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THE ALTERNATIVE DISPUTE

RESOLUTION (ADR):

MALAYSIAN DEVELOPMENT AND

ITS STATE-OF-INNOVATIVE-ART

Presented By:

Dr. Nor ‘Adha Binti Abdul Hamid

Centre for Graduate Studies,

Selangor International Islamic University College (SIIUC),

Bandar Seri Putra, 43000 Kajang, Selangor.

MALAYSIA.

5th. – 7th. May 2010

Australia.

dr_adha@yahoo.com

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CONTENTS OF DISCUSSION:

A. INTRODUCTION

B. ACCESS TO JUSTICE SYSTEMS

1. Litigation System

2. ADR System

C. ADR PRACTICE IN MALAYSIA

1. Tribunal For Consumer Claims (TCM)

2. Malaysian Mediation Centre (MMC)

3. Muamalah (Islamic Transactions) Bench in High

Court, Financial Mediation Bureau (FMB) –

Consists of Insurance Mediation Bureau (IMB) and

Banking Mediation Bureau (BMB)

D. SAMPLE OF DISPUTE RESOLUTION MECHANISM IN

ISLAMIC BANKING

E. CONCLUSION

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A. INTRODUCTION

• Different task of dispute resolution

• The goal – to achieve justice socially, economically and

politically

• The system of justice must yield result through a fair process,

reflecting both sides „win-win settlement‟, within a reasonable

time and expenses

• The techniques of dispute resolution should promote all the

good values between both disputants

• 2 options: Litigation or ADR?

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B. ACCESS TO JUSTICE SYSTEMS

-The access to courts and tribunals involved in the delivery

of justice to individuals, groups and organizations involve in

disputes.

1. LITIGATION SYSTEM

-Lord Woolf “..The process is too expensive, too slow and too

complex. It places many litigants at a considerable disadvantages

when compared to their opponents. The result is inadequate access

to justice and an inefficient and ineffective system.”

-Chief Justice Burger “.. Inefficient courts cause delay and expenses,

and diminish the value of judgment. Small litigants, who cannot

manipulate the system, often exploited .. By the litigant „with the

longest purse.”

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2. ADR System

-The range of procedures that serve as alternatives to litigation for the

resolution of disputes, generally involving the intercession and

assistance of a neutral and impartial third party.

-A less hostile, win-win and innovative solutions, more co-operative

environment and both are given the opportunity and to meet face to

face to explore the underlying interests in disputes.

-Abraham Lincoln “Discourage litigation. Persuade your neighbours to

compromise whenever you can. Point out to them how the nominal

winner is often the real loser.”

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Primary

ADR

ODR ODR

Secondary

ADR (hybrid)

P

H

I

L

O

S

P

H

Y

1. Arbitration

2.Mediation/

Conciliation

3.Negotiation

1.Tribunal

2.Med-arb

3.Mini-trial

4.Expert-determination

5.ENE

6.Court-annexed

1 2 103 4 5 6 7 8 9

1.Alternative Dispute Resolution

2.Appropriate Dispute Resolution

3.Better Dispute Resolution

4. Innovative Dispute Resolution

5.Additional Dispute Resolution

6. Complementary Dispute Resolution

7. Assisted Dispute Resolution

8. Affirmative Dispute Resolution

9. Amicable Dispute Resolution

10. Administrative Dispute Resolution

MULTI-TYPES OF ADR

&

P

O

L

I

T

I

C

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C. ADR PRACTICE IN MALAYSIA

• Used in Malaysia since 1600s or earlier

• Historically, each village has been administered by a ‘Ketua

Kampung’ (village head), whose duties include the settling of

disputes among villagers under his jurisdiction.

