Construction Disputes: Should you Mediate, Arbitrate or Litigate?

Wednesday, 23, 2008
Contributed by: Don M. Dean

When a dispute arises during a construction project, the parties must decide whether mediation, arbitration or litigation is the most expeditious and economical manner of resolving the dispute. As a former trial Judge and having represented parties to construction disputes for in excess of forty years, it is my experience that litigation is not only the least expeditious, but the most expensive. Discovery is expensive and docket delay may last for years. Whether one is an owner, a general contractor, subcontractor or a materialman, the dispute needs to be resolved quickly so that the project is not delayed.

Mediation is a form of dispute resolution in which the mediator (often a lawyer) attempts to assist the parties in resolving their differences. Unfortunately, mediation has most often been used to resolve lawsuits after the parties are already in court and have conducted discovery which is expensive. Further, since the mediator has no authority to require that the parties resolve their differences, mediations are often unsuccessful. In addition, many mediators lack experience in construction.

Arbitration has come to the fore in construction matters in recent years. It has the advantage of being both less expensive and quicker than litigation and more likely to resolve the issue than is mediation. The arbitrator is usually a person having experience in construction disputes, either as an expert in actual construction or as a lawyer who has participated in drafting construction contracts and resolving differences which have arisen during construction projects. In arbitration, discovery, if any, is kept to a minimum which is saving of both time and money. There is no docket delay and the discovery is controlled by the arbitrator.

While the arbitrator has the absolute discretion in deciding the case, his or her conduct is usually controlled by the rules of either the National Arbitration Forum or the American Association of Arbitrators.

Arbitration is a dispute resolution mechanism which should be considered by all parties in a construction dispute.

This column is published for informational purposes only. It should not be construed as legal advice and is not intended to create an attorney client relationship. The views expressed are those of the author and do not necessarily reflect the views of the author's law firm or its individual partners.