Adjudication vs. Mediation: the truth
Adjudication and Mediation are both methods used for resolving disputes, especially in the context of construction. Let’s explore each of them in turn:
1. Adjudication:
Definition:
Adjudication is a formal process where an independent third party (the adjudicator) reviews a dispute between parties and makes a binding decision. It is commonly used in the construction industry to resolve disagreements related to payment, variations, or other contractual issues.
Process:
The disputing parties submit their case to the adjudicator.
The adjudicator reviews the evidence and arguments.
The adjudicator issues a decision, which is legally binding unless challenged in court.
Advantages:
Speed: Adjudication is relatively quick compared to court proceedings.
Binding Decision: The adjudicator’s decision is enforceable.
Cost: It is generally cheaper than going to court.
Limitations:
Lack of Confidentiality: The process is not confidential if enforcement of the Adjudicators decision is needed.
Limited Scope: Adjudication may not address underlying relationship issues.
Rarely is it Amicable: It can strain relationships between parties.
It is increasingly expensive: If lawyers are involved (which is the norm) costs can be significant, and the losing party invariably pays the Adjudicators fee too. Adjudicator’s hourly rates can range for £250 - £600.
2. Mediation:
Definition:
Mediation is a voluntary process where a neutral mediator assists parties in reaching a mutually acceptable resolution. It encourages open communication and collaboration.
Process:
The mediator facilitates discussions between the parties.
The focus is on finding common ground and exploring creative solutions.
The outcome is not imposed; it’s agreed upon by the parties.
Advantages:
Cost-Effective: Mediation is usually significantly less expensive than adjudication.
Speed: It’s generally much quicker than adjudication.
Confidentiality: Mediation is confidential.
Preserves Relationships: Parties can maintain better relationships.
Limitations:
Voluntary Participation: Both parties must agree to participate.
Non-Binding Outcome: The resolution isn’t legally binding unless parties choose to formalise it.
Not Suitable for All Cases: Some disputes may require a binding decision.
Why mediation is gaining attention and increasing in use:
Economic Uncertainty: Factors like the pandemic, Brexit, and global conflicts have intensified construction disputes.
Costly Disputes: Rising costs of Adjudication highlight the limitations of current dispute resolution processes.
Calls for Compulsory Mediation: Industry experts advocate for mandatory mediation to improve dispute resolution.
Changing Attitudes: COVID has disrupted and challenged traditional views, making mediation more appealing, especially in the virtual environment.
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