TWO DAYS IN THE LIFE OF A MEDIATOR

Alternative dispute resolution is increasing being used in the construction industry as an alternative to the more confrontational methods of resolving disputes.

Shropshire quantity surveyor John Price outlines his own experience of ADR.

I have been asked to describe one of the construction industry mediations I have conducted to illustrate the process involved. The mediation described concerned a substantial dispute between a main contractor and a subcontractor on a building project. Obviously the names and the parties involved and exact details must remain confidential.

At the start of the mediation the subcontractor was claiming well over £1m. Of that claim the main contractor agreed only £20,000 and was pursuing a counterclaim for more than £500,000.

Complex Situation

There was also a dispute as to liability for defects in the subcontract works in respect of which the main contractor was already in arbitration with the employer under the main contract. Therefore, in financial terms, the dispute between the parties was approaching £2m. The "defects" dispute greatly complicated the mediation.

The mediation was further complicated by other factors –

1. By the time of the mediation arbitration proceedings between the parties were already well advanced and, having put a great deal of work into preparing for the arbitration, there was a temptation by both parties to let it run and see what the arbitrator's award would be. The parties were also concerned not to provide one another with a preview of how they would be handling the arbitration.
2. One party was reluctant to provide even a brief outline of the dispute for me prior to the meeting while the other was keen to forward me voluminous documentation which was available because of the arbitration. I pressed for a brief description of the disputes from each party and the "outlines", which I received two days before the mediation began, gave me a basic insight to the contract and the matters in dispute.
3. The mediation was unusual in that prior to my appointment as mediator the parties had decided that the procedure they wanted was a mixture of an executive tribunal/mini trial approach on the one hand and a mediation on the other. (One of the advantages of the ADR approach is that the parties can formulate a process that suites them).
4. The parties presented their positions using two expert witnesses each and also called on a handful of witnesses of fact. At times there were 15 people at the mediation.
5. The parties had identified 10 separate areas for witnesses and witnesses of fact.

Two working days were set aside for the mediation. Given the large amounts in dispute, the defects dispute, the number of separate heads of dispute, the number of people attending the mediation, the doubt as to whether both parties actually anted to achieve a resolution and the limited time available, a resolution of the disputes between the parties by mediation could well have been considered unlikely. It says much for the mediation process that an overall settlement was reached.

The mediation began at 9.00 a.m. on the first day and that day's session finished at approximately 7.15 p.m. The process started again at 9.00 a.m. on the second day.

Late in the afternoon on the second day the whole mediation appeared to me to be on the point of collapse when the main contractor's representatives disclosed to me that they wished me to convey an offer no better than the offer made to the subcontractor in the course of the arbitration prior to the mediation.

At that point I had a long private caucus session with the main contractor's representatives in order to understand fully exactly how they had arrived at their position and to reality test it.

At the end of that caucus I asked the main contractor's representatives to reconsider their position very carefully and whether they wished me to convey any offer at all to the subcontractor, given that it was my view that to do so could only have had the effect of bringing the mediation to an immediate end.

The main contractor did reconsider and, after a further caucus with me, that reconsideration was followed by a long joint session in which the main contractor's representatives expressed their views on the claim and counterclaim to the subcontractor at length without actually indicating any likely level of settlement. The subcontractor then responded at length. The collapse of the mediation was avoided.

Both sides then went through a process of reassessing their expectations in separate caucuses with me and on their own. Around 9.00 p.m. what I considered a realistic offer was conveyed through me to the subcontractor with indications of possible further concessions in some areas. Between 9.00 pm and 11.00 p.m. there were many more short private caucus sessions. It was in that period that progress towards a settlement was greatly advanced.

Shortly before 11.00 p.m. the original difference between the parties of almost £2m stood at less than £100,000, the "defects" issue already having been settled during the course of the day. At that point both parties' senior representatives said they had gone as far as they were likely to go in moving towards the other side's positions.

Differences Resolved

The mediation had been attended by two "observers", directors of each of the parties' companies. I suggested that the observers, who up to that time had, by agreement, attended in passive capacities, should take an active role and see if they personally could resolve the remaining amount in dispute. It took the observers only a couple of minutes in joint a session to resolve the difference. Heads of Agreement were drafted and the mediation finished at 11.15 p.m. with open displays of goodwill and satisfaction all round and a general sense of achievement in all those present.

I subsequently received favourable comments from both companies and statements that they would in future attempt to resolve any disputes by mediation at the earliest possible time and certainly before embarking on litigation or arbitration.

The two day process was truly exhausting for all the main players involved. I certainly found it so. However, it was very worthwhile from the parties' points of view providing as it ended with an amicable resolution and a preserved relationship at a time of recession in the industry when no company wishes to make enemies. It also saved the parties many thousands of pounds in legal costs.

I believe everyone involved found the exercise personally rewarding and stimulating and that it demonstrated that there are alternatives to the confrontational forms of dispute resolution that the industry has come to hate but still accepts as the norm.

This mediation reinforced my belief that, in addition to the ability to listen to what is said and appreciate the significance of what is not said, a mediator must be able to exercise considerable patience and instil in the parties the willingness to do likewise. The mediator must not give up on the mediation. His determination to investigate every possible means of resolution must infect the parties with the same desire.