CAREERTIPS: 4 Alternative dispute resolution methods available to Construction Professionals

Adine Abro's list of the 4 methods of Alternative Dispute Resolution (ADR) that Construction Professionals must take note of.

Alternative Dispute Resolution mechanisms (ADR) are used by the parties to resolve conflict or a dispute without having to go to court. The advantages of ADR includes:

•  reduced legal costs;
•  a speedier resolution of the dispute; and
•  confidentiality.

These mechanisms include negotiation/amicable settlement, mediation, adjudication and arbitration.

Amicable settlement/negotiation

Amicable settlement/negotiation by the parties is one of the most commonly used ADR methods for resolving disputes. It is:

•  convenient,
• unstructured and
• often preserves working relationships.

It is a process whereby the parties attempt to reach a settlement without involving a third party. It is the simplest way of resolving disputes, because the parties themselves are usually in the best position to know the strengths and weaknesses of their own cases.

Mediation

Mediation is a process in which an independent third party, known as the mediator, is appointed to facilitate resolving the dispute between the parties. If a settlement is reached, the parties sign a written agreement, which will become legally binding. The legal rights of the parties are protected, which means that if no agreement is reached, the parties still have the option to either proceed with adjudication, arbitration or court proceedings.

Adjudication

In South Africa, adjudication is contractually agreed between the parties. The adjudicator, an independent third party, is appointed to resolve a dispute between the parties. The decision of the adjudicator:

•  must be implemented immediately; and
• is binding and final

unless it is later reviewed by either arbitration or court proceedings.

Arbitration

The process of arbitration is similar to court proceedings. However, arbitration can only be entered into if both parties have agreed to it. Arbitration is generally preferred by the parties because they have the opportunity to appoint an arbitrator with specialized knowledge and experience. In South Africa, arbitration is governed by the Arbitration Act (42 of 1965). 

Also read: 5 key things things Construction Professionals should understand about variations to the works