Construction law begins with the design and/or construction contract. A well-crafted contract clearly defines a project’s terms and helps the parties avoid future disputes and litigation. In reality, though, disagreements are often inevitable in the complex world of construction. Multiple stakeholders mean disputes can quickly arise over delays, scope changes, or payment issues. Left unchecked, these challenges can disrupt even the most carefully planned projects.
Cobb Cole’s Construction Law team drafts, reviews, and negotiates construction contracts to protect a client’s interests from the start. We weed out ambiguous terms, advocate for favorable conditions, and ensure regulatory compliance. When a dispute occurs, we guide clients through available resolution approaches, including mediation and arbitration, to find common ground and reach fair outcomes.
What Is The Difference Between Mediation and Arbitration?
Mediation is a collaborative process led by a neutral third-party mediator who guides the parties in negotiating a voluntary, enforceable, mutually agreeable solution. The parties retain control over the final terms of the agreement as opposed to an arbitrator issuing a ruling.
Arbitration is a more formal process where one or more arbitrators hear each side’s evidence and arguments and then make a legally binding decision, similar to a judge’s ruling. It resembles a court trial but is generally faster.
Mediation and arbitration are both effective in addressing construction contract disputes, but there are some distinctions between them:
- Construction disputes often involve numerous stakeholders, including contractors, subcontractors, and property owners. Mediation allows for a flexible approach where the multiple parties maintain working relationships and avoid disrupting ongoing projects.
- Arbitration is sometimes preferred when dealing with technical and highly complex disputes. Arbitrators with expertise in construction law can be appointed, providing a more informed decision-making process. It also allows for quicker resolution, which is crucial for time-sensitive projects.
Many firms now use both mediation and arbitration (med-arb or arb-med) to help settle the same construction law matter, leveraging each process’s strengths to create a more efficient and flexible resolution strategy.
Why Construction Cases Are So Complex
The sheer number of stakeholders involved makes construction cases particularly challenging. Projects typically include property owners, general contractors, subcontractors, suppliers, architects, engineers, and even lenders and insurers, all with interconnected responsibilities. When a disagreement over project delays, workmanship, or payment issues arises, it can include two, three, or more of them. There can also be third-party litigation claims that further complicate matters.
Various building codes, rules, and regulations can vary by jurisdiction and project type, meaning there are multiple compliance layers to address.
Construction disputes also tend to involve highly technical details that call for specialized knowledge. For instance, claims related to design and construction defects, material failure, or code violations generally require expert testimony and have a longer discovery process, which often includes extensive documentation, including contracts, blueprints, emails, and change orders that must be examined.
Why Mediation and Arbitration Clauses Are the Norm in Construction Contracts
Streamlining construction contract dispute resolutions saves everyone time, money, and resources. Unlike litigation, which can drag out for years, mediation, arbitration, and med-arb offer a quicker pathway to resolving conflicts.
Experienced construction law attorneys include mediation and arbitration clauses to ensure disputes are handled efficiently without the need for prolonged and costly court proceedings. They also involve industry-specific experts, making it easier to address the technical complexities of construction cases and ensuring disputes are resolved fairly. Projects can move forward with minimal disruption, helping maintain timelines and preserving working relationships.
What Happens If Mediation and Arbitration Clauses Are Left Out of Construction Contracts?
Leaving mediation and arbitration clauses out of construction contracts allows a party to unilaterally choose litigation. That could mean protracted litigation, higher legal costs, and longer project delays.
Failure to use mediation or arbitration first to try and resolve a dispute means parties lose the opportunity for faster, less formal resolutions that give them more control over the outcome. In court, a judge or jury makes the final decision, which can be unpredictable and out of any party’s hands. This, in turn, can result in less favorable outcomes and increased financial strain due to longer timelines and higher legal fees. Including these clauses helps ensure disputes are handled efficiently, allowing projects to continue with minimal disruption.
Effective Dispute Resolution Strategies in Construction Contracts
Most legal cases, construction law or otherwise, can be best resolved in mediation, arbitration, or a combination of both.
The Construction Law team at Cobb Cole provides essential guidance during contract negotiations, ensuring your rights, duties, and obligations are clearly defined and protected. When disputes arise, they are skilled in managing complex dispute resolution processes and advocating for fair outcomes through mediation, arbitration, or litigation, if necessary.
Contact Cobb Cole online or call 386-255-8171 to discuss how our construction law guidance and advocacy can help achieve your goals.
