Kota Kinabalu: Borneo International Centre for Arbitration and Mediation (Bicam) Council Member, Chin Yuen Fong, advocated the use of Alternative Dispute Resolution (ADR) methods and how it can integrate with Environmental, Social and Governance (ESG) principles, particularly in the context of construction projects.
“Construction disputes are common, costly and often involve delays that impact buyers and developers.
“ADR, which includes methods like arbitration and mediation, offers a faster, cost-effective and flexible way to resolve these disputes without resorting to court litigation,” he said during the 9th Sabah International Surveyors Congress.
Chin introduced several methods of ADR – namely, arbitration, mediation, expert determination and adjudication.
Arbitration is a binding process where both parties appoint an arbitrator to resolve disputes, offering advantages such as international enforceability, especially since Malaysia is a signatory to the New York Convention.
It is also favoured for its privacy and confidentiality, ensuring trade secrets remain under wraps.
“While arbitration awards are final and generally not appealable, exceptions exist, such as fraud or jurisdictional overreach by the arbitrator. This makes arbitration useful in complex, high-value disputes,” he explained.
For mediation, he said it is a voluntary non-binding process where a mediator helps the parties reach a common ground.
The mediator is not a judge or arbitrator but a facilitator who guides discussions to explore potential solutions, favoured for its time and cost-saving benefits.
Chin listed the Construction Industry Payment Act as one of the mechanisms of adjudication, especially for payment-related disputes.
However, it only applies to construction projects over four stories and cannot be contracted out.
Chin described expert determination as an ADR method more suitable for disputes in technical issues such as discrepancies in quantities or bills.
In such cases, an expert, like a quantity surveyor, can be appointed to make a final decision, streamlining the process.
When compared to litigation, he portrayed ADR to be the better option with its cost-effective and flexible procedures that can be tailored to the needs of the parties involved.
“This flexibility is a key advantage over litigation, as rules of evidence can be adjusted depending on the situation. For example, in construction disputes, the content of documents is often the main focus, so strict rules may not be necessary,” he elaborated.
Chin expressed how ADR is generally faster, because once an arbitrator accepts an appointment, they schedule and manage the entire process, including deadlines for filing claims, defences, and replies.
This tailor-made roadmap keeps the case moving efficiently.
He also explained how ADR processes – especially arbitration – are private, making them suitable for disputes involving trademarks, trade secrets, or sensitive construction drawings.
Litigation, by contrast, is public; anyone can walk into an open courtroom and hear the details.
The finality of ADR, he expressed, is also one of its attractive factors. For arbitration, awards are final and binding with very limited grounds to set aside.
They can be enforced in the agreed jurisdiction.
When parties settle in mediation, they sign a binding settlement agreement. Breach of this agreement can be sued as breach of contract.
This, he said, encourages amicable solutions between both parties, while in expert determination, the expert’s decision is final; courts usually do not intervene.
“However, adjudication is not final and binding – arbitrators may reopen decisions. Its purpose is ‘pay now, argue later’ to maintain cash flow in construction projects,” he added.
In terms of ESG, Chin said ADR supports environmental goals by reducing paper use through the Borneo International Centre for Arbitration and Mediation (Bicam).
It is the only centre in Malaysia with a full online e-filing system, along with digitally-accessible documents that do not require printing.
ADR hearings can also be conducted remotely, which lowers carbon emissions from flights and travel. Digital tracking is also used to help arbitrators monitor deadlines, reducing the need for physical storage and printing.
For social goals, ADR promotes constructive dialogue, collaboration and amicable settlements.
He explained that this preserves business and professional relationships, ensuring projects continue smoothly while also encouraging inclusivity by allowing participation from diverse professionals.
Lastly, ADR supports governance goals by being transparent and predictable, with clear procedural rules.
“It also provides finality and certainty, especially through arbitration awards. It also relies on qualified and impartial experts which ensures sound decision-making.
“In essence, ADR aligns with ESG by minimising environmental impact, fostering socially responsible conflict resolution and promoting good governance through transparency, efficient and expert-led processes,” he said.
