KUALA LUMPUR: The International Settlement Agreements Resulting from Mediation Bill 2025 (D.R. 44/2025) is expected to strengthen Malaysia’s legal framework for resolving international commercial disputes through mediation.
The Bill, currently being debated in the Dewan Negara, aims to enhance legal certainty and improve Malaysia’s attractiveness as a destination for international investment and business.
“In an increasingly complex global trading environment, efficient, cost-effective and flexible dispute resolution mechanisms are essential,” said Senator Datuk Ahmad Datuk Seri Ibrahim.
He said the proposed legislation represents an important step in strengthening Malaysia’s ecosystem for Alternative Dispute Resolution (ADR), particularly in managing cross-border commercial disputes more effectively.
“The Bill implements Malaysia’s obligations under the United Nations Convention on International Settlement Agreements Resulting from Mediation, commonly referred to as the Singapore Convention on Mediation 2019.”
According to him, the convention provides a legal framework allowing recognition and direct enforcement of international settlement agreements achieved through mediation in courts of contracting states.
“This reduces the need to initiate fresh litigation proceedings and provides greater confidence to international parties seeking efficient dispute resolution,” he said during his debate in the Dewan Negara.
He said that international commercial parties traditionally rely on arbitration because the New York Convention 1958 ensures enforceability of arbitral awards across different jurisdictions.
“With the Singapore Convention now in place, mediation is given enforceability closer to arbitration, making it a viable mechanism for international commercial dispute resolution.”
Ahmad highlighted that the Bill would strengthen investor confidence, as legal certainty in resolving disputes remains a key factor influencing foreign investment decisions.
He said Malaysia already benefits from a recognised common law legal system, experienced legal professionals and relatively competitive operational costs within the regional dispute resolution landscape.
“The Bill also supports efforts to reduce the burden on courts by encouraging the use of mediation and other alternative dispute resolution mechanisms.”
Ahmad emphasised that administrative and constitutional structures of Sabah and Sarawak must be considered when determining authorities that can enter mediation agreements involving state entities.
He noted that matters related to land, natural resources and indigenous customary rights require careful consideration to ensure settlement agreements do not conflict with state laws.
He also highlighted the relevance of the Bill within the Brunei-Indonesia-Malaysia-Philippines East Asean Growth Area (BIMP-EAGA) framework, which focuses on accelerating development in remote regional economies.
“The sub-regional economy was valued at approximately USD1.34 trillion in purchasing power parity terms in 2024, with intra-regional trade reaching USD165.96 billion.”
He added that ongoing infrastructure initiatives worth about USD66.99 billion would require strong legal certainty to support cross-border cooperation and dispute resolution.
Ahmad proposed several measures, including specialised training for judges, strengthening mediation institutions, establishing a BIMP-EAGA mediation hub, and expanding digital mediation platforms.
“The competitiveness of a nation is closely linked to the certainty of its legal system,” he said, adding that effective implementation would strengthen Malaysia’s legal credibility.
