Disputes are not uncommon within construction projects, which is why understanding the benefits and downsides of mediation can be useful.
Whether it is due to payment, delays, defects or variations, tensions can escalate and parties may assume that court proceedings are the only option.
However, mediation is a timely and far less disruptive way to resolve construction disputes.
Our Construction Law expert and solicitor, Layna Thompson, explains the benefits of mediation for managing a construction dispute.
What is mediation?
Mediation is a form of Alternative Dispute Resolution (ADR).
It involves the appointment of an independent and neutral mediator who helps the parties negotiate a settlement.
The mediator does not decide the outcome or impose a judgment but facilitates discussions and guides each party towards a mutually acceptable resolution.
Unlike litigation or arbitration, mediation is informal and focuses on collaboration.
Mediation is commonly favoured in the construction sector as it can resolve disputes between customers, employees and other contractors or subcontractors.
Why is mediation so effective?
Mediation works particularly well for construction disputes as it is:
- Quick – Court proceedings can take months or even years. Mediation can often be arranged within weeks and many disputes are settled on the day of mediation.
- Cost-effective – Litigation costs can quickly escalate and mediation is significantly less expensive. Also, the mediator’s fees are often shared between parties.
- Helpful for preserving relationships – Construction projects often involve ongoing commercial relationships. Mediation is cooperative and allows parties to move forward without the damage that adversarial proceedings can cause.
- Flexible – A court can only award remedies available in law, which is often damages. Mediation allows alternative solutions such as revised payment terms or agreed future works and adjustments.
- Confidential – Unlike court proceedings, mediation takes place in private. Discussions are without prejudice, meaning they cannot be referred to in court if the dispute continues. This can help protect reputation and encourage open communication.
What is the mediation process?
The mediation process is straightforward and involves:
- Agreement to mediate – This may be voluntary or because a contract requires mediation before court proceedings.
- Appointment of a mediator – The parties will select a neutral individual, often with legal or construction expertise.
- Preparation – Each side prepares a statement summarising the issues, evidence and desired outcome to help the mediator understand the dispute in advance.
- Mediation discussions – The process often begins with a joint meeting where each party outlines its position. The mediator then holds private sessions, known as caucuses, with each side. These confidential discussions allow parties to explore settlement options openly.
- Negotiation and settlement – The mediator discusses the proposals between the parties. If an agreement is reached, it is recorded in writing and signed to create a binding settlement.
If mediation does not resolve the dispute, the parties retain the right to pursue adjudication, arbitration and court proceedings.
How can we support you during mediation?
Effective mediation requires preparation and our Construction Law team can support you at every stage of the process.
We advise you on whether mediation is appropriate and ensure you are remaining compliant with any ADR clauses in your contract.
During the mediation process itself, we prepare a detailed statement, assess any settlement terms and ensure they are clear and protect your position.
If the dispute is not resolved through mediation, we can advise on the next legal steps.
Construction disputes can be costly and take time away from your project.
With the right legal support, you reduce the risks of a potentially damaging dispute and reach an agreement that works for all parties.
For further advice or support on how mediation can help resolve your construction dispute, contact our team today.
