Construction Law

Effective Construction Mediation

For those in the construction industry that have participated in pre-claim, court-ordered mediation, the process can be a frustrating experience.  However, there are many benefits to mediating construction disputes.  The purpose of this article is to identify the benefits of construction mediation and provide some guidelines for making the mediation process effective.

Clients often confuse the difference between litigation, arbitration, and mediation.  Litigation involves resolving your dispute in court by either a judge or jury.  In construction contracts, arbitration is almost always binding and involves resolving the disputes in front of a selected arbitrator or a panel of arbitrators.  Unlike litigation or arbitration, mediation involves the parties utilizing a mediator to facilitate a settlement between the parties.  The mediator does not act as a judge and will not be issuing any decisions.  Everything that is said in the mediation remains confidential and generally cannot be used in any court or arbitration proceeding.  If the parties are able to resolve their disputes in mediation, the parties will execute a settlement agreement and the underlying proceeding, whether it be in litigation or arbitration, is thereby resolved.  If the parties are unable to resolve their disputes, then they will continue with the litigation or arbitration.

As with all forms of mediation, the goal of mediating a construction dispute is to resolve the outstanding claims and avoid incurring additional legal costs.  Because of the numerous complex claims and the document-intensive nature of construction cases, litigation or arbitration involving construction disputes often can be costly.  Mediation, especially early in the dispute, may allow the parties to resolve a claim at a fraction of the cost they would have paid for legal costs, expert costs, and other miscellaneous expenses if the case were to proceed to trial.

Another benefit of mediating a construction dispute is that it gives both parties the opportunity to hear the other side’s case and obtain “free” discovery.  At mediation, by listening to the other party’s case, it may help your lawyer focus future discovery efforts by requesting certain documents or setting discoveries of key witnesses.

When selecting a mediator to facilitate the resolution of a construction dispute, it is important to select someone that has a construction law background and is familiar with the legal principles underlying all construction disputes.  A skilled construction mediator will be able to properly analyze the claims and use the construction knowledge that he or she possesses to help negotiate a mutually agreeable settlement.

Prior to attending mediation involving a construction dispute, it is important that the parties exchange a minimum level of documents or other evidence needed to facilitate settlement and shed light on the issues.  Often, at mediation, the parties may be unable to make a decision because they do not have all of the documents or evidence needed to substantiate a claim.  If the documents and evidence can be disseminated prior to the mediation, then the parties will have full knowledge going into the mediation of the issues and damages which need to be addressed during the course of the negotiations.

In difficult economic times, it is important to utilize mediation to resolve disputes and understand the other party’s position prior to spending excessive amounts on costs.  The parties to any dispute should view mediation as a cost-effective alternative to proceeding in either litigation or arbitration.

Written by Jeremy Power, a lawyer in Cotney Attorneys & Consultant’s Toronto office. To contact Jeremy, please email  jpower@cotneycl.com.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.