By RICHARD STOCKENBERG
The decision whether to litigate or arbitrate a construction contract dispute is a judgment call. It all depends, but what is clear is that mediation offers a viable alternative to reach peaceful resolution without the need to resort to either.
What are the Differences?
Litigationis a public court proceeding utilizing and enforcing rules of evidence and procedure with attorneys representing the litigants. The decision maker is either a jury or a judge. The decision is binding and enforceable and is subject to review by a higher court.
Arbitration is a private proceeding that is voluntary, officiated by a single arbitrator or, in some cases, by a panel of three arbitrators. While there are rules governing procedures, arbitration does not follow the strict rules of evidence. The decision is binding with only limited rights of appeal. Attorneys are not required but are generally used.
Mediationis a non-binding settlement process facilitated by a neutral mediator, usually an attorney experienced in construction law. While mediation is generally voluntary, some courts will require litigants to engage in the process, though neither side is required to settle – just to make a good faith effort. Selection of the mediator is by agreement of the parties.
While parties cannot be required to surrender their rights to litigate, when a party signs a contract agreeing to arbitration, courts will typically enforce the clause.
In prior iterations, the American Institute of Architects family of documents required disputes to be resolved by arbitration using the services of the American Arbitration Association. However, to afford the parties options, the forms were modified to require the parties to check the box selecting either arbitration or litigation. Unless the arbitration box was selected, litigation became the default procedure.