The Advantages of Mediating Construction Disputes
Source:
Global Construction Solutions
Date:
Summer 2017
This article originally appeared in the Summer 2017 issue of
By Thomas I. Elkind, Esq.
The construction process necessarily in-
volves many parties, some of whom may
not have contracts with each other. While
the owner usually has contracts with the
architect and the general contractor, the
architect and the general contractor are
not often related by contract, and the
subcontractors and consultants of the
general contractor and the architect
rarely have contracts with the owner.
When disputes arise, as they often do on
construction projects, it is common for
many parties to become involved, since
it is often not clear whether a dispute is
the result of improper design, faulty con-
struction, defective materials or actions
of the owner.
It has become standard practice for con-
struction contracts to contain clauses
requiring the parties to arbitrate any dis-
putes that arise. Although these clauses
may be stricken from the printed Ameri-
can Institute of Architects forms that are
commonly used in the construction in-
dustry, lawyers and parties are more like-
ly to amend the printed provisions than
to eliminate them entirely. Thus, most
construction contracts provide for some
form of arbitration of disputes between
the parties.
However, arbitration is solely a creature
of contract. A party that has not contrac-
tually agreed to arbitrate a dispute can-
not be forced to participate in an arbitra-
tion, although if all involved in a dispute
consent, other parties can join an arbitra-
The Advantages of Mediating Construction Disputes
tion. This can lead to a situation where all
parties involved in a dispute cannot be
brought into one proceeding to resolve
the dispute. A party can be forced to ar-
bitrate against one or more parties at the
same time as it is engaged in court litiga-
tion against other parties involved in the
same dispute. Such a situation not only
can be very expensive, but there is also
the possibility of inconsistent results be-
ing reached in the multiple proceedings.
Parties facing this type of situation are
well-advised to seek an early resolution
of their dispute. If the parties cannot ne-
gotiate a resolution, mediation is the best
and least expensive way to resolve such
disputes. In mediation, all the parties can
agree to participate in the process, even
if they have not agreed to join in one ad-
judicatory proceeding. The cost of the
mediation, when spread among all the
parties, is minimal when compared to the
cost of engaging in multiple adjudicatory
proceedings.
Another advantage of mediation in these
situations is that the dispute can be
promptly resolved so that the parties can
get back to productive activities. Con-
struction arbitrations can be very com-
plex, with many facts to examine, experts
to testify and documents to review and
explain. Hearings of these proceedings
can take many days over many months.
A related litigation regarding the same
issues can take even longer. In addition,
many judges do not like handling con-
struction cases, and they may delay the
resolution of these cases in the hope
that they will settle before trial.
For these reasons, mediation—which is
always a good option for resolving dis-
putes—is an especially attractive tool in
construction disputes. The advantages
of speed, low cost and final resolution of
the issues all support using mediation in
an early attempt to resolve complicated
construction disputes.
Thomas I. Elkind, Esq.,
a JAMS Boston neutral
and former litigator,
has worked throughout
his career to resolve
construction cases,
representing owners,
contractors, architects,
engineers, sureties and lenders in a wide
variety of matters. He can be reached at
telkind@jamsadr.com.
If the parties cannot negotiate a resolution, mediation
is the best and least expensive way to resolve such
disputes. In mediation, all the parties can agree
to participate in the process, even if they have not
agreed to join in one adjudicatory proceeding.