Over the past 25 years mediation and arbitration have become desirable alternatives to litigation. The popularity of these alternative dispute resolution ("ADR") programs are due to their flexibility, speed and lower cost. Participants have greater control over the process and amount of information shared, and resolution can be either advisory or binding, depending on the method used. These methods also tend to be less damaging to relationships, due to less adversarial processes.

Arbitration and mediation are the two most frequently used methods of alternative dispute resolution. Numerous ADR methods are available, and several are likely suitable for any given project. Each method has a slightly different format, level of participation and degree of resolution, such as- advisory opinions, facilitated resolution, and binding or non-binding decisions.

Arbitration is the most common alternative to litigation. Arbitration offers a final, usually binding, decision. Resolution takes place in a matter of months, if the process is expedited, as compared to years in litigation. Arbitration is the ADR method of choice in many standard contract documents published by the AIA, AGC, CMAA and FIDIC. Arbitration can and should be used in conjunction with dispute avoidance and early dispute resolution programs.

Mediation is a voluntary, non-binding method that utilizes a facilitator to assist disputing parties to reach their own resolution. Mediation is most effective when there is an ongoing relationship that both parties wish to preserve.

ADR also includes leading-edge construction project techniques that utilize teaming and partnering to develop innovative project specific risk allocation and implement aggressive dispute avoidance and early dispute resolution programs. Use of risk management and contracts legal counsel on multi-disciplinary dispute avoidance teams is also increasingly being used.

Before selecting a method of dispute resolution, the following issues should be addressed:

Was the method evaluated for suitability to this particular project?

Were alternative methods offered? If so, why were they rejected?

What is the cost of this method of resolution? Is it final or binding?

What is the length of time to resolution?

Who will be deciding the outcome?

Do we participate in the adjudicator selection process?

What training, style and experience of the neutral is appropriate?

Is there formal discovery or exchange of information prior to the mediation/hearing/trial?

Is there a step program with the opportunity to resolve the dispute prior to final determination?

Will attorney's fees be paid if I prevail?

Is there a risk of paying attorney fees for both sides if I do not prevail?

Is there an opportunity to appeal a decision?

What do I need to do to collect on an award if I prevail?

For international contracts, is an arbitration award enforceable?

What is the best dispute administration service provider (and source of neutrals) for my dispute?

Contact CSG for guidance in selecting an appropriate method of dispute resolution for your project. CSG also offers assistance in developing internal dispute resolution programs.

Dispute Avoidance

No ADR commentary would be complete without a word in favor of dispute avoidance. Although arbitration is less expensive and a faster method of dispute resolution, parties still face costs of $10,000 and upwards, just to get to a hearing. A bit of prevention seems worth the effort.

Please see the Risk Management and Design/Build pages for tips on setting up your project to avoid disputes.

For information on maintaining projects already underway, please see the Contract Management, Contract Administration, Change Management and Negotiations pages within this web site.

For further details on Dispute Resolution, please see ADR Methods.