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 These include:
- 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.
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")7, 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.
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
- 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.
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.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.