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Advantages of Mediation in Construction Disputes

"In the session, the figure of mediation was emphasized as an adequate method for the resolution of disputes that in general is characterized by being faster and more efficient than litigation or arbitration"

Last Wednesday, January 26, a new session of the Mediation Club Fide. On this occasion, the mediation in construction disputes. They initially intervened in the session Miguel Angel Malo Valenzuela, counselor of Cuatrecasas and Sofia Parra-Martinez, partner at Pinsent Masons. The session was moderated by Carlos Gutierrez Garcia, Director of Litigation at Siemens Gamesa Renewable Energy SA, Academic Counselor of Fide and academic coordinator of the Mediation Club Fide.

In the session, the figure of mediation was emphasized as an adequate method for the resolution of disputes that in general is characterized by being faster and more efficient than litigation or arbitration, thus treating the following points.

A tour of the main characteristics of mediation:

1. The complexity, since they usually involve constructive or design technical aspects and factual complexity, in addition to the legal complexity that any dispute may have. That complexity means that there are often nuances, different contractual interpretations, different technical solutions, concurrent delays, different interpretations of schedules and critical paths, etc. which are the ones that give the necessary margin to mediate a dispute. The fact that mediation has a more limited duration than other more traditional ones such as arbitration or litigation does not prevent the resolution of complex disputes. It is only necessary to have a good capacity for synthesis and to be able to identify the key points of the dispute that must be mediated.

2. The flexibility, which is manifested in three main aspects, at the time of starting it, since it can be started: During the execution of the project, either in early stages, in intermediate stages or in liquidation or closing; when the project ends, before initiating a litigation or arbitration procedure, or even once such a procedure has begun. Flexibility in terms of the process, and flexibility in terms of solutions, because it allows reaching impossible results in arbitration or litigation procedures.

3. The “multi-party” mediations. Indeed, given the complexity of the supply chain and the fact that the same problem involves several parties, mediation is ideal to bring several parties together and reach an agreement regarding their respective responsibilities. However, it largely depends on the willingness of all those parties to go through the same mediation procedure. The only way to try to promote that is by having identical dispute resolution clauses in all the contracts for the same project, whereby the parties agree that they may be involved in multi-party proceedings with other project companies.

Also discussed were the advantages of the mediation process:

1. The parties, by not entrusting the resolution of their dispute to a third party -judge or arbitrator-, maintain the control on it and, therefore, the control and the final decision on its possible end through a negotiated agreement. In the event that the mediation is successful and the parties end their dispute through a negotiated settlement, they will have saved significant legal costs.

2. In the event that mediation is unsuccessful, the costes incurred during a mediation session will not normally be raised, and the parties will have the possibility to reassess their position in view of what happened during the mediation process. The representatives of each party have the opportunity to present their position formally in front of a third party -the mediator- and the representatives of the other without having to endure the inconveniences that could derive from a good cross-examination carried out by the lawyer of the opposing party. to highlight possible inconsistencies, errors or objectionable aspects of their performance during the project.

3. Likewise, the representatives of the parties that have committed possible errors can find a output or an honorable or reasonable explanation that helps prevent them from entrenching themselves in inflexible positions. The parties may consider not only strictly economic aspects of the project in question, but also personal, emotional, or related to possible future common projects. Sometimes, the channels of agreement are opened when the representatives of the parties are able to sit down simply so that they can communicate again. Avoiding the demonization of the other is the first step to start a fruitful communication that can lead to some kind of negotiated solution.

As for those cases in which dispute mediation can negatively affect the proper development of the construction process, what is sought to be avoided with the tiered dispute resolution procedures in international construction contracts. In particular, in cases where the work has not been completed when the dispute arises, the resolution of the dispute through mediation contributes to avoid the risk of the paralysis, obstruction or hindrance of the construction process that sometimes occurs as a result of the judicial or arbitration dispute. Resorting to mediation, therefore, normally generates significant economic savings for the parties.

The speakers contributed some cAdvice for a lawyer facing a possible mediation process:

1. It is essential toAdvise honestly and with total transparency to the client about the probability of success of your case, as well as about the possible risks derived from the judicial or arbitral resolution of the dispute.

2. The lawyer has to prepare thoroughly for mediation, just as if you were facing a trial or a hearing for the taking of evidence in an arbitration.

3. The lawyer must be very aware that the role he has to play during mediation is different from the one he has in a judicial or arbitration procedure, and his obligation is to know it and exercise it in the best possible way. We recommend consulting the Decalogue of Mediation, document prepared by the Mediation Center FIDE which clearly summarizes the role of the lawyer during a mediation process.

Likewise, they transmitted some Advice for the parties facing construction mediation:

1. Mentality change, it is a different process from litigation or arbitration in which you do not have to go to defend your position in a strict and intransigent manner, but rather you have to go with an open mind to listen and negotiate. It is a commercial but structured negotiation with the help of a third party.

2. Preparation and composition of placer. You have to go with clear ideas regarding the strengths and weaknesses of your own case and that of the other party; having thought about what is the “best scenario” and what is the worst and what that party would be willing to agree to. Review and reconsider the composition of the place as the mediation process progresses, to see if there is anything to add after listening to what the other party and the mediator say. Mediation does not necessarily consist of reaching a 50%-50% Solomonic solution, but it does involve trying to bring positions closer, even if it is in different percentages depending on the positions of the parties and where they are willing to go.

From Fide We are strongly committed to Mediation as the future of conflict resolution between parties. In this link you will find everything related to Mediation in Fide.

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