Malaysia promotes alternative dispute resolution. Arbitration is governed by the Arbitration Act 2005 (Amended 2011), based on the UNCITRAL Model Law on International Commercial Arbitration. Malaysia is also a signatory to the 1958 New York Convention. Arbitral awards made in Malaysia can be enforced in all countries that are signatories to the Convention.

To promote mediation in Malaysia, the Mediation Act of 2012 was passed. Under the Mediation Act, parties can appoint a mediator, or they can request that the Malaysian Mediation Centre of the Bar Council appoint a mediator from its panel. If the mediation is court-connected, Practice Direction No. 4 of 2016 on Mediation issued by the Chief Justice, is applied.

Malaysia also has an arbitration center, The Asian International Arbitration Centre (Malaysia) (AIAC), formerly known as Kuala Lumpur Regional Centre for Arbitration (KLRCA).
KLRCA recently developed the KLRCA i-Arbitration Rules, where “i” stands for Islamic. The rules cater to Shariah-compliant commercial transactions.

The number of cases resolved through alternative dispute resolution, especially through mediation, has been rising steadily in Malaysia. KLRCA registered 1,290 cases between 2010 and 2016, showing a marked increase from past years.