Leveraging ADR Methods for Efficient Dispute Resolution

By: Chris Carucci

Nov 1, 2024 — Alternative dispute resolution (ADR) is a way for parties to resolve conflicts without proceeding to trial. ADR is typically much more efficient and cost-effective than litigation. Within the construction industry, there's a trend toward integrating ADR for dispute resolution, especially in New York, where litigation can take a very long time and be incredibly costly.

Some of the ADR methods used in resolving construction claim disputes are explained below.

1. Mediation

Mediation is a process during which an impartial third party, the mediator, facilitates negotiations between the parties involved in the dispute. Mediation is non-binding. The parties aren't obligated to accept the mediator's recommendations, and any agreement to a settlement is completely voluntary.

2. Arbitration

Arbitration is a formal process where a neutral third party, the arbitrator, hears the arguments and evidence each party presents and makes a final decision. This decision can be binding or non-binding, depending on the agreement of the parties involved.

Unlike a courtroom setting, arbitration proceedings are typically confidential. Parties opt for arbitration when they want a structured process. Arbitration often involves a discovery process that — though its scope may be limited — is less costly and time-consuming than formal litigation.

3. Dispute Review Boards (DRBs)

DRBs are typically used in long-term construction projects. A panel of impartial professionals is appointed at the start of a project to help prevent and resolve disputes. These appointments are made by the owner and the contractor. The DRB members visit the site regularly, review project documents, and provide recommendations for resolving disputes. DRBs can foster communication among the parties, which can prevent disputes from morphing into claims. They also provide non-binding recommendations that can influence performance and guide the parties toward a resolution.

4. Negotiation

Negotiation is a direct discussion between the parties without any third-party involvement. It's a flexible and informal process where the parties can discuss options and reach a mutually acceptable agreement. Negotiation can be done at any stage of the dispute resolution process and is often the first step before considering other ADR methods.

These ADR methods offer several advantages in resolving construction disputes, including faster resolutions, reduced costs and greater control over the outcomes. They also allow for more flexible and tailored solutions that meet the specific needs of the parties. However, the suitability of each ADR method depends on the nature and complexity of the dispute, as well as the preferences of the parties involved.