I often get calls from clients, potential construction clients, and other construction and business professionals with questions about arbitration or mediation clauses in the contracts that they are reviewing or drafting. When I get these calls, it often becomes clear that, understandably, there is some confusion as to what each of these alternate dispute resolution processes entails. I thought I’d put together a quick primer on what each is and their differences.
I have often discussed the benefits of mediation for construction professionals. I also expanded my solo construction practice to provide mediation services due to my firm belief that the process of mediation is worthwhile in most construction matters.
Mediation is a private process where a mediator, in the construction context often a construction attorney or other construction professional, provides guidance in assisting the parties to a dispute in reaching an agreed settlement. The process is totally confidential and the mediator is not making the decision. The process is totally voluntary and the only binding thing to come out of the process is any agreement that the parties make.
In short, the mediation process is totally in the parties’ control and the mediator is simply there to use his or her experience to assist in highlighting issues, providing suggestions (where the parties request) and to facilitate the process. The parties can come up with whatever solution they want to make to their dispute without rules of evidence or the winner take all nature of court proceedings.
Arbitration on the other hand is essentially private court. In arbitration, the arbitrator, in my construction world a construction lawyer or construction professional (possibly more than one), acts as the “judge” in the dispute. The rules are provided either in the construction (or other) contract or, if designated by contract or agreement, by a third party (JAMS, American Arbitration Association or the like). The parties present their evidence and the arbitrator makes a decision that is enforceable in court if necessary.
Depending on the rules provided for in the contract, the process can be faster and more streamlined. Discovery can be shortened. Depositions can be eliminated. The rules of evidence can be loosened. All of these things could make arbitration desirable in some situations. However, arbitration places neither flexibility or control with the parties. The arbitrator decides who wins and who loses. I have shared my thoughts on this process on many occasions here at Musings and won’t go into them all here, but suffice it to say that I don’t believe in arbitration as universally as I do in mediation.
I hope that this helps in your understanding of two available yet very different non-judicial ways to resolve your construction dispute. Please share your experiences and thoughts below.
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