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3. Claims based on the terms of the contract
In large construction projects, hundreds of pages of construction contracts are to be signed. Clearly stated in those contracts are contract attachments, construction drawings, material specifications, installation details, a lot of work that a contractorshas to perform, the scopes and duties of both parties. Each contract has different conditions to consider, analyze, or evaluate claims. To make each claim it is required to read the contract documents, interpret and consider the conditions of each contract.
In the mediation process, both parties will select a mediator, usually someone who has experiences in that construction project and understands construction documents and contracts to be the middleman in the mediation. Construction claims, especially the extension of time, will be considered from the contract terms and based on the documents involved in analyzing the delay. Therefore, a mediator with experiences in construction contracts is the best suited to assist in resolving construction contract disputes.
4. Technical terms and specific documents of construction project
More than 90% of the construction memory is contained in technical documents that comes in a variety of formats. And each project has a wide range of relevant documents from project initiation to completion.
Some projects will have millions of pages of relevant documents. And every project the author has assisted is a claim for an extension of time and extra cost due to the delay. The documents involved in the delay analysis can be complex from the start to the end of the project which has to be considered whether the delayed work is in critical path or not, who are the causes, and what are the effects.
It would not be good if in court the judge has to read through a lot of documents and try to understand the techniques and evaluate whether there is any impact on the critical path, what is the actual completion date, had the bathroom drawing revision affected the whole project, the installation work had been damaged because of whom, when, how, how much, etc.
Would it be better if both parties appoint a mediator with knowledge and direct experience who is familiar with large construction project documents, understand construction technical terms, the professional who is independent and impartial, to assist in considering such claim for extension of time and extra cost?
5. Claim still remains a secret.
Mediation is a process by which both parties are to keep it secretly without disclosing or using of the mediation content. For example if either party agreed that they will cut the price by 50% but it turns out that the mediation was unsuccessful and had to go to the arbitration or the ligitation, the parties may not be able to use the proposal in the arbitration or ligitation. This is different from the trial in the level of the arbitration or the ligitation in which testimonies can be recorded and disclosed which results in a lack of privacy and the need for wider disclosure of project details and disputes.
6. Both parties can make their own decisions.
During the mediation process, both parties still have full power to decide at what price to agree, how to pay, or how to settle for the sake of future work. Both parties are to decide and make their own decisions. A mediator is merely a middleman to provide assistance and advice that can quickly resolve the dispute.
But if the dispute is resolved by arbitration or court. The arbitrator or the judge will decide, not the parties.
7. More convenient, faster and cheaper than going to court.
Mediation is an unconventional procedure for resolving disputes. It can be held anywhere such as a hotel meeting room with or without a lawyer participating in the mediation process. Thus the negotiating atmosphere will not be too stressful. And the costs incurred will not be high.
When there is a dispute if the root cause of the dispute is awared of, or there is a rough idea of how the decision will be made in the ligitation process. Will going to court still be a satisfying choice? The chaos in daily life and work that will occur when the case goes to court are rather predictable. For this reason mediation before a court hearing is the best way to resolve a dispute.
Mediation Cluase in Construction Contract
According to the author's experience, more than 90% of construction disputes that choose to use a mediation method will be able to settle disputes without having to file a lawsuit.
Samples of Mediation Clause specified in construction contracts
At the beginning of a construction project, all parties are still in good term. It is very easy to add this small contract clause without incurring any cost. But it is a very useful clause to help both parties later. Samples of alternative dispute resolution clauses suggested to include in a construction contract are as follows:
“In the event that a dispute arises between the parties, the parties shall proceed to settle the dispute by mediation and arbitration as follows:
(1) The parties are to negotiate the dispute amicably within 60 days from the date of the dispute between each other on the date, time and place whereby the parties have reached an agreement. The parties will mutually appoint ... experts who have experience, knowledge and expertise in disputes to act as the mediator of disputes that arise between the parties, to propose resolution alternatives for solving disputes, as well as to guide the parties in decisions to settle the said disputes. Each party shall pay half of the expenses and tribute to the mediator at the rate agreed upon with the mediator. And the mediation process shall be conducted in Thai.
(2) In the event that the parties are unable to reach an agreement as the mediator has proposed the alternative to resolve the aforementioned disputes in (1), either party has the right to present the dispute to the arbitral institution ..."
5 keys of successful Mediation
1. Be prepared to present as if going to court. Do it seriously. It is not necessary to wait to do so in court. In cases with high claim value it is necessary to have expert witnesses of each field to help in analyzing. For example, to claim an extension of time, it is required to have a Schedule/Delay Expert Witness. If the problem is a structural work, a Technical Expert Witness is needed. Or if it is about damages, a Cost or Quantum Expert Witness will be the best fit.
2. Select a mediator who understands construction contracts, the one with communication skills and a true understanding of the mediation process. A mediator should be able to convince the parties to reach mutual agreement and has no prejudice or bias against either side.
3. If the decision-makers of both parties do participate in the mediation, the chances of success will be higher.
4. The parties must be responsible for mediation costs 50-50. It is imperative that mediation costs must be shared equally by both parties so that the mediation becomes impartial .
5. Both parties are ready to take a step back and do not “want their day in court”. If either party has such idea, the mediation may not be successful.
do not “want their day in court”. If either party has such idea, the mediation may not be successful.
This Month’s Q&A ConTime Tips
Q: The mediation will replace other dispute resolution or in a contract, what alternatives are to be specified?
A: The mediation is an alternative for resolving disputes prior to the Adjudication, Arbitration, and Litigation process that will judge the dispute. The mediation will not replace any other method, but it is a friendly and easy dispute resolution process. And both parties can make their own decisions which is the best and most appropriate solution for construction disputes.
Just add mediation clauses to an original construction contract without cutting any other options off.
Q: Where the right mediator can be chosen from? Does the mediator have to come from court?
A: The mediation will not be official. Therefore, a mediator can be anyone with the mediation knowledge and experience that both parties agree and consent to be a mediator. A mediator does not have to be from any agency. Now the author together with a group of experts have established the Mediation Academy in Thailand to educate, train, and gather mediators for construction projects. For more information kindly contact the author.
