Adjudication Arbitration and Mediation – The Difference
In practice, many people are not aware of the key differences between these three forms of resolving disputes, even though they may have contractually agreed to follow a specified method in the event of a dispute arising.
Mediation is becoming the most common method of alternative dispute resolution. This involves appointing a neutral, independent trained mediator.
Mediation is entirely voluntary and conducted on a “without prejudice” basis. This simply means that the parties cannot refer to matters discussed during the mediation in any future Court litigation.
Often the mediator will gather the parties together at the start of the day so as to allow each party to set out its position. The parties then split into separate rooms with the mediator going between the rooms to try and narrow the issues in dispute with the ultimate view of achieving a settlement. The intervention of an independent mediator can sometimes help the parties to take a step back from the litigation and consider matters from a more objective prospective. This can help in facilitating a settlement of even the most contested disputes.
Parties tend to engage in mediation after the formal Statements of Case in Court proceedings have been served. This means that the expense of preparing a case for trial such as dealing with disclosure, witness evidence and the trial itself can be avoided if the case settles at mediation.
The Court encourages parties to engage in mediation and a failure to engage in settlement discussions without a justifiable reason can lead to costs consequences even if the offending party is ultimately successful at trial
Arbitration is in private as opposed to being in public. An impartial professional is instructed to make a decision on the dispute. This in turn means that it can be quicker for cases to be resolved. However the arbitrator’s time is paid for by the parties unlike a Judge.
There are also limited grounds to appeal the arbitrator’s decision and the arbitrator has the power to order costs.
The parties have to agree to arbitration. It is therefore often found in international overseas contracts as it allows the parties to agree a neutral venue and mechanism for dispute resolution at the outset.
Adjudication is widely recognised as being a “pay now argue later” mechanism for resolving disputes. Adjudication is most often used for resolving construction disputes as the parties to a construction contract cannot contract out of it.
Whilst it can be extended, the adjudication is generally a 28 day procedure which is started by a party serving a Notice. There are strict limits to comply with when dealing with an adjudication.
Generally an adjudicator has no power to award costs unless the parties have otherwise agreed.
Adjudication awards are enforced by the Courts. The idea behind adjudication proceedings is that it is designed to protect cash flow for businesses by preventing one party from withholding payments for significant periods of time. Adjudication however, does not finally dispose of the matter.
The adjudicator’s decision often last until practical completion, at which point it can be arbitrated or litigated if not accepted. Generally, adjudication is appropriate for dealing with claims relating to:-
- Interim payments
- Extensions of time for completion of works
- Delay and destruction of works
- The final account sum.
The above is merely a brief summary of the main differences between adjudication, arbitration and mediation. Should you require further advice on choosing which of the above methods is most appropriate to your dispute then please do not hesitate to get in contact with the Tollers Team and in particular Tristan Benson on 01536 278498.