Arbitration is a type of Alternative Dispute Resolution (ADR) where both sides involved in a dispute agree to let a third party, the arbitrator, decide the outcome. The arbitrator may be a lawyer, or may be an expert in the field of construction. They will decide on the best resolution according to the law. The arbitrator’s decision, referred to as an award, is legally binding and can be enforced, if needed, through the courts. Arbitration is therefore often used as a quick and relatively inexpensive way to settle contractual disputes as it can be a clear cut way to a resolution.
Resolution of a construction contractual dispute by Arbitration is frequently agreed to by the parties when entering into a building contract. The building contract usually includes a specific clause that the parties agree to the Arbitration process and decision being a binding and enforceable one. Upon entering into the contract the parties therefore agree not to pursue their complaints in a court of law unless a clear breach of applicable laws outside of the contract have been breached.
Mediation through Arbitration, known as Med-arbitration (med-arb), is similar to a court hearing but can be done with legal documents where oral evidence is not required. Initially the parties agree to mediation but if that fails to achieve a resolution the mediator assumes the role of arbitrator. Each party submits documentary evidence and witness evidence before the Arbitrator to make their case. The Arbitrator assesses the evidence and draws a conclusion giving reasons and using applicable law, either awards for one of the parties or proposes a unique resolution.
If you are in any doubt of your contractual or legal position at all, please take legal advice or contact us for free advice on how we can help you.