The construction industry is very familiar with arbitration. It can be a quick and relatively inexpensive way to resolve a dispute – argue a point, get a decision, deal with it and move on. [I should probably note, as the industry is aware, though, that it is not always quick, not always inexpensive, and the absence of an appeal can be devastating if you get an arbitrator who just doesn’t get your point or the law.] Some contracts are even adding mediation as a component of the contract, requiring mediation before arbitration.
But disputes don’t always arise in a context where mediation or arbitration is compelled. Many vendors and subcontractors don’t spell out dispute resolution terms in their paperwork, a three-way dispute with a party that has no alternative dispute resolution clause, and many other settings exist wherein someone can’t be compelled to mediate or arbitrate.
What then? Are you just left to the Courts?
Not necessarily. The construction world, like the rest of the business world, understands that coming to terms and moving on is almost always preferable to fighting to an expensive and slow conclusion. It is starting to discover that mediation may be the best approach even when it is not required by the contract.
Mediation settles far more cases than it leaves in dispute. It is quick (a mediator can be on site in days, or hours if necessary). It is inexpensive (no discovery, no long trials – just informal preparation and presentation and discussion). You are not locked into a bad decision by a judge or an arbitrator. In mediation, if you don’t reach an agreement, there is simply no deal. Even if no agreement is reached, you have not spent an inordinate amount of time and money to have tried.
But if it does work, you have resolution in a matter of days, not weeks or months or years. All it takes to start mediation and see if it can produce a resolution is an agreement to try – an agreement that you can make without risk even after the dispute has arisen.
Given the success that mediation has achieved in resolving disputes, calling a mediator in, even when you have no contract saying you have to, can be beneficial to all parties, at little expense and at no risk.