Hello PjM Studiers! During a recent workshop, @coachpierceallston was asked what the difference is between mediation and arbitration in AIA Contracts. Let’s take a look at this question and what it means for practicing architects.
In the context of AIA Contracts, the terms mediation, arbitration, and litigation describe different ways of resolving disputes that may arise between the owner, architect, and contractor. Let’s look at each one.
Mediation is a non-binding process where a neutral third party, known as the mediator, helps the disputing parties try to reach a mutually acceptable resolution.
AIA A201 General Conditions of the Contract and B101 Owner-Architect Agreement require mediation as the first step before moving to arbitration or litigation.
The key features of mediation are:
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The process is confidential and informal.
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The mediator does not make a decision; they guide the discussion.
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If no agreement is reached, the dispute may move on to arbitration or litigation.
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If the parties reach an agreement, it is written into a binding settlement.
Note that even though the mediation process itself is non-binding, meaning that entering into mediation does not mean you have to agree to any terms or be bound by the ruling of a third party, if a resolution is reached, then that resolution is written into a settlement agreement which is binding, just like any contract would be.
Arbitration is a private process where a neutral arbitrator, or panel, hears evidence and makes a binding decision.
Often, AIA contracts include arbitration as the default binding dispute resolution method after mediation, unless the parties agree otherwise.
The key features of arbitration are:
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Faster and more private than litigation.
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Binding decision similar to a court judgment, but typically with limited rights of appeal.
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Less formal than court but more structured than mediation.
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The arbitrator is usually selected based on industry expertise.
Litigation is the process of resolving disputes in a public court system, with a judge and jury (if applicable) making a legally binding decision.
If parties agree to remove arbitration from their AIA contract, litigation in court becomes the binding dispute resolution method after mediation.
The key features of arbitration are:
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It’s a public process; court filings and decisions are part of the public record.
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Often more time-consuming and expensive than arbitration.
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Allows for broader appeals than arbitration.
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Can involve jury trials, depending on the type of claim and jurisdiction.
Now, let’s look at why mediation is required first before arbitration or litigation.
First, arbitration and litigation are expensive and time-consuming. Many disputes don’t need to escalate to full legal proceedings and mediation is much cheaper and faster. Often, disputes can be resolved in a single day or a handful of sessions, which avoids months, or even years, of legal wrangling.
Second, construction projects depend on ongoing collaboration between the owner, architect, and contractor. Mediation provides a less adversarial setting, where parties can work together to find a compromise instead of battling it out in court. Even if the parties can’t fully reconcile, mediation often narrows the issues, making later arbitration or litigation smoother.
Third, in mediation, the parties maintain control over the outcome. The mediator doesn’t impose a decision; instead, they guide the parties toward a mutually acceptable solution. This flexibility often allows for creative and project-specific resolutions such as schedule adjustments or design tweaks that a court or arbitrator would not have the authority to impose.
Finally, the construction industry values dispute avoidance and early resolution. By requiring mediation first, AIA contracts reflect widely accepted best practices that aim to reduce disruption to projects and maintain professionalism among parties.
In summary, mediation, arbitration, and litigation are all dispute resolution techniques. AIA contracts specify that you must pursue mediation first. If mediation is unsuccessful, then arbitration becomes the default binding resolution. Parties may choose to strike out arbitration in their contract and instead list litigation as the default binding resolution.
Mediation is the preferred dispute resolution method because it saves time and money, preserves relationships, offers control and flexibility, and follows industry best practices.
Let us know, if you had the choice, would you prefer arbitration or litigation after mediation? Why?
Emely Taveras Robbs, AIA, NCARB
Architecture Learning Manager
Black Spectacles