Understanding Arbitration and Mediation

Arbitration and mediation are two methods of alternative dispute resolution (ADR) that can be used to resolve disputes in the construction industry. Both arbitration and mediation are alternatives to going to court, and they can be faster and less expensive than traditional litigation. However, there are some key differences between the two.

Arbitration is a process in which an impartial third party, known as an arbitrator, hears both sides of a dispute and makes a binding decision on how the dispute should be resolved. The arbitrator's decision is final and cannot be appealed, except in limited circumstances. Arbitration is often used to resolve disputes over contract interpretation, performance, or damages. Mediation, on the other hand, is a process in which a neutral third party, known as a mediator, helps the parties to a dispute reach a mutually acceptable resolution.

The mediator does not make a decision or impose a solution on the parties. Instead, the mediator helps the parties to communicate effectively, identify the underlying issues in the dispute, and explore potential solutions. Mediation is often used to resolve disputes that involve complex or emotional issues, or disputes where the parties have a ongoing relationship and want to preserve it.

Both arbitration and mediation can be useful tools for resolving disputes in the construction industry. The choice between the two will depend on the specific needs and goals of the parties, as well as the nature of the dispute. In some cases, the parties may agree to use both arbitration and mediation in sequence, starting with mediation and then proceeding to arbitration if the parties are unable to reach a resolution through mediation.