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By: Leonard M. Kessler LenKesslerADR
Construction projects often take years to complete, involve layers of contractors and subcontractors, and employ hundreds, if not thousands, of workers. Efficient conflict resolution is important in the construction industry because it helps maintain relationships between people and entities who must continue to work together on a project that may be midstream in its schedule when conflicts arise. In addition to maintaining a good relationship on a project under construction, the parties want to maintain their relationship for future projects.
DISPUTES ARE VERY COMMON ON CONSTRUCTION PROJECTS, and the parties often turn to mediation to minimize disputes and the costs, both financial and time, arising from litigation and arbitration. Mediation is also appealing because a construction dispute can be mediated while litigation or arbitration is ongoing or while the project is still being constructed.
Mediation is a private dispute resolution process in which the parties work with a mediator to negotiate a settlement to their dispute. The mediator is a neutral party who has no vested interest in the outcome and is trained to facilitate a settlement between the parties. In addition, for construction disputes the mediator usually has experience in the construction industry.
A mediator cannot bind the parties to any outcome. In mediation, the parties are the decision makers and only they can reach a mutually satisfactory agreement and find solutions that facilitate completion of a project still under construction or preserve relationships for future construction projects. This contrasts with litigation and arbitration, where control of the dispute is relinquished to a court or arbitrator that has no interest in facilitating timely completion of a project or preserving relationships.
Mediation is faster and less expensive than litigation or arbitration. Mediation sessions usually take no more than a day or two, compared to a court trial or arbitration hearing that can take weeks. Mediations can be scheduled as soon as the parties are ready, while arbitration hearings and court trials often take years to be scheduled. This time advantage is particularly important when the mediation takes place while a project is still under construction because resolution of disputes clears the way for more cooperation between the project participants.
To read the full practice note in Lexis Practice Advisor, follow this link.
Leonard M. Kessler is an attorney, arbitrator, and mediator with a background in complex construction and commercial disputes. He is the former chief legal officer for the 21,000-employee Infrastructure & Environment Division of URS Corporation (now part of AECOM), which provides architecture, engineering, design, environmental, design/build, construction, and construction management services in approximately 250 offices in more than 50 countries.
For a list of the fundamental provisions that should be included in a construction contract, see
DRAFTING AN OWNER-CONTRACTOR AGREEMENT
RESEARCH PATH: Real Estate > Construction > Owner and Contractor Agreement > Practice Notes > Owner-Contractor Agreement
For an overview of the steps in the arbitration of a construction dispute under the American Arbitration Association rules, see
ARBITRATION OF CONSTRUCTION DISPUTES UNDER THE RULES OF AMERICAN ARBITRATION ASSOCIATION
RESEARCH PATH: Real Estate > Construction > Owner and Contractor Agreement > Practice Notes > Dispute Resolution
For a discussion on the rules and procedures governing the arbitration of a construction dispute under the JAMS rules, see
ARBITRATION OF CONSTRUCTION DISPUTES UNDER JAMS
For information on alternative dispute resolution provisions in contracts, see
RESOLVING CONFLICT: DISPUTE RESOLUTION
RESEARCH PATH: Real Estate > Joint Ventures > Joint Venture Agreement > Practice Notes > Dispute Resolution