Under Maltese law, disputes can be settled in Court through litigation practice or by means of Alternative Dispute Resolution practice. The most common methods of alternative dispute resolution under Maltese legislation are; mediation and arbitration.
Alternative Dispute Resolution (ADR) is an alternative way of settling disputes between parties in order to reach an agreement without resorting to litigation. A mediator or an arbitrator is a neutral third party, which is involved in the ADR process to facilitate in solving the dispute with the most favourable outcome for both parties.
When circumstances allow involved parties to resort their dispute by means of ADR, rather than going through lengthy court proceedings, the conflict can be resolved in a shorter timeframe and is financially cheaper. Furthermore, alternative dispute resolution secures confidentiality and limits the involvement of any other persons in solving the dispute, compared to litigation.
In Maltese legislation “mediation means a process in which a mediator facilitates negotiations between parties to assist them in reaching a voluntary agreement regarding their dispute”.
Mediation procedure runs in the presence of an external mediator, an impartial party, who facilitates the discussion between the parties in the presence of their respective lawyers. The Mediator does not assign fault or make any orders but assists the parties in communicating with each other to reach an amicable settlement.
Whilst mediation is considered to be one of the most effective and efficient ADR methods, suitable for most civil and commercial matters, it can help resolve almost all disputes, including disputes related to employment, family and property law. In certain cases, such as personal separation or disputes related to certain types of leases, mediation is compulsory.
Going through mediation procedure can bring the following outcomes:
- Reconciliation: the possibility of restoring the relationship between the parties;
- Bonarja or amicable settlement: in case of no possibility for reconciliation, the mediator will try to find a solution suitable for both parties in order to reach the settlement of the conflict without a need to proceed to Court;
- Close of mediation without a settlement: if a favourable solution has not been reached, a case will move towards litigation in Court and mediation will be closed.
Arbitration is another method of ADR used widely in Malta for large commercial disputes, or instances where it is prescribed by law. In arbitration, similar to mediation, a third neutral party is present during proceedings – an arbitrator. There could be more than one arbitrator appointed to the case. In arbitration proceedings, the arbitrator takes a final decision at the end of the hearing.
Alternative Dispute Resolution Methods in comparison
|The mediator listens and discusses all possible ways to find a favourable solution to settle the dispute, acting more as an advisor but without making any decisions himself. The final decision is made jointly by the involved parties.||During the proceedings, the arbitrator takes a final decision on the case – “award”.|
|The settlement of the mediation is generally non-binding unless specifically demanded by the parties.||The decision and the award are final and binding on both parties. Appeals can be lodged only in the circumstances provided for by law.|
|The procedure is less formal compared to arbitration||The procedure is more formal compared to mediation|
Whilst both Mediation and Arbitration are effective methods of Alternative Dispute Resolution, it is essential to choose the right method, depending on the nature of the dispute.
Considering the fact that court litigation can in certain instances have a negative impact on one’s portfolio, we believe that, whenever possible, disputes can be settled in an alternative manner. SMM Group legal team can help to find alternative scenarios, which will be the best for our clients’ specific circumstances by leading the way through the whole process of dispute resolution.