Alternative dispute resolution, or ADR, has become the means of choice for resolving disputes in the construction industry and in other commercial transactions. As one of the leaders in legal services to the construction and government contracting industries, Smith Currie has numerous attorneys who have formal training and significant experience as mediators and arbitrators in disputes throughout the nation.
Additional information about the two major forms of alternative dispute resolution is included below.
Mediation is a form of negotiation facilitated by a mediator. The mediator helps the parties identify real interests, evaluate the strengths and weaknesses of each party’s position, and helps the parties reach a mutually agreeable settlement of the issues in dispute. The mediator does NOT render a decision on the merits of the dispute, unlike an arbitrator or a court. Mediation requires concession and compromise by each party, but the mediation process empowers the parties to reach a satisfactory settlement. Mediation permits the parties to control the outcome and to avoid the risk of an unexpected decision by a court or arbitration tribunal. Mediation is confidential. Any information revealed to the mediator by a party will not be disclosed to the other party without consent. Mediation is not bound by the law, although the law is always relevant. Thus, mediation is more flexible, and creative solutions may be crafted. Smith Currie's six nationwide offices are equipped to host mediations and arbitrations of all sizes.
Parties to litigation often turn to other expedient forms of resolving disputes in an effort to avoid the high cost of litigation or arbitration. The parties may decide to resolve their dispute by way of private mediation. The parties agree to employ a private mediator who assists and facilitates negotiations or settlement of a dispute in an informal manner. The mediator typically identifies the strengths and weaknesses in each case and attempts to guide the parties to a fair resolution of the dispute.
Arbitration is a procedure in which the parties agree to submit disputes to an arbitrator or an arbitration panel for decision. It, unlike mediation, results in an award like a judgment in court. The parties may contract before a dispute arises to submit any disputes to arbitration, and this agreement will be enforced under the Federal Arbitration Act and the various state arbitration codes. If the parties have not made such an agreement, the dispute may be submitted to arbitration after it arises.
Arbitration is designed to be an efficient, expeditious procedure for having disputes decided by an arbitrator experienced and well-versed in the subject matter of the dispute. Discovery is limited in arbitration. Many lawyers in arbitration treat the process as if it were litigation. This is costly and time-consuming and frustrates the objectives of arbitration. Discovery is usually limited to a review of each opposing party’s files and documents concerning the dispute, and a few, VERY limited number of depositions, each usually limited in time. Expert witnesses often are required to submit a written report setting out what the expert was asked to do, what documents and other information the expert reviewed, the methodology employed by the expert in his or her analysis, conclusions reached and the basis for them, and the expert’s opinions. This often constitutes the expert’s direct testimony, and the party offering the expert presents him or her only for cross-examination by the opposing party and, perhaps, for limited rebuttal testimony.
The arbitrator will conduct a hearing and will receive testimony from each party’s witnesses under oath, will receive documentary exhibits (usually without regard to the usual rules of evidence, giving each exhibit the weight the arbitrator believes it deserves), and will hear closing arguments or, alternatively, consider post-hearing briefs by each party. This procedure is very similar to a trial, but less formal.
The arbitrator then has a limited time to consider the evidence and argument of counsel and make an award. The award may be a standard award which makes a monetary award on each element of the claim, an award setting out findings of fact and conclusions of law which form the basis of the award, or a reasoned award which is typically a narrative explanation of the facts, the arbitrator’s reasoning, his or her analysis of the facts and often the law, and the award resulting from that analysis.
For smaller claims, usually $1 million or less, a single arbitrator is appropriate. For larger, more complex disputes a three-member panel is often appointed. The parties have input in selecting the arbitrator when the arbitration is administered by an ADR organization. Sometimes the arbitrators are appointed by the parties and these party-appointed arbitrators may not be neutral.
Arbitration awards are generally impervious to judicial review and reversal, except that awards may be vacated by a court having jurisdiction only for specific grounds set out in the Federal Arbitration Act or the applicable state arbitration code. The grounds are very limited and generally include fraud, refusal to hear evidence, arbitrator’s exceeding his powers, and arbitrator bias. The law and the courts give great deference to the process the parties have selected for resolving their disputes and are loath to intervene to upset the outcome.
Most construction contracts include an arbitration clause whereby the parties agree to resolve any potential disputes that may arise by using the services of an arbitrator. Many forms of agreement require arbitration as per American Arbitration Association guidelines while some others require mediation.
An agreement to arbitrate may be made either in advance of a dispute (e.g., in the contract) or after the dispute has arisen. The State Arbitration Codes and the Federal Arbitration Act enforce arbitration provisions in contracts. Courts and public policy favor the resolution of commercial disputes through arbitration "to promote judicial economy and to settle disputes quickly and fairly." Thus, courts will generally enforce such contractual provisions.
Construction disputes are often extremely complex, and arbitration may prove an arduous process; there are efficiencies, however, in part because discovery rules do not apply, proceedings are informal, and it is not necessary to follow formal rules of evidence.
The role of the Special Master (who is frequently, but not necessarily, an attorney) is to supervise those falling under the order of the court to make sure that the court order is being followed and to report on the activities of the entity being supervised in a timely matter to the judge or the judge's designated representatives. In construction cases, the Special Master may preside over the discovery and pre-trial processes and motions in a case. The Special Master has special expertise in the engineering and construction industry as well as the legal processes involved in settling large and complex cases.
A Dispute Resolution Board (DRB) is a panel of three experienced, respected and impartial reviewers. The Board is organized before construction begins and meets at the jobsite periodically.
The Board is usually formed by the owner selecting a member for approval by the contractor, the contractor selecting a member for approval by the owner, with the two thus chosen selecting the third to be approved by both parties. The three DRB members then select one as chair with the approval of the owner and contractor.
DRB members are provided with the contract documents, become familiar with the project procedures and the participants, and are kept abreast of job progress and developments. The DRB meets with owner and contractor representatives during regular site visits and encourages the resolution of disputes at the job level.
The DRB process helps the parties head off problems before they escalate into major disputes.
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I have the highest regard for Mr. Heady. He represented a co-defendant in a complex construction case in which I represented another co-defendant. He... Read more
I have the highest regard for Mr. Heady. He represented a co-defendant in a complex construction case in which I represented another co-defendant. He was an important member of our defense team, whose involvement was critical in advancing the litigation to an amicable settlement without running up costs for his client or other litigants. Mr. Heady was always professional, very well prepared, and I would not hesitate to recommend him to others.
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It's one thing to meet expectations - quite another to exceed them. That is what Sarah Carson in Smith Currie's Charlotte office provided. To say I... Read more
It's one thing to meet expectations - quite another to exceed them. That is what Sarah Carson in Smith Currie's Charlotte office provided. To say I "went against the grain" would be an understatement - construction lawyers are to be back slapping men that only fear their next fishing opportunity. But Sarah brought something different. A type of stubborn know how with I'm not taking prisoners approach. Which, I hate to say, is just what we needed.