• Among Alternative Dispute Resolution centre are:

1. Tribunal For Consumer Claims (TCM)

2. Muamalah (Islamic Transactions) Bench in High Court,

Financial Mediation Bureau (FMB) – Consists of Insurance

Mediation Bureau (IMB) and Banking Mediation Bureau (BMB)

3. Malaysian Mediation Centre (MMC)

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MALAYSIA

Tribunal For

Consumer

Claims

(TCM)

Established under Sect. 85, Part XII, Consumer Protection Act

1999

Independent body – primary function of hearing and determining claims

lodged by consumers against supplier/manufacturer

Alternative channel apart from court for a consumer – in a less

cumbersome, speedy manner and at minimal cost

No party shall be represented by an advocate/solicitor during hearing

Awards within 60 days from the first day of hearing

Every award made shall be final and binding on all parties

Financial

Mediation

Bureau

(FMB)

Independent body under Central Bank, Malaysia

Objective – to help settle dispute between the customer and financial

service providers – ie – Banking and Insurance institutions

Provides free, fast, convenient and efficient avenue to refer disputes for

resolutions as an alternative to courts

Consists of Insurance Mediation Bureau (IMB) AND Banking Mediation

Bureau (BMB)

Awards within 60 days from the first day of hearing

Malaysian

Mediation

Bureau

(MMC)

Established under Malaysia Bar Council

Provides mediation services for settlement of disputes

to incorporate mediation into pre-trial process in court

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Tribunal For Consumer Claims (TCM)

A consumer can lodge a claim with the TCM claiming for any lost suffered on any matter concerning his interests as a consumer under the Act arising from:

(a) a false or misleading conduct, false representation or

unfair practice,(b) safety of goods and services,

(c) The right against a supplier in connection with any of the guarantees implied by the Act,

(d) The right against a supplier in connection with any guarantees implied by the Act in relation to services,

(e) The right against a manufacturer in connection with any express guarantees on supply of goods, and

(f) The right against a manufacturer in connection with any express guarantees implied by the Act in respect of any goods.

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Malaysian Mediation Bureau (MMC)

The Bar Council, Malaysia has established a Malaysian Mediation Centre (MMC) which was officially opened on 5th November 1999.

It provides mediation services for the settlement of disputes.

The Bar Council has sought the help of the judiciary to encourage litigants to consider mediation before turning to the courts.

The Council had also asked judges to consider incorporating mediation into the pre-trial process at the case management stage

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D. SAMPLE OF DISPUTE RESOLUTION MECHANISM IN

ISLAMIC BANKING

THE AVENUES: DISPUTE RESOLUTION

MECHANISMS IN ISLAMIC BANKING

MECHANISMS

(1) Muamalah Bench (under the Special

High Court in the Commercial

Division) :

The establishment of a Muamalah

Division within the civil courts system

by the Practice Direction dated 6

February 2003 issued by the Chief

Judge (the Practice Direction – Arahan

Amalan No. 1/2003, Pendaftaran Kes-

Kes Muamalat di Mahkamah (Kod

Pengklasan) is of great significance to

Islamic banking and Takaful industries

in dealings with their disputes.

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Cont‟d…

MUAMALAH BENCH

CASES

Mohamed Ismail Bin

Mohamed Shariff, the

Counsel for the Bank Islam

Malaysia Berhad in the first

case involving this kind of

dispute in the case of Bank

Islam Malaysia Berhad v.

Adnan Bin Omar [1994] 3 CLJ

735 (HC); [1994]3 AMR 44

(HC) once said:

“that the setting up of the

same is long overdue and

comes about 9 years after the

first call was made for such a

bench to be set up”.

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Cont‟d…

MUAMALAH BENCH

CODE 22A

SPECIAL HIGH

COURT DIVISION

According to the Practice Direction No.

1/2003, paragraph 2, all cases under

the Code 22A filed in the High Court of

Malaya will be registered and heard in

the High Court Commercial Division.

(This Special High Court will only

hear Islamic banking cases and not

conventional cases).

