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Resolving construction disputes via arbitration and litigation

Although you might hope a construction project will be completed in accordance with the contract without any major problems creeping up, this rarely happens. It's often because big bucks are at stake and neither side wants to budge that disputes arise.

Most contracts with contractors spell out how disputes should be handled. Oftentimes the first step both parties must try is mediation. This nonbinding dispute resolution option involves the two parties coming together with an impartial mediator to see if they can work out a fair agreement.

A well-trained mediator will be keen to emphasize to the two parties that resolving their differences via mediation is the best option for ensuring that they maintain control over the end result of their dispute. However, if both parties have marked differences in opinions, mediation may have little positive impact. In such cases as that, arbitration or litigation may be the only option.

Arbitration generally involves a panel of arbitrators, such as engineers, attorneys, contractors or architects, hearing and rendering a binding decision in your case. Arbitrators are not required to make decisions in accordance to prevailing law, but instead fair decisions based on weighing the factors in the case.

Like mediators, arbitrators are not generally bogged down the same caseload as courts, which means that disputes can get resolved more quickly. Also like mediation, arbitration may also be particularly ideal as a way for you to avoid a jury, who perhaps lacks construction knowledge, making a decision as to your fate.

As for negatives to choosing arbitration, once decisions are made, they generally cannot be reversed unless it can be shown that the arbitrators acted unethically or unprofessionally. The costs associated with paying the hourly fees of all of the professional arbitration panel can add up as well.

On the plus side of litigation, the courtroom may be a particularly ideal place for you to resolve your differences with your contractor if there appears to be some unenforceable language in the contract. It may also be helpful in resolving jurisdictional issues.

If you're involved in a contract dispute and are trying to decide between mediation, arbitration and litigation, then a Melbourne real estate construction law attorney can provide guidance in your legal matter.

Source: Construction Dive, "The dotted line: Navigating construction disputes, from mediation to litigation," Kim Slowey, accessed Oct. 04, 2017

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