Sudhar Thillainathan

Messrs. Steven Thiru & Sudhar Partnership Advocates & Solicitors -

Profile

Sudhar is a founding partner of the firm of Messrs. Steven Thiru & Sudhar Partnership, a boutique dispute resolution firm, which was established on 2nd May, 2018. Prior to that, Sudhar was a senior partner in the firm of Messrs Shook Lin & Bok, a long-established full-service law firm.

Sudhar is an established commercial disputes practitioner with almost three decades of experience. He advises and appears in a broad range of complex and high-value commercial disputes, across a wide-range of industry sectors, often with a cross-border dimension, with an emphasis on disputes with contract law, company law, equity and civil fraud elements.

Sudhar has extensive trial and appellate court experience and is also experienced in obtaining and resisting applications for pre-emptive relief including freezing and disclosure orders.

A large proportion of his work in recent years have involved major fraud litigation and asset recovery exercises. He also has substantial experience handling corporate and joint venture disputes.

Sudhar accepts arbitral appointments and has been appointed sole arbitrator and as chairman of three member tribunals under various rules including AIAC (formerly KLRCA), ICC, SIAC and UNCITRAL.

Sudhar is the recipient of the Malaysian Arbitration Lawyer of the Year award for 2023 and 2024 conferred by the Lawyer Monthly Magazine, UK. Sudhar is also ranked as a leading dispute resolution practitioner in notable legal directories.

Interview

Could you explain the ADR process in Malaysia and how it integrates within the broader legal system?

In Malaysia, the Alternative Dispute Resolution (“ADR”) process is an integral component of the broader legal system, designed to offer efficient and harmonious methods for resolving disputes outside of traditional court proceedings. Historically, Malaysia’s ADR methods were influenced by the cultural practices of its major ethnic groups – Malays, Chinese, and Indians. The formal introduction of ADR in the 19th century drew on models from the US, UK, and Australia, but these foreign methods initially lacked alignment with local traditions, leading to limited recognition.

Following Malaysia’s independence in 1957, the country developed its own legal system that blends common law with local statutes. Within this complex legal framework, ADR processes such as arbitration, mediation, and conciliation offer alternative routes for dispute resolution. Arbitration involves a neutral arbitrator making binding decisions, while mediation and conciliation focus on facilitating negotiations and maintaining relationships between parties. These ADR methods are supported by institutions like the Asian International Arbitration Centre (AIAC) and the Malaysian Mediation Centre (MMC), which promote their use in both international trade and domestic conflicts.

The integration of ADR within Malaysia’s legal system enhances the efficiency of dispute resolution by providing less formal and more flexible alternatives to litigation. This approach aligns with Malaysia’s broader legal strategy, which also includes specialized tribunals for industrial relations, competition law, income tax and customs law, reflecting a comprehensive commitment to addressing disputes effectively and equitably.

How has Malaysia’s legal framework adapted to accommodate and promote ADR methods in recent years?

Malaysia’s legal framework has undergone several adaptations and enhancements to accommodate and promote ADR methods in recent years.

(a) Legislative Developments
Several pieces of legislation have been enacted and bring into force to accommodate and promote ADR, including but not limited to, Arbitration Act 2005 (Revised 2011, 2018 and 2024) and Mediation Act 2012.

(b) Institutional Support
The AIAC has expanded its services to include comprehensive ADR options, including arbitration, mediation, and adjudication.

(c) Judicial Initiatives
The judiciary has issued practice directions encouraging or mandating mediation in certain cases, particularly in civil and commercial disputes. Furthermore, Mediation centres have been established within court premises to facilitate the process.

In the premises, Malaysia’s legal framework has adapted significantly to accommodate and promote ADR methods. Legislative amendments, judicial initiatives and institutional support have collectively contributed to a robust and evolving ADR environment in Malaysia. These efforts aim to provide efficient, cost-effective, and amicable dispute resolution alternatives, complementing the traditional litigation process.

Can you describe a landmark ADR case handled by Steven Thiru & Sudhar Partnership that had significant implications for the practice in Malaysia?

The Firm recently acted for the Employer in Damai City Sdn Bhd v. MCC Overseas (M) Sdn Bhd & 2 Ors [2023] 1 MLJ 258, where the rights and interests in a performance bond had been assigned to the guarantor banks. Following a demand on the performance bond, the Contractor applied for an interim injunction in the High Court to restrain the payment and/or the receipt of payment of the guaranteed sum under the performance bond on the ground of unconscionability, pending the disposal of the pending arbitration under Section 11(1) of the Arbitration Act 2005.

The Court of Appeal held that the jurisdiction of the High Court under Section 11(1) of the Arbitration Act 2005 is confined only to the parties to the arbitration agreement and the pending arbitration and/or to claims by the parties thereto, as opposed to third party claims by the guarantor banks of the performance bond. As the arbitration agreement was only between the Employer and the Contractor, the Court of Appeal found that any arbitration award would be futile as against the guarantor banks as it would not bind the guarantor banks, being non-parties to the arbitration. It is therefore imperative for stakeholders in the construction industry to appreciate that there are limitations on the right of a litigant to invoke Section 11(1) of the Arbitration Act 2005 where a performance bond has been assigned to a third party.

What role does cultural context play in shaping ADR practices in Malaysia, and how does your firm address these nuances? And what skills do you believe are essential to being a successful mediator?

Cultural Context in Shaping ADR Practices in Malaysia
As mentioned above, Malaysia is indeed a multicultural society, comprising ethnic Malays, Chinese, Indians, and indigenous group. Different cultural norms and values shape how disputes are approached and resolved. In Malaysia, for instance, the traditional community-based dispute resolution methods, such as ‘adat’ (customary law) and the involvement of community leaders, have historically played a significant role, particularly in rural areas.