However, in those courts other than

the Muamalah Bench in High Court of

Kuala Lumpur, Islamic banking cases

will be dealt with by the same judge or

magistrate who is dealing with

conventional banking and commercial

cases which are registered using Code

22 (High Court), Code 52 (Sessions

Court) and 72 (Magistrate‟s Court) and

any other cases registered in those

courts.

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Cont‟d…

FINANCIAL MEDIATION BUREAU (FMB)

FMB

(2) The Financial Mediation

Bureau (FMB)

An independent body established on

20 January 2005.

The main objective is to help settle

disputes between the customer and

the financial services providers who

are its members.

It provides with free, fast,

convenient and efficient avenue to

refer the disputes for resolutions as

an alternative to the courts. These

disputes may be Banking/Financial

related as well as Insurance and

Takaful related.

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Cont‟d…

FINANCIAL MEDIATION BUREAU (FMB)

ITS GOAL The goal is only one – to achieve

justice socially, economically and

politically.

Hence, access to justice for

Islamic banking and Takaful

disputes would be meaningful if

their system of justice yields

result through a fair process,

reflecting both sides „win-win

settlement‟ and within a

reasonable time and expenses.

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Cont‟d…

FINANCIAL MEDIATION BUREAU (FMB)

BANKING/FINAN-

CIAL RELATED

• For complaints, disputes or claims

involving a financial loss, the amount

claimed should not exceed the

following:

1. Banking/Financial Related -

RM100,000

(except for fraud cases involving

payment instruments, credit cards,

charge cards, ATM cards and

cheques for which the limit is not

more than RM25,000).

2. Insurance/Takaful Related -

RM200,000

(Motor and fire insurance/takaful);

RM100,000 (Others); and RM5,000

(3rd. party property damage).

INSURANCE/TAK

AFUL RELATED

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Cont‟d…

INSURANCE MEDIATION BUREAU (IMB)

IMB

THE GOAL

(a) The Insurance Mediation Bureau

(IMB)

Sometimes in 1984, the insurance authority

mooted the idea of forming an independent

body which can resolve insurance disputes

speedily and amicably, at less cost to the

public and in less formal manner than in

arbitration or court trial. Finally a formal

independent body was established in August

1991 known as Insurance Mediation Bureau.

It was established under the Companies Act

1965 as a company limited by guarantee.

It was formed as a result of certain incidents

surrounding the insurance industry. The

insuring public especially the motorists had

complained that they have not been getting a

fair deal from their insurers pertaining to their

claims.

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Cont‟d…

BANKING MEDIATION BUREAU (BMB)

BMB

THE GOAL

(b) The Banking Mediation Bureau

(BMB)

It was established on 28 June 1996

under the Companies Act 1965 as a

company limited by guarantee.

The main object of the Bureau is to

provide a simple mechanism for

dispute resolution without any costs to

the customers of the banks or finance

companies.

The Bureau receives references from

the customers who are not satisfied

with the decisions of the banks or

finance companies on their complaints

or claims involving monetary loss as

the result of their dealings with them.

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Cont‟d…

BANKING MEDIATION BUREAU (BMB)

ITEMS

• The disputes that can be brought to the

BMB arising out of any of the following:

(1) The charging of excessive fees, interest

and penalty;

(2) Misleading advertisement;

(3) Automatic Teller Machine (ATM)

withdrawals;

(4) Unauthorised use of credit cards; and

(5) Unfair practice of pursuing actions

against guarantor.

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E) CONCLUSION

HOPES

ADR – win-win innovation concept

• It improves the application to out-of-court

settlement over conventional judicial

proceedings

• It is less expensive, less litigious and non-

adversarial methods of dispute resolution

In this regards, the introduction of the

Tribunal For Consumer Claims (TCM),

Malaysian Mediation Bureau (MMC) and

Special Division in the High Courts‟s

jurisdiction and the setting up of the

Financial Mediation Bureau (comprise of

BMB and IMB) specially to hear Islamic

financial disputes is an excellent

development which has been long awaited

by millions of consumer, particularly from the

Islamic financial sectors.

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THANK YOU