The use of non-binding alternative dispute resolution methods in lieu of arbitration and court proceedings continues to find favor in the construction industry where previously, complex technical, factual and legal issues were resolved in costly and time consuming litigation.
Due to the increased success of mediation in the resolution of construction disputes, many form and negotiated contracts now include provisions compelling mediation. Compulsory mediation makes mediation a condition precedent to court proceedings or arbitration, meaning that the parties must first attempt mediation, and only if it is unsuccessful may the claiming party proceed to arbitration or court. Another framework used on larger building projects and public works is one in which the parties must go through a series of procedures, referred to as "step negotiations," prior to mediation or arbitration. These "steps" vary, but may include: 1) a meeting between each party's project manager to attempt to resolve the dispute within a specified time frame, and failing that, 2) a meeting between their respective project executives, who also have a certain amount of time within which to meet to attempt resolution, and/or 3) the use of a Dispute Resolution Board, a pre-determined panel available on short notice, which conducts a hearing and usually makes a non-binding recommendation to the parties to resolve the dispute. Contracts containing these dispute resolution requirements, especially compulsory mediation, often put parties in a position of attempting to resolve claims before there is enough information available to evaluate each party's position. This may leave parties feeling ill-prepared and having low expectations for the process. To make alternative dispute resolution work, the parties must make a good faith effort towards resolution. Half-hearted participation undertaken just to satisfy procedural requirements only wastes everyone's time and ignores the potential value of these lower-cost, quicker avenues. With compulsory mediation, a good faith effort means a willingness to work cooperatively with the mediator and any other party and engage in procedural steps to make the process a valuable one. These include the exchange of information and documentation and submission of pre-mediation position papers to allow the parties and the mediator to gain a perspective of the claims and positions. Compulsory negotiation and mediation clauses may at first glance appear to be just another hurdle to overcome in the long road towards settlement of disputes. However, if approached in good faith, owners, general contractors and subcontractors can resolve disputes without the time and expense of arbitration or court proceedings.This
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