Alternative Options in Construction Contract Disputes
With the inevitable restrictions caused by the current pandemic on the Court System, it is logical that parties will turn their minds to other more attractive options, outside of lengthy and costly litigation, to resolve construction contract disputes. Often people use the terms adjudication, arbitration and mediation interchangeably, but it is important to understand the differences between these options. In the current economic climate knowing how to use these alternate methods effectively is more essential than ever in protecting cashflow for any business.
Adjudication has long been recognised as a time efficient and less costly means of resolving construction disputes. Adjudication assists cash-flow during the process of a construction project and can be the key to unlocking complex and intractable disputes. Any party to such a dispute can refer the matter to adjudication. The adjudicator’s decision is binding until the main dispute is subject to litigation, arbitration or otherwise settled and is often the end of the dispute between the parties. If required, enforcement of a decision of an adjudicator is to seek summary judgment on the decision without the need for a full trial. Whilst litigation can be lengthy adjudications can often be completed within one month. Quite often adjudication resolves issues during construction projects thereby aiding cash-flow.
Parties often elect for Arbitration because it is a private means for resolving disputes, as opposed to litigation which is conducted in a more public forum. Furthermore, Arbitration is attractive because it can involve an industry expert Arbitrator engaged to make a decision on the dispute. Arbitration is also particularly appealing to cross-border disputes. Close attention should be given to the contract as increasingly parties in dispute are electing to resolve their disputes in Arbitration rather than litigation. Unlike Court proceedings the Arbitrator’s time is paid for by the parties. Whilst there are some limited grounds to appeal the Arbitrator’s decision, the Arbitrator does, like a Judge, have the power to order costs.
Mediation is in vogue as one of the most common methods of alternative dispute resolution. An independent neutral mediator who has been specifically trained for the task is agreed upon by the parties. The whole process is conducted on a “without prejudice” basis and in the event that the parties cannot reach agreement they cannot refer any subsequent court to the issues discussed during the mediation. Each mediator’s approach is different and depending on the case both parties may be addressed together by the mediator and then separated with the mediator going between each party with a view of narrowing the issues and ascertaining if a settlement can be reached. Whilst it can be agreed upon at any time in practice parties often mediate once the legal issues have been articulated in the pleadings. Courts often encourage parties to avail of mediation as it less costly, time consuming and acrimonious than full blown litigation. It does however require both parties to be willing to engage properly in the process.
MKB Law will advise on each individual case to ensure that the most practical and cost-effective method of resolution is taken.
Please contact David McAlinden or any of our litigation teams who will be happy to discuss the processes available in general or how to deal with any specific case.