How does alternative dispute resolution work?

In part because a lot can go wrong, litigation is common in the course of construction contracts.

These sorts of legal disputes are often high stakes. In addition to the possibility of having to pay unexpected costs, long, drawn-out litigation also costs a lot in terms of time, money and emotional stress. Litigation also has the possibility of damaging the reputations of all involved.

For this reason, many times parties to a construction contract in Tennessee will agree to use some sort of alternative dispute resolution, or ADR. There are many different types of ADR, but two common types used in the construction business are arbitration and mediation.

In arbitration, instead of taking a case to court, the parties will instead present their cases before a neutral party called an arbitrator. In construction cases, the arbitrator should be someone with knowledge of the construction industry and some familiarity with the project in question.

Although there are some formal procedures in an arbitration, these are usually not as elaborate as those procedures a court would use. Arbitration is also generally a private affair.

Although arbitration can be non-binding, usually the parties will agree to abide by the arbitrator’s decision.

Mediation is also an option in construction cases

Those involved in a construction dispute may also consider mediation.

Although also a neutral party who ideally has experience in the construction business and construction law, a mediator does not actually make any decisions.  Instead, he or she will help those involved in the dispute to settle their differences and come to an agreement.

Again, the process is confidential. It is also voluntary. This means that if the two sides cannot agree despite their good faith efforts, neither would have to worry about what they said during mediation being used against them later in court.

Usually, Nashville-area construction firms will write arbitration or mediation clauses into their contracts. Even if they do not, however, these options may still be a good choice among other legal alternatives when dealing with a commercial construction dispute.


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