Addressing Cultural Nuances in ADR Practices
Given Malaysia’s multicultural context, addressing cultural nuances is crucial for effective ADR. Law firms and mediation centres in Malaysia are increasingly aware of the need to align their practices with the cultural expectations and values of their clients. For instance, understanding the importance of community, religion, and tradition in the lives of Malaysians can significantly impact the approach to mediation and negotiation.

Our firm prides itself on maintaining a diverse team of professionals from various ethnic and cultural backgrounds, allowing us to effectively align with the cultural contexts of the parties involved. In promoting cultural accommodation, we ensure that the ADR process respects and upholds the values and beliefs of all participants.

The essential skill to become a successful mediator is to understand, respect, and adapt to different cultural contexts and practices in Malaysia and maintain a neutral stance thus ensuring that all parties perceive the mediator as unbiased and fair.

Is ADR suitable for common types of disputes, such as contract and real estate issues? How effective do you find it for resolving significant commercial disputes in these areas?

ADR is Suitable for Common Types of Disputes
ADR is highly suitable for disputes involving contract and real estate issues due to its flexibility, confidentiality, and the ability to maintain business relationships. Disputes in these areas often require swift resolution, expert knowledge, and confidentiality—criteria that ADR meets effectively.

In Malaysia, ADR is often resorted to for resolving construction disputes.

The construction sector often faces complex disputes related to payment issues, variations, and project delays, where the selection of an appropriate ADR method can significantly impact the efficiency and effectiveness of the resolution process.

In the construction industry, disputes can severely disrupt project timelines and lead to significant financial losses. ADR methods like arbitration and mediation are particularly effective because they allow fast dispute resolving process and to promote advance cash flows, which is essential in the construction industry, and directly enable construction works to continue without prolonged delays. Arbitration is also frequently used due to its binding nature, providing a clear and enforceable outcome that can resolve disputes more definitively.

Effectiveness of ADR in Resolving Significant Commercial Disputes
The effectiveness of ADR in resolving significant commercial disputes, including those in construction and real estate, can be evaluated from several perspectives:

• Confidentiality: ADR processes ensure that sensitive commercial information, including proprietary details about construction methods or real estate transactions, remains private. This protection is crucial in industries where public disclosure could lead to competitive disadvantages.

• Expertise: Construction disputes often require the involvement of professionals with specialized knowledge of industry practices. ADR allows parties to select mediators or arbitrators with the necessary expertise to understand and resolve these technical disputes effectively.
• Speed and Cost-Effectiveness: ADR is generally faster and more cost-effective than litigation, which is essential in construction projects where delays can have significant financial implications. By resolving disputes quickly, ADR helps minimize the impact on project timelines and budgets.

• Flexibility: The flexibility of ADR allows for tailored solutions that can address the specific needs of the parties. This is especially beneficial in construction disputes, where the complexity of the issues might require creative and customized resolutions that a court might not be able to provide.

What strategies has your firm employed to enhance the success rates of mediation and arbitration?

The Firm’s Senior Partner, Mr Sudharsanan Thillainathan is a former President of the Malaysian Institute of Arbitrators (“Institute”) and the Firm’s Partner, Ms Dawn Wong is the current Deputy President of the Institute. Through the Firm’s longstanding involvement with the Institute, the Firm is uniquely placed to actively engage in ADR law reform and is committed to advancing the cause of alternative dispute resolution through mediation and arbitration by collaborating with local and international ADR institutions, industry associations, and academic centres aim to raise awareness, share knowledge, and promote ADR adoption in Malaysia.

What efforts are being made to improve access to ADR services across different sectors and communities in Malaysia?

On July 16, 2024, Malaysia’s Parliament passed the Arbitration (Amendment) Bill 2024, amending the Arbitration Act 2005. This legislative change is pivotal in solidifying Malaysia’s position as a leading hub for international arbitration. The amendments include:

• Establishment of the AIAC Court of Arbitration: This new institution aims to provide a dedicated platform for arbitration, aligning with international best practices. The Court will enhance the efficiency and credibility of arbitration processes, ensuring that disputes are resolved effectively.

• Revisions to Procedural Aspects: Key changes include the appointment procedures for arbitrators in cases involving multiple claimants and respondents, provisions for re-hearings, and the recognition of digital and electronic signatures for arbitration awards.

• Introduction of Third-Party Funding: The new legislation permits third-party funding in arbitration, which is expected to improve access to ADR by allowing parties who might not otherwise afford arbitration to engage in the process.

These efforts collectively aim to enhance the accessibility, efficiency, and effectiveness of ADR services in Malaysia. By modernizing legislative frameworks and institutional structures, Malaysia is working to make ADR more accessible and equitable for all sectors and communities, ensuring that dispute resolution mechanisms are well-suited to contemporary needs and international standards.

What are the consequences of breaching a post-ADR agreement, and is this a common issue?

Any settlement reached after a successful mediation session may be written and signed by the parties in a Settlement Agreement. Still, in every event, the parties must record the terms of the settlement as a consent judgment. If proceedings have been commenced in court, the settlement agreement may be recorded before the court as a consent judgment or judgment of the court.

In the event that one of the parties breached a post-ADR agreement, the aggrieved party may seek judicial enforcement. Courts can compel compliance with the agreement or award damages for non-performance. In jurisdictions like Malaysia, where ADR processes are reinforced by statutes such as the Arbitration Act 2005 and recent amendments, breaches of ADR agreements can be pursued through the courts to ensure that the terms are honoured. This enforcement mechanism underscores the importance of adhering to agreements reached through ADR.