Mediation - Effective Method to Resolve Construction Disputes
Construction industries are fast paced, exciting, and yet at the same time, prone to be problematics. In ancient time, it was not uncommon to hear that it took tens of if not hundreds of years to build large construction projects. That, fortunately or unfortunately, are days in the past. Today construction activities are going on at breakneck speed. With the advancement of technologies and skills, construction project durations are getting shorter and shorter. The last I heard, somewhere in China they managed to complete a 57-story building in mere 19 days! Even shorter time than I took to write this article!
With such advancement and shortening of construction period, coupled with the tedious nature of construction activities, of which could involve tens if not hundreds of different trades, it should surprise no one that the administration of construction contracts would face many difficulties. Most contractors could attest to the messiness of contractual administrations in construction projects. It is not uncommon to hear contractors completing sizable projects without even having signed the proper contracts, as the administration works could not catch up in time.
Therefore, with complicated processes together with less-than-ideal administration processes, construction disputes are the norm rather than the exception in construction industries. Of course, one would think that if the industries could improve the administration of the construction contracts, all should be fine. Yet, after years of efforts in various ways to lessen the possible conflicts in the industries, the construction industries remain prone to contractual disputes.
Henceforth, it is only prudent for us, practitioners in the construction industries, to seriously consider what is the best ways to settle contractual disputes. Traditionally, contractual disputes are settled by litigations through formal court proceedings, or in most construction cases, by arbitrations. Undoubtedly, litigations will solve any disputes as the adjudicators would render the binding decisions for parties to carry out. Nevertheless, the cost, time, pressures, and the anxieties onto the parties involved in litigation processes are tremendous. At the end of the day, resolving disputes via litigation might be economically unfavourable. The net returns, in most cases, might be highly unsatisfactory after having taken into account the high cost of the litigating processes.
Mediation, on the other hand, is a dispute resolution process that the construction industries should take heed of. Mediation is a process by which a mediator would help the disputing parties to come up with amicable solutions acceptable by both parties. On the surface, it seems rather questionable that difficult disputes could be resolved by negotiations and mediations alone. Yet, with skilled mediators, it is not uncommon for seemingly insurmountable disputes to be resolved through negotiations and mediations. Personally, I have successfully mediated and resolved construction disputes amounted in the tens of millions, and such success stories are common in the mediation regime.
The next advantage of mediation speed. For litigation, with the requirement of evidence, documentations, affidavits, witnesses, and all other preparatory works, together with the scheduling of the courts or with the tribunals, it could take months if not years to resolve matters. Mediations, on the other hand, due to the process of letting parties resolving their own disputes, do not have stringent requirement for documentations and evidence. After all, the parties should know all the ins and outs of the case. As such, disputes could be resolved speedily.
Granted, unlike litigation, of which all matters could be resolved, mediation success rate is not 100%. However, with a success rate in the high 70’s percent, mediation is definitely an effective and financially sensible route to resolve disputes. With the establishment of SCMC, the contractors should seriously consider having mediation as their first call for dispute resolutions.
I guess the greatest advantage of mediation as a dispute resolution regime is the cost factor. For litigations, due to the stringent requirement on evidence and the due processes of laws, the costs for litigations are usually very high. It is not uncommon for the costs to runs in the tens of thousands for a State Court’s matter and runs in the hundreds of thousands in the Supreme Court’s matter. Mediation, on the other hand, would cost only in the thousands for a one-day session. Therefore, as a good cost control measure, I would think one should always consider mediation first to resolve disputes.
Article contributed by:
Mr Yong Eng Wah
Partner, Resolvers Pte Ltd
The Singapore Construction Mediation Centre Pte Ltd (SCMC) was set up by SCAL in 2019 to provide mediation exclusively to resolve construction disputes for SCAL members. SCMC Mediation is beneficial to companies in term of avoiding project disruption, eliminating lengthy and costly court proceedings and it seeks to resolve the problem in a way that will preserve relationships. The discussions between parties during a mediation session will remain private and confidential. In addition, SCMC is supported by a panel of experienced and qualified mediators with extensive background in construction and experience in mediating construction disputes. For any enquiries on mediation under SCMC, please email us at firstname.lastname@example.org or visit our website at www.scal.com.sg/scmc .