Be prepared early
Construction disputes are complex and often a dispute related to a small part of the works can lead to serious and far-reaching consequences unless a solution can be found quickly. The decision regarding when to mediate, therefore, needs to be made after considering the effects of any delay.
If mediation is undertaken at an early stage and while the project is still under construction, there is a greater likelihood of finding a commercial resolution before costs build up and the parties harden their positions. Additionally parties will be able to control many more issues and be able to 'trade' their claims. If a dispute continues until after construction is complete, usually the only resolution the parties are negotiating for will be a purely monetary one.
In any event, the Civil Procedure Rules and the related Pre-Action Protocol for Construction and Engineering Disputes compel all parties to examine a case fully, even though there may be no certainty that proceedings will be issued if settlement is not reached and no guarantee of recovering the costs involved if the claim does not proceed.
The mediation is held on a 'without prejudice' basis, so communications made for the purposes of the mediation will not be admissible in court proceedings: though not the fact that mediation has taken place.
Know what to expect
How a mediation is conducted will depend on the type of case, the parties, the content of the dispute and the timing. Most mediations are conducted in a day, and although there are many shapes to mediation it can be described as consisting of any number or combination of joint and private meetings.
Before a mediation, the mediator will be in contact either by phone or at a pre-mediation meeting with the lawyers to confirm the details and sometimes with the parties to address concerns about the mediation. For example: in multiparty cases, the mediator might confirm the negotiation approach of the claimant and the defendant group; in complex cases where the defendants are at odds on the issue of contribution, a separate day of mediation with only the defendants might be advisable before parties meet to resolve the case as a whole; and sometimes a site visit may be valuable to the mediation, particularly if there has been no opportunity for an inspection or where the dispute revolves around workmanship and defects.
Each party prepares a case summary, which should include: a chronology of the events and the negotiation history; details of settlement offers; the court timetable (if any); details of the claims and counterclaims and the areas that are not in dispute. Where possible, a joint bundle of supporting documents should be agreed between parties to avoid duplication. In addition 'for your eyes only' documents can be sent.
Who should attend?
The effectiveness of mediation depends on each party having the right people at the table: a senior representative with the authority to settle; legal representation; or, those who might be integral to helping the negotiation of a settlement or to explain any difficult factual or technical issues.
Often parties will insist on bringing their experts. However, more often than not, each expert produces a report that gives a different interpretation and conclusion so the mediator may need to address the reason for any differences between opinions and adapt the process to make the experts' presence productive. They may be asked to work together to identify common ground or to narrow and agree certain issues or each team to hear the best case of the other and assess how their expert witness might come across in court.
The best approach is to keep the number of people attending the mediation to as few as possible and have others available on the telephone if required.
What to be aware of at the mediation?
The process, whilst flexible in form, tends to contain a number of key phases that the mediator will have familiarised the parties with. The mediator may remind the parties of the importance of the opening presentations and that, for them to have some impact, they should not be regurgitations of pleadings.
Because construction mediations cover many issues, prioritising issues is essential. Unless the parties are seeking a global settlement, some detailed discussion will be expected on each of the issues. In the opening meeting the mediator will list the issues and, with the parties, prioritise them or decide on the order of discussion. Where many parties are involved, a timetable for meetings can be agreed. This exercise reminds parties there is simply not enough time to discuss every issue in detail (particularly as most construction mediations are scheduled for one day) and helps encourage everyone to look broadly at a potential settlement and spend less time bogged down in detail.
Settlement in construction mediation need not be monetary in nature. A contractor may be less interested in money than in having additional time to complete the job or in obtaining future work, while the owner may want the project completed quickly and economically. In such circumstances the parties will need to make sure they do not open themselves to further dispute.
At the end
The aim of mediation is to reach a binding agreement that is clear and comprehensive. Even if the mediation does not settle on the day, many cases will settle within a few days or weeks, sometimes with the further help of the mediator. Pressure to settle undoubtedly builds up as the mediation day continues. If there has been a considerable gap between the parties, it will take a lot of closing, and that may not be possible in one day, or even a series of days. Around three quarters of mediations settle but even when it has not prevented a trial, it is often found that it has narrowed the issues substantially and reduced costs overall.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
