Ep 2 Rationale of using Negotiation and Mediation in Malaysian Construction Industry-Ms Rammit Kaur

Summary

The video script discusses the importance of alternative dispute resolution methods like negotiation and mediation in the Malaysian construction industry. These methods are flexible, cost-effective, and maintain privacy and confidentiality, allowing parties to control the process and find mutually favorable solutions. They also help preserve business relationships and reputations, making them preferable to formal dispute resolution mechanisms.

Takeaways

• 🏗️ Disputes in the construction industry are common and must be resolved promptly to avoid irreparable damages and losses.
• 🔍 Alternative dispute resolution (ADR) is prevalent in the industry, with negotiation and mediation being particularly flexible and cost-effective.
• 🇲🇾 Negotiation and mediation in Malaysia are less formal and are still in a formative stage compared to other dispute resolution methods.
• 🤝 The process of negotiation and mediation is fluid and can be tailored to the parties' needs, without fixed procedures.
• 👥 Parties have autonomy in these processes, with the ability to control the manner and pace of dispute resolution.
• 💡 Negotiation is more subjective, driven by the parties involved, while mediation introduces an element of objectivity through a neutral third party.
• 🕒 The time taken for negotiation and mediation is typically shorter, as parties are already familiar with the dispute details.
• 💰 These methods are economically advantageous, requiring less financial outlay compared to adjudication and arbitration.
• 🔒 Privacy and confidentiality are maintained, which is beneficial for parties who wish to keep their disputes and business strategies undisclosed.
• 🤝 Negotiation and mediation are conducive to maintaining business relationships, as they promote amicable resolution and mutual agreement.
• 💡 The process encourages creative solutions and remedies that go beyond financial compensation, such as future contracts or added warranties.
• 🏢 The industry values entities that resolve disputes amicably, as it reflects positively on their business reputation and approach to conflict resolution.
• 🔑 Confidentiality in these processes also safeguards trade secrets and sensitive information, which is crucial for maintaining competitive advantage.

Q & A

Why are disputes in the construction industry considered inevitable?

Disputes in the construction industry are inevitable due to the complex nature of projects, involving multiple stakeholders with different interests, which can lead to disagreements over various issues such as defects, delays, and performance standards.

What are the potential non-compensable damages and losses that can arise from unresolved disputes in construction projects?

Unresolved disputes can lead to non-compensable damages and losses such as defects in the construction work, project delays, and damage to the business's reputation, which can affect its performance and standing in the industry.

Why is the use of alternative dispute resolution (ADR) common in the construction industry?

ADR is common in the construction industry because it offers a more flexible, simple, fast, and economical approach to resolving disputes compared to formal legal processes.

How does the negotiation process in Malaysia differ from other forms of dispute resolution?

Negotiation in Malaysia is less formal and more fluid, allowing parties to set their own process without fixed rules. It is driven by the subjectivity of the parties involved and does not necessarily require the involvement of external councils.

What is the role of a neutral third party in the mediation process?

A neutral third party in mediation adds objectivity to the resolution mechanism, helping parties to express their concerns and understand the motivations behind the claims, without being restricted by technical contractual and legal arguments.

How does negotiation and mediation assure party autonomy in dispute resolution?

Negotiation and mediation assure party autonomy by allowing parties to have total control over the process, not being restricted by procedural rules, and conducting the process as they deem fit according to their circumstances.

What are the cost benefits of using negotiation and mediation for dispute resolution in the construction industry?

Negotiation and mediation are cost-effective as they rely mainly on internal resources for negotiations and have a lower course of proceedings compared to adjudication and arbitration. They also take less time, reducing overall costs for the parties involved.

Why is privacy and confidentiality an advantage in negotiation and mediation processes?

Privacy and confidentiality are advantages because they allow parties to retain control over sensitive information and maintain the privacy of their dispute resolution process, which is crucial for preserving business relationships and trade secrets.

How does negotiation and mediation help in maintaining business relationships and reputation?

Negotiation and mediation help maintain business relationships and reputation by allowing for amicable resolution of disputes, which is viewed positively in the industry. It also keeps sensitive business information confidential, protecting trade secrets and key personnel details.

What are some creative remedies that parties can consider in negotiation and mediation?

Parties can consider creative remedies such as future contracts, added warranties, or the supply of additional space to compensate for damages or losses, rather than being limited to financial compensation.

Why is it important for parties to consider what would be a palatable resolution for the other party during negotiation and mediation?

Considering a palatable resolution for the other party is important because it encourages a cooperative approach, where both parties are more likely to make concessions and reach an agreement that is favorable to both sides, thus resolving the dispute effectively.