Special mediation centre to be set up to help resolve Covid-19 related contractual disputes

KUALA LUMPUR: A special mediation centre will be set up to help resolve disputes if contractual obligations cannot be met because of the Covid-19 pandemic, says Datuk Takiyuddin Hassan.

The Minister in the Prime Minister's Department said the government would bear the cost of mediation if done through the centre for a period of one year from Oct 1 this year to Sept 30 next year.

"For this purpose, the government has agreed to set aside not less than RM29mil to provide mediation services through the Covid-19 Mediation Centre to the public and companies affected by the pandemic," he said.

Only those qualified would be eligible to seek mediation through the centre, he said when tabling the Temporary Measures For Reducing The Impact of Coronavirus Disease 2019 (Covid-19) Bill 2020 for its second reading in the Dewan Rakyat on Tuesday (Aug 25).

These include individuals from the B40 and M40 categories, and micro and small scale enterprises, Takiyuddin said.

Also eligible, he added, were manufacturers with annual sales of between RM300,000 and RM15mil or which have between five and 75 full-time employees.

He said that also qualifying for the mediation services at the centre would be those from the services and other sectors whose annual sales are between RM300,000 and RM3mil or have between five and 30 full-time employees.

Takiyuddin added that expert mediators would be appointed to the centre.

"If parties are able to resolve their dispute in an amicable manner, then they will have to sign an agreement on this.

"Their decision will be final and binding," he added.

Apart from mediation, parties involved in disputes could use arbitration or the courts to resolve their disputes, he said.

Takiyuddin informed lawmakers that the proposed law – Temporary Measures For Reducing The Impact of Coronavirus Disease 2019 (Covid-19) Bill 2020 – aims to provide temporary relief for those who are unable to perform their contractual obligations due to the Covid-19 pandemic.

He said the proposed law would be in force for a two-year period from the date of its proclamation.

He added that the Prime Minister can extend this period through a gazette proclamation and by tabling it before the Dewan Rakyat.

"The proposed law will prevail over any other written legal provisions which are inconsistent or in conflict with it," he said.

He added that the proposed law would also be retrospective and be deemed to have come into effect on March 18 this year.

"The proposed law will also not have any punishments or penalties for non-compliance.

"This is in line with the government's intention that the law is not punitive in nature to burden any party," he added.

The proposed law would see the modification of 14 Acts and two ordinances with regard to contractual obligations.

This includes developers not being allowed to impose late payment charges on unpaid property instalments by consumers should they default paying from March 18 to Aug 31 this year.

The proposed law also seeks to exclude March 18 to Aug 31 from the calculation of the defect liability period and the period for developers to carry out works to repair or make good of other defects in houses purchased.

Another proposed measure in the Bill includes protecting tenants who are unable to pay their rent by proposing to modify Section 5 of the Distress Act 1951 to provide that a warrant of distress cannot be included in the distraining for the arrears of the rent owed from March 18 to Aug 31.

Also proposed is that no owner shall exercise any power in taking possession of goods under a hire-purchase agreement as noted in Section 16 of the Hire Purchase Act 1967 for any default instalment.

However, this is only for the period from April 1 till Sept 30 this year.

Apart from that, creditors are not allowed to present a bankruptcy petition against a debtor under the Insolvency Act 1967 unless the debt owed by the said individual, or if two or more creditors join in the petition, amounting to debts RM100,000.

The Bill also proposes that those who have overdue instalments purchased under a credit card have to be issued a notice by the facility provider for late payment.

The purchaser has 21 days to reply to the notice.

However, the Bill states that credit facility providers cannot commence legal proceedings to recover the total outstanding amount owed under the credit sale agreement.

The agreement only applies if the credit sale agreement was entered before March 18 and if the purchaser has no overdue instalments before March 18.

The Bill, when passed, will modify 16 laws, such as the Limitation Act 1953, the Sabah Limitation Ordinance, the Sarawak Limitation Ordinance, the Public Authorities Protection Act 1948, the Insolvency Act 1967, the Hire-Purchase Act 1967, the Consumer Protection Act 1999, and the Distress Act 1951.

Also to be affected are the Housing Development (Control and Licensing) Act 1966, the Industrial Relations Act 1967, the Private Employment Agencies Act 1981, the Land Public Transport Act 2010, the Commercial Vehicles Licensing Board Act 1987, the Courts of Judicature Act 1964, the Subordinate Courts Act 1948 and the Subordinate Courts Rules Act 1955.

The Bill is expected to be passed later Tuesday (Aug 25).