Even in the best of relationships, disputes can arise between the client and architect, client and contractor, or architect and contractor, even though the architect and contractor do not normally have a written agreement with each other. Disputes should be quickly addressed and resolved for the well-being of the project and to minimize disruption of the design and building process. If the dispute cannot be resolved by the parties, various methods of resolution are offered that include settlement, mediation, arbitration, and litigation. To maintain insurance coverage and protect appropriate interests, proper notification to insurers or involvement of legal counsel is required.
Settlement of Disputes.
Disputes between two parties should be addressed quickly and, if at all possible, a settlement should be rendered and recorded. Settlement can be in the form of monetary adjustments or payments, free services on behalf of the architect to remedy or correct an error, or such other agreement between the two parties. It is recommended that this method of dispute resolution be used whenever possible to avoid time, cost, and anguish, which can occur as a result of mediation, arbitration, and litigation.
In mediation, the parties in dispute agree on a third independent party to act as a mediator and hear each side’s position in the dispute in an attempt to mediate a resolution. Mediation is not binding on either party but helps resolve certain disputes due to a third party’s focus on, and question of, the issues.
This is a method of handling disputes in which an arbitrator or arbitration panel, often consisting of three members, is selected to hear the positions of the parties in the dispute and decide on a potential resolution. The resolution is binding on the parties. Cost and time for arbitration is usually, but not always, less than that required for litigation. The arbitrators usually consist of professionals (architects and engineers), lawyers, contractors, or other parties involved in the building industry.
In the event settlement or mediation cannot resolve a dispute and the parties do not wish to arbitrate, the only remaining course of action is to litigate the dispute. This requires that much time and money be expended for depositions, document and other discovery, and preparation for trial. The final results are rendered by a group of individuals (the jury) or judge not involved in the building industry. Therefore, a possession of a thorough knowledge and understanding of issues affecting the architectural and engineering profession and construction industry become the responsibility of each party’s legal counsel to establish a true and accurate picture of each party’s position and the facts in the case.