Compulsory mediation?

Anybody reading this article who has been involved in a construction dispute will know that it can be an expensive business. Lawyers do not wear nice suits because they are cheap to hire!
 

Access to Justice - is it time to take a leaf out of an Arab book and insist on compulsory mediation?

 

Anybody reading this article who has been involved in a construction dispute will know that it can be an expensive business. Lawyers do not wear nice suits because they are cheap to hire!

 
In English Law, parties to construction contracts have the choice of deciding how disputes are to be finally decided.  The choice is litigation or arbitration.  Arbitration is supposed to be cheaper than litigation (in practice this is often proven not to be the case) and it is supposed to be private.  I say supposed to be, because a losing party to an arbitration will often look to draw up some ingenious argument about a point of law that needs deciding in the courts.  So, in practice, arbitration may not prove to be as private as you would like.
 
Since the advent of statutory adjudication in May 1998, the majority of construction disputes have been decided by adjudication.  Adjudicators’ decisions are temporarily binding and must be complied with until one of the parties decides to take the matter to the courts or off to arbitration to have the dispute finally decided. In practice, losing parties rarely refer the matter on to the courts or arbitration for two reasons.  There is little to be gained from going on if it is felt that the adjudicator has come up with the right answer. Even if the adjudicator has got it horribly wrong, the costs of an onward referral to the courts or arbitration can be prohibitive.
 
Those of us who earn our living from the construction industry are living in difficult times.  We are in the middle of a very deep recession.  Work is scarce, margins are tighter than ever and we are all living in fear of what the banks are going to do next.  Contractors and Sub-contractors are chasing money like never before and this inevitably means more disputes, whether we like it or not.
 
It would appear that our wealthy colleagues in Dubai are experiencing similar problems and their approach to the solution of this problem is not only unusual, it is highly sensible.  The Dubai government is about to pass a law that will require any party to a construction dispute to have tried mediation through the Dubai Mediation Centre before that party can take its case through the courts.
 
Is it time that we had a similar system in the UK?
 
Many lawyers will argue that to mediate a dispute before it has been fully argued out in pleadings with the accompanying disclosure means the mediation is bound to fail.  But I simply do not agree that this is the case.  Yes, it may well be true that all the facts and legal arguments have not been fully rehearsed between the parties at an early mediation but this argument cuts both ways simply because the parties will have the advantage of not having incurred the associated legal costs.
 
Sensible business people are quite capable of factoring the risks associated with early mediation.  If my experience is anything to go by, mediations which are conducted close to trial date, when the parties have spent most if not all of their money and are well and truly entrenched in their positions, are the most difficult cases to resolve through mediation.
 
I am even sometimes told that the parties have agreed to mediate because they cannot afford the cost of the trial. Again mediations which take place because of a need to settle, rather than a desire to, are difficult to deal with and, whilst often leading to settlement, invariably leave one or both parties feeling polarised, demoralised and disillusioned by the entire legal process.
 
My feeling is that the Dubai Government has got this absolutely right.  Perhaps we should take a leaf out of their book and the time for the compulsory mediation of construction disputes is here.  “More jaw less war” must be the order of the day.
 
Peter Vinden is a practising adjudicator, mediator, expert and conciliator.  He is Managing Director of Vinden and can be contacted by email at pvinden@vinden.co.uk
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