The litigation process can be contentious, stressful, and expensive. The time needed to get to trial and obtain a resolution often exceeds the time spent completing a construction project, and litigation drains the energy and attention of all participants from the project or job at hand. Similarly, professional reputations are damaged or lost in an industry where reputation is a valuable business asset.
Often, these negative dispute repercussions can be avoided entirely by opting for mediation or arbitration to reach an agreement.
One alternative to litigation is mediation, a private and informal method of dispute resolution that involves a mediator. The process is entirely voluntary, with no one being compelled to accept a settlement. Mediators are neutral and independent parties who assist disputants in reaching an agreement and a resolution to the problem at hand. Settlement terms are decided by the parties, not the mediator.
At the hearing, the disputants have the option of presenting evidence and/or documentation to support their position. The mediator facilitates the negotiation process but cannot issue a binding decision. Once a settlement is reached, the mediator will help draft the agreement terms, which can then be taken to an attorney and written into a legal contract.
The purpose of arbitration is to privately settle a dispute by using a neutral third party as a decision maker. It is essentially a forum that permits the disputing parties to present their cases to a single arbitrator (or sometimes a panel) for a final decision.
Unlike trial judges, who often have no expertise in construction, engineering, and architecture, arbitrators can be experts selected for their technical knowledge. Their award decisions are also more likely to be final, which reduces the risk of costly appeals.
Arbitration is preferable to litigation in that it is a speedier and less expensive method of resolving disputes. It is also a more informal proceeding, and closed to the public. Both sides are allowed to present evidence and call witnesses to support their position, and each party can question the other’s witnesses and evidence. After everything has been presented, the arbitrator withdraws to review the case and make a decision.
In binding arbitration, any award made may be enforced in court. Judges will carefully review each case and its specific arguments to determine if anything in the proceedings invalidate the award, such as fraud or misconduct.
If you have questions about this process or about construction law in general, we can help. Please get in touch with us today!