The construction market in India is growing significantly, but at the same time, it brings along legal risks and disagreements, making you fall for legal disputes. There are several factors that might contribute to construction industry conflicts, such as taking extra time to complete the project, incurring more costs, and providing poor construction quality. However, there is always a way to address the conflict and reach a resolution through construction dispute resolution methods. There are ways to resolve the dispute outside the court or to take it to court proceedings, which is ideal to resolve the dispute.
It begins with the litigation vs mediation to resolve the construction dispute. Mediation and Litigation are ideal ways for construction conflict resolution as both aim at resolving disputes but follow a different approach.
Mediation is an alternative construction dispute resolution method for resolving the dispute outside the court. It involves high-end confidential negotiation between parties to agree to the settlement discussed. Whereas litigation means dragging the case to court trials, where the judge announces the verdict after listening to both parties’ appeals.
So, which is a better choice? Here, Brick & Bolt has compiled the major differences between litigation and mediation for construction disputes, including their advantages and disadvantages.
What is Mediation in Construction?
Mediation in the construction industry is a way to address the construction dispute, which follows a confidential and voluntary process. During the process, neutral mediators enter the play, allowing disputing parties to communicate and work towards a mutually acceptable solution. This Legal option for the construction dispute resolution process does not force decisions; instead assists parties in reaching an agreement.
Advantages of Mediation in Construction
The following are the advantages of mediation in construction disputes.
- Cost-Effective
Mediations are usually less expensive than litigation since legal fees are lower and waiting times are shorter.
- Saves Time
Mediation can be quicker than litigation, which can last months or years.
- Relationship Preservation
The mediation dispute resolution method promotes mutual understanding and cooperation between businesses through a collaborative approach.
- Flexibility
Mediation enables parties to come up with solutions that are creative and flexible.
- Confidentiality
Mediation is a private process that protects sensitive information and dispute details.
Disadvantages of Mediation in Construction
The following are the disadvantages of mediation in construction dispute resolution.
- Non-Binding
Mediations are not legally binding unless formally outlined in a contract, and there is no guarantee that a dispute will be resolved.
- Potential Power Imbalances
Significant power imbalances could lead to one party dominating the process, leading to unfair outcomes.
- Lack of Precedent
No precedents are established through mediation for referencing similar cases in the future.
Also Read: Legal Implications: When to Use Judicial Stamp Papers vs. Non-Judicial Stamp Papers
What is Litigation in Construction?
The litigation process is a popular way to sort disputes in the construction market. Arguments and appeals are conducted in the courtroom during the litigation process. Based on the argument and studying the evidence