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particularly in regards to disputed amounts should be included in the agreement. After all, money is generally what these disputes are all about.
The ADR agreement can spell out exactly who will be involved in the proceedings. For example, if our dispute is between the contractor and owner, would the architect be part of the ADR process? What about the structural engineer? Or would you simply make the agreement to allow for any party to be included in the proceedings - regardless of connection with the project?
Will outside representation be allowed? For instance, will the combatants be allowed to bring in outside attorneys? Could industry experts be used to assist with one side's case?
How would information be exchanged by the disputing parties? This is particularly key in regards to sensitive information, such as financial or legal information. Parties need to decide whether they will exchange documents and what limits apply. This can be quite key, as having additional facts on the table (provided by these documents) can be key to resolving a conflict.
A DOWNSIDE?
Of course, nothing is perfect, and ADR is no exception. For example, the ADR can often be made non-binding (unless specifically made binding by agreement); that is, neither party in the dispute is absolutely required to agree with the ADR decision. "So, what good is it then", you might ask? Well, though complying with the outcome isn't mandatory following the process is. Remember, the parties mutually agreed to the procedure early on in the project-probably before the job began. By doing so, they basically agreed that the resolution remedy they selected for settling disputes was fair and equitable to all parties. Therefore, that makes the participants (binding or not) more apt to accept the results of the proceeding.
But there are other concerns over ADR. One popular worry (and probably well-founded) is that many contractors feel there is simply no reason to pursue dispute resolution when the owner has already drafted one-sided clauses (in the specification manual), which (in the opinion of the contractor) overthrow any attempt to resolve disputes amicably. Quite frankly, they've got a point. The best ADR procedure in the world wont be worth a hill of beans if the owner maintains that any liability discussed in ADR is precluded by ambiguous clauses or vague statements that often permeate the architectural specifications. To the contractor, the ADR should be "all or nothing" from an owner-commitment standpoint.
Some other perceived downsides to ADR include:
• The economy generated by ADR may potentially cause more claims to be filed thereby negating
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much of the reason that ADR exists.
Often, ADR only provides for limited discovery and fact-finding on the part of the combatants. Though this is often a result of the more economical process, it can strengthen or weaken a participant's case accordingly.
ADR doesn't generally lend itself to extremely large cases or cases that have set out to set legal precedent. These types of disputes are probably still best handled in a conventional court of law.
If the mediator/arbitrator turns out to be "weak" or unskilled, the results may conflict with the rule of law or fact the potential awards may indeed end up being watered-down or otherwise compromised (that's why the selection process is so important).
Huge awards are probably not so likely from an arbitrator/mediator. If you're after big money - take it to court.
And there's more. For instance, what if the parties cannot agree prior to the start of construction to an ADR procedure? Well, that in itself may send up a red flag to go out and find some professional assistance. This is also a good time to mention that with all things legal - if you ever have a serious doubt about your legal rights or situation, call your attorney or consult your legal department. This is still a very serious process - and money and liability are at risk. But regardless, ADR is a step in the right direction towards more amicable dispute resolution ... and may even be the way you decide your next legal battle, so check it out.
Steve S. Saucerman is a full-time commercial construction estimator/project manager, freelance author and lecturer for the construction industry and also teaches Building Construction Technology at Rock Valley College in Rockford, IL.