Arbitration V. Mediation In Florida Construction Bond Claims

Florida contractors may be required to obtain a performance and/or payment bond for many types of construction projects, either by statute or provisions in the construction contract. Though some consider bonds to be ancillary to the contract, they can certainly become a hot topic when disputes develop. Fortunately, not all conflicts must go to court. Instead of battling things out through costly, time-consuming litigation, parties might resolve disputes via alternative dispute resolution (ADR). The term encompasses different strategies for smoothing over conflicts without court.

There are multiple ADR options, and each is governed by different rules. Two of the most common routes in construction law are mediation and arbitration, and there is a good chance that Florida contractors will encounter them. It is important to understand the basics of these, both for purposes of knowing what to expect and for advance planning. You should consult with a Florida bond claims lawyer to specifics, though a comparison of arbitration and mediation is useful.

Arbitration is Adjudication 

When a dispute goes to arbitration, there is a decision made by arbitrators that is binding upon the parties. The proceeding is formal and similar to a trial, with the panel making their decision by applying law to the facts. All parties with their attorneys, including the surety company, participate. The pre-arbitration process can be complex, as these cases typically involve extensive discovery. At the arbitration:

• The parties will have the opportunity to make opening arguments.
• The aggrieved party that raised the bond claim will present evidence and testimony, including testimony from experts.
• All witnesses are subject to cross-examination by the lawyers for other parties, and the arbitrators can ask questions.
• At the conclusion of all parties’ cases, the arbitrators will make a decision on the bond claim dispute. The end result is a win-loss situation, and the arbitration award is binding. 

Mediation is Enhanced Negotiations 

Parties will almost always try to smooth over disputes themselves, getting help from their lawyers for any attempts at reconciliation. These negotiations may have failed initially, but mediation is an enhanced form of settlement discussions that is often successful with disputes.

Instead of formalities with discovery and an official proceeding, mediation is informal and guided by a trained mediation professional. The mediator facilitates productive conversation by helping the parties frame their dispute and understand each other’s interests. The goal is problem-solving instead of victory. Other important points include:

• Mediation can often be completed in a few days, even with complex bond claims.
• If the parties do reach an agreement, they sign and create a binding, enforceable contract.
• When parties are dissatisfied with mediation, they can still take the case to court. 

A Florida Bond Claims Attorney Will Guide You with ADR

ADR is an umbrella term for resolving conflicts in construction, but the options for out-of-court resolution are very different. For more information on mediation and arbitration, please contact Linkhorst & Hockin, P.A. to discuss. You can set up a consultation at our offices in Jupiter, FL by calling 561-626-8880 or visiting us online.

Source:

law.cornell.edu/wex/alternative_dispute_resolution