Here on ConstuctionLawMonitor.com I like to blog about non-traditional ways to settle disputes between contractors and other feuding parties. Mediation is my favorite because I am a mediator. Its also my favorite because, generally, its the best and most efficient way to resolve disputes. There are circumstances whereby mediation will not work but that usually happens when irrational parties come to the table.
In this post I will explore the element of “when” is a matter ripe for mediation.
As discussed in other posts, there can be clauses within construction contracts wish mandate mediation. This type of clause is called a mediation or alternative dispute clause. In this instance, the contract will lay out exactly how the mediation and/or arbitration process should be handled when an dispute occurs between the parties.
So the timing element of a contractually mandated mediation is spelled out in the construction contract. Many times mediation is a precursor to any litigation or arbitration hearings. This basically works as to when there is a dispute, parties look to the contract to see how the mediation should be initiated.
Outside of contractually mandated mediation there is also voluntary mediation. By definition, all mediation is voluntary. The premise of all mediation proceedings is that the parties are there voluntarily. Otherwise the mediation will not work.
Once the parties are both there in good faith and voluntarily, then the process can work properly. Most mediation proceedings can be completed in one day. Sometimes more complex issues with numerous parties may take a bit longer and may span over a number of days. Either way is fine and the process is designed to facilitate both simple and complex.
Often times parties think they only get one bite at the apple when it comes to mediation. Mediation is different than trial or an arbitration where there does not have to be a final decision made by the neutral party. A mediator is merely a facilitator to settlement. When parties mediate, they have to be the ones who make the final decision to settle.
In my experience, I have seen parties try to mediate disputes early on in the dispute and it did not work out. There was simply an impasse which could not be worked out that particular day. Then the parties dig back in and litigate or negotiate independently. Months and even years later, the parties will come to the table again to mediate and try to work out a deal. As long as the parties are engaged and willing to compromise there is always hope that mediation will work.
There are two main alternatives to mediation. Litigation and Arbitration are what I will discuss.
As you may or may not know, litigation is the standard practice here in the United States, but it is old and antiquated. Litigation is also extremely expensive and slow. If a party files suit on a hundred thousand dollar construction dispute it will likely take years to completed. The process is slow and the parties know how to exploit the process so that it will move even slower. The only parties who make money off litigation are attorneys.
One of my favorite quotes regarding how bad litigation is from the French scholar Voltaire,
“I was never ruined but twice; once when I lost a lawsuit and once when I won one.”
Even as far back as the seventeenth century people were opposed to litigation. Needless to say, the process has become worse, not better.
Next is the somewhat better and more favored, arbitration. Arbitration is good because it is more efficient and cost effective than litigation. Parties get to select an arbitrator and then proceed ahead with more relaxed rules than traditional litigation. The problem here is that the arbitrators ruling in binding. Binding is scary because its all left to the discretion of one person.
I’ve experienced a number of arbitration rulings that have left me scratching my head wondering what the arbitrator was listening to. There is the possibility of appeal, but the standard is overwhelming and the ruling is rarely overturned.
Mediation is a voluntary negotiation process where a neutral third party helps to facilitate the parties making an agreement. In my mind this choice is clear to mediate.