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June 9, 2009

Alternate dispute resolution can save time and money

The construction industry is one in which disputes are unavoidable, with each side wanting an outcome that satisfies their position and their needs. Until recently the only method of resolving disputes was through litigation.In 1994, an advisory committee to the Ontario Attorney General recommended:

• that the construction industry, and construction lawyers, should become familiar with alternatives to the court process, including mediation and arbitration;

• that alternative methods of dispute resolution be included in construction contracts;

• that construction litigants should be required to participate in private mediation as early in the litigation process as practical.

Since the time, nothing much has changed with too many disputes still being directed to the traditional method of litigation. In Ontario the cost of litigating a construction claim with a value of $100,000 or less will almost always exceed the value of the claim. Often the time required to get the matter to trial and obtain resolution will exceed the time required to complete the project.

Increasingly people, including attorneys, recognize the adversarial approach of the traditional legal system does not effectively, efficiently or satisfactorily resolve some types of disputes. Many judges look favourably on private dispute resolution as it reduces their caseloads and provides a positive public image that the courts are willing to engage in more efficient methods of settling disputes. The courts can only focus on the legal issues brought forward with no consideration given to the particular interests of either party. As a consumer of legal services, it has become important for you to become well-informed as to alternatives to the litigation process. When it is not necessary to set a precedent, there is an alternative to the time consuming and costly method of litigation.

Construction projects are time sensitive and when a dispute arises a contractor could be faced with looking at several months or years of working through the court system before a settlement is reached or a judgment rendered. When time is of the essence, going the ADR route could achieve a settlement in no more than a few weeks.

The most common and expeditious alternative is the participation by all of the parties in a private dispute resolution process. By utilizing a private dispute resolution process, constructors are able to address contract and service provision disputes in a manner that minimizes costs and maintain confidentiality of business information. Utilizing the courts to settle a dispute often places a company at a disadvantage through the public disclosure of internal documents. Confidentiality does not exist in all court courts and documents, including bid / tender information, can and may be subject to public disclosure to anyone requesting access to the documents.

It is important to understand that professional dispute resolvers such as facilitators, mediators, and arbitrators do not advocate for or provide legal advice to the parties. Unlike judges who are trained in the law, but might not have any knowledge of your specific industry, professional dispute resolvers, generally bring some level of industry knowledge, and are trained to help seek resolution through a collaborative, non-adversarial process.

A simple way for you to determine if private dispute resolution should be applied to a particular dispute is to look at the dispute from the worst possible outcome – you are not successful at litigation and you are ordered to pay costs. Then work backwards through various less costly possibilities, including private dispute resolution processes and you will ultimately be able to focus on your interests and how they might best be met.

Dispute resolution is not a process of forcing a settlement, but is rather an undertaking by the parties in finding common interests and ultimately a resolution. It is nothing more complicated than a process of assisted negotiation between the parties in the dispute.

It is worth noting the comments of the renowned jurist, Justice Sandra Day O’Connor who stated: “The courts should be a last resort for the resolution of disputes, not the first.”

Christine Passnick has more than 30 years of experience in the areas of ICI, development, environmental and regulatory issues. She is the founder and principal of CEPASSOC.

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