia Rajandran (Associate) of Skrine.
Section 9(1) of the Act.
Events that come within these categories include any business meeting, incentive travel, conference, exhibition, sales event, concert, show, wedding, party or other social gathering or sporting event, for participants, attendees, guests, patrons or spectators of such gathering or event.
Section 9(2) of the Act.
Section 9(3) and 9(4) of the Act.
Section 9(5) of the Act.
, ‘About Pusat Mediasi COVID-19 (PMC-19)’ in FAQ, Para 3.
, ‘Mediation’ in FAQ, Para 5 and 6.
, ‘Mediation Process under PMC-19’ in FAQ, Para 14 and 15.
, ‘Appeal Process at COVID-19 Mediation Centre’ in FAQ, Para 1 and 2.
, ‘PMC-19 Mediation Rules’ in FAQ, Para 4.
Section 15(2)(d) of the Mediation Act 2012.