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MEDIATION – A SERIOUS CONTENDER IN THE DISPUTE RESOLUTION ARENA?
  • Feb 15, 2022
  • Latest Journal

The past 20 months have been challenging, to say the least, for the construction industry and unfortunately it does not appear that matters are likely to improve any time soon.  We have had to face the effect the Covid-19 pandemic has, and continues to have, on the industry together with the impact of Brexit and the issues relating to material and supply shortages which in turn have increased prices.  It is a situation that is ripe for disputes in an already contentious industry.  The industry was called upon to work together to deal with the impact of Covid-19.  However, I don’t expect that many of us thought that we would still be dealing with it 20 months later.

Whilst there was an acceptance by contracting parties to work together, to an extent, to deal with the initial impact of Covid-19, there does seem to be a waning of this approach given the continued impact and disruption.  At CDR, we always encourage our clients to keep the lines of communication open with the other party, however sometimes parties need a helping hand in resolving their disputes.  As such, is it time for the construction industry to give more consideration to the use of mediation?

The Scottish Government in July 2021 published its CPN3/21 in respect of resources for construction projects and this was to take cognisance of the issues in the market with regard to the availability and affordability of materials and labour.  In particular, it conveyed a message that parties should look to work together to resolve issues.  The guidance suggested that ‘contracting authorities should work closely with contractors to identify how risks to the delivery of projects adversely affected by resource constraints might be mitigated.  Such discussions should be honest and open.’  It went on to state that ‘Discussions with contractors should take account of what is fair and reasonable in particular circumstances.’  The guidance also advised that ‘In order to reach mutually satisfactory outcomes, either or both parties may wish to propose that engagement is built around a conflict avoidance philosophy.’

Whilst this conflict avoidance philosophy relates to the Scottish Government’s CPN2/2021, it appears to be an attempt to change the mindset of parties in order to encourage working together to find a resolution to the matters in dispute.   Conflict avoidance and early intervention in disputes seeks to enable this.  Mediation can also assist in that it can be instigated at an early stage in the project and allow parties to find a mutually agreeable solution to the matter that is in front of them in order that they can conclude the project amicably.  Unlike adjudication, arbitration or litigation, mediation allows parties to retain control of their dispute and in doing so hopefully preserve relations in order that they can continue to work together.

As a practising Adjudicator and accredited Mediator, I consider there is a place for various methods of dispute resolution in our industry.  There is no ‘one size fits all’ for disputes.  Depending on the dispute and the parties’ attitudes to one another will also be determining factors in respect of the appropriate method of dispute resolution.  However, whilst adjudication is well established it seems there is still somewhat of a reluctance to use mediation by the construction, as a whole.  Against the backdrop of the successful outcome of mediations, this remains a bit of a mystery.  In CEDR’s Ninth Mediation Audit for 2020, it noted that the settlement rate had increased to 93% from the previous 89% in 2018.  It stated that this figure was broken down with 72% of cases settling on the day and the further 21% settling shortly after the mediation.  With a success rate like that what’s not to like?   

In further support for reasons why parties should consider mediation, the Audit stated that the value of cases mediated on each year was approximately £17.5 billion; and commercial mediation had saved businesses and individuals approximately £4.6 billion.  In a time of increasing material and labour prices, surely the industry should be looking at cost effective ways to manage its disputes?

Given the pandemic, we have all had to adapt our working environments with many meetings being conducted on Zoom and Teams (other platforms are available) and that has been the same for mediation.  Whilst some people questioned whether mediation was suitable for an online environment, there are obvious benefits; parties do not all have to be in the same location which saves time and costs.  Also as we all try to do our bit for the environment it helps with our green credentials by minimising and often eliminating travel.  Mediations are usually a one day process but are not restricted to a 9-5 working day.  As such if the mediation runs on after 5pm then not having to travel home late at night or catch the last flight home is a stress that is alleviated by online mediations and as such keep all involved focused on finding a resolution.  So whilst there are obvious benefits, how has the new online model been received by the industry?

In a recent blog from James South the CEO of CEDR, he stated that he considered that online dispute resolution was here to stay.  CEDR noted that a virtual mediation, prior to the pandemic, was something that was rarely undertaken.  However, CEDR are now conducting between 30-40 of these processes a month.  James also stated that the settlement rate of online mediations has been higher than the last 2 years at 85% of mediations being settled on the day.

Therefore, I think it is clear that whilst many of us may have had some hesitation in entering the virtual world prior to the pandemic, virtual mediations and the benefits that it can bring to parties is a positive to be taken from what has been a very difficult 20 months.  Perhaps it may even be the push that parties need to seriously consider mediation as a form of dispute resolution.

Mediation is surely something that the construction industry should be embracing; working together to resolve disputes and building an industry that is less contentious for generations to come.  We will never get rid of disputes; they are a fact of life.  However, we should be looking at how best to resolve these when they do arise.  If the past 20 months has taught me anything, it is that time is precious, and life can change in a flash, which you have no control over.  If there is a more time and cost efficient way to manage disputes and prevent the breakdown of working relationships, I for one would actively encourage parties to explore all options.  There is no ‘one size fits all’ for a dispute, and mediation will not be appropriate for all disputes, however, we must make sure that contracting parties are fully aware of all the options available to them.  Armed with knowledge of the options parties can make an informed decision on which method of dispute resolution best suits their particular circumstances and dispute.

CDR have a proven track record of assisting our clients and avoiding disputes and, where necessary, resolving disputes.  Should you wish any more information or guidance in relation to any of the above please do not hesitate to contact me at lhc@cdr.uk.com.  

Please note that the materials presented and discussed herein serve a purely informational and educational purpose, and do not constitute advice. CDR accepts no liability for any claim brought as a result of you or a third party relying on this information.