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May 2010

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ALTERNATIVE DISPUTE RESOLUTION METHODS SUCH AS MEDIATION ARE INCREASINGLY BECOMING MORE POPULAR.

"It is fair to say that most parties involved in construction and development projects have an interest in limiting the effects of disputes on business performance".

There is ever increasing pressure to limit the impact of disputes on business performance and as such the parties are becoming more open to explore early and innovative approaches to dispute management and resolution.

What is Mediation?

Mediation is a third party assisted negotiation process with the mediator being appointed by agreement between the parties.

Generally, the mediator is often a specialist dual qualified professional so that the parties can rely upon the professional, legal and commercial skills of the mediator to assist the negotiation process. Mediation is not about legal positioning, although it may be useful to have legal representation to assist in advising the parties and in drafting settlement agreements.

When should mediation take place?

It is generally considered that mediation is most effective after the parties have identified and adequately documented their respective positions. However, the mediation process should not be burdened by voluminous pleadings. The parties should use brief summary position statements instead. Relevant evidence such as expert reports, DVD's etc may be useful to assist the negotiation process. What is more is that both parties should fully consider the respective weaknesses and take part in the mediation with an open mind with a view to negotiating a settlement on agreed terms.

Cost Savings

The results of the survey carried out by Kings College London indicate that cost savings can be significant and that even when a settlement was not reached most considered that the process had been beneficial.

To achieve the most favourable, efficient and economic resolution to any dispute requires careful and dedicated consideration of all the available dispute resolution models, including mediation, but most of all requires early neutral evaluation of the merits of all party positions.

Mediators do not issue decisions but facilitate discussions between the parties, some private, by highlighting matters that may be considered by the parties and which may lead the parties to identify certain weaknesses that may impact on the negotiation process. The mediator is also likely to identify some practical realities and suggest resolution strategies and parameters that may assist the parties to agree the terms of any resolution.

Is Mediation Useful?

In May 2009 Kings College London published the results of a survey it had carried out on "The Use of Mediation in Construction Disputes".

The survey established that most disputes that settle before trial do so through negotiation with some 35% resolved with the aid of mediation. The survey also concluded that most mediations resulted from the parties own volition and not through court intervention.

As such mediation is being used and is useful but there is clearly headroom for further use.

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