A case for online dispute resolution in the construction industry – “Necessity is the mother of invention”

The case for mediating a construction dispute is adequately argued, indeed laboured, by several academics, commentators and others and so I do not feel the need to repeat the arguments of those who have trodden this path before.

The case for online dispute resolution has seen very recent traction in the past few weeks. Necessity is, after all, the mother of all invention.

I am encouraged by the many articles, blogs and commentaries straight from mediators’ mouths welcoming the availability of online platforms to host virtual calls and indeed to allow the resolution of disputes at a time of almost worldwide lockdown.

At the time of writing I have the benefit of a recent article written by my colleague Rachael Gamble wherein she notes that, save for emergency applications and relief, the Courts are in de facto lockdown. I was also privy to email communication concerning the inability to appoint an adjudicator in the Republic of Ireland to deal with a statutory adjudication concerning payment in the construction industry.

Now, more than ever, organisations operating within the construction industry require a secure, swift, cost-effective, confidential and flexible process to resolve their disputes and facilitate cash flow. In a time of almost worldwide lockdown, that can only be achieved by online dispute resolution and online mediation/conciliation appears an obvious new tool that could facilitate the parties, their representatives and the dispute resolver.

It is no surprise that parties, their representatives and dispute resolvers find themselves in the current predicament. I would argue the pandemic has merely accelerated a digital response that was only 2-5 years in the future.

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Kings College London - The use of Mediation in Construction Disputes - May 2009

Almost 11 years ago, an evidence-based survey was developed between Kings College London and the Technology and Construction Court (TCC) in England to survey the use, effectiveness and cost savings associated with mediations that take place in respect of construction-based litigation.

The respondents to the survey were asked: -

• To what extent did they use mediation in order to settle their dispute?
•  At what stage did they settle?
• Did they make any cost savings by using mediation, rather than conventional negotiation?

The survey concluded that: -

• The majority of respondents who had used mediation said it resulted in a settlement.
• Mediation was undertaken on the parties’ own initiative in the vast majority of cases.
• The cost savings attributed to successful mediations were significant. 76% of respondents stated that mediation has resulted in a cost saving in excess of £25,000.00.

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Judicial Encouragement

In Northern Ireland, strong judicial encouragement can be found in the Rules of the Court of Judicature and in the Action Protocol for Commercial Actions.

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Order 1 Rule 20

Adjournment of proceedings for the purposes of ADR

20.— (1) The Court, on the application of any of the parties or of its own motion, may, when it considers it appropriate and having regard to all the circumstances of the case, order that proceedings or any issue therein be adjourned for such time as the Court considers just and convenient and—

(a) invite the parties to use an ADR process to settle or determine the proceedings or issue; or

(b) where the parties consent, refer the proceedings or issue to such process

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Pre-Action Protocol for Commercial Actions

The Protocol requires parties to attempt a meeting such that, “Within 21 days of the defendant’s letter of response, or if applicable the plaintiff’s letter of response to counterclaim, the parties should complete any meeting proposed. The aim of the meeting will be to agree the main issues and the causes of disagreement on each issue; to consider whether some form of alternative dispute resolution would be more suitable than litigation;”

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Can the Courts Force Parties to Mediate?

There is now a plethora of case law advocating adverse costs awards against ultimately successful parties who unreasonably refuse to mediate.

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The Future in Northern Ireland - Lord Justice Gillen Review

Lord Justice Gillen has published his report entitled the Civil and Family Law Review. Within that report he makes 13 recommendations in respect of mediation in civil actions. For the purposes of this article, relevant recommendations include: -

• Compulsory mediation to be introduced and limited to a pilot scheme in low value cases up to £5,000 initially. Online dispute resolution should be considered.
• Courts to retain the right to impose costs sanctions where a party refuses to consider or participate in mediation without adequate explanation.
• Rules, similar to the Civil Procedure Rule requiring the court to consider at every stage in proceedings whether an Alternative Dispute Resolution is appropriate, to be introduced.
• Legislation to require solicitors and barristers to advise any person intending to commence legal proceedings to give consideration to using mediation as an alternative means of resolving disputes. 

With all of the above in mind, I am delighted to confirm that the Consumer Code for Online Dispute Resolution (CCODR) has launched a digital platform which is now available to its members to facilitate online dispute resolution, document exchange and invoicing in one secure, reliable and cost efficient space. As a practitioner and party representative, this can only be seen as a very positive step in the right direction to allow parties to resolve their disputes whilst social distancing. Learn more about the code here.

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Written by Aaron Moore Solicitor, Arbitrator, Adjudicator, Mediator

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