Alternative Dispute Resolution and Construction Disputes
Alternative Dispute Resolution
Alternative dispute resolution (ADR) is an effective avenue for the resolution of construction disputes, and has been especially employed with respect to construction defect litigation. ADR provides a cost-effective way for the parties to air their grievances and come to a compromise in order to save the financial resources that would surely be expended if the matter was to go to trial. The two most prevalent forms of ADR are mediation and arbitration.
Mediation
Mediation is a non-binding ADR method that uses an independent facilitator to aid the parties in the dispute resolution process. It is especially successful when the parties recognize that it is in their best interests to achieve a mutually beneficial agreement. The primary advantage of mediation, besides the cost-savings, is that it is a fairly quick process. A resolution of the matter can be accomplished in much less time than it would take for the dispute to be resolved through arbitration or trial. Also, because mediation is less acrimonious than trial, it may be possible for the parties to continue with business relations in other ventures.
Arbitration
Like mediation, arbitration is a voluntary method of dispute resolution that utilizes a neutral third party. Unlike mediation, however, arbitration is binding. Additionally, it is a more costly and formal process. The parties select the arbitrator who will hear each side of the controversy and thereafter render a final decision. The parties are likely to choose an arbitrator who has experience in their industry, which is a distinct advantage over litigation where there is no guarantee that the trial judge has any acumen or expertise at all in the relevant industry.
Construction Disputes
Oftentimes, construction contracts will include a provision for ADR. In some instances, the parties may bind themselves to participate in mediation prior to seeking a judicial resolution through the courts. Other times, the parties agree to arbitrate any disputes that may arise, foregoing the use of the court system altogether. These agreements to arbitrate are valid and enforceable.
Even without a contractual obligation, parties in construction disputes may still participate in ADR. Chief among these disputes is actions for construction defects. It is generally the case that after a construction defect action has been filed, the owner, developer, general contractor, subcontractors, and design professionals participate in mediation. Site inspections of the affected homes are made and the findings of each party are presented at the mediation along with all the pertinent construction documents. Once a settlement is reached as to each party, the settlement is presented for approval and, when that is achieved, the settling party is removed from the litigation. This allows for the efficient reduction of parties to the action, which can number in the hundreds, and affords the settling parties the ability to extricate themselves from the litigation with a minimal outlay of resources that would be necessarily spent to defend the action.
Copyright 2011 LexisNexis, a division of Reed Elsevier Inc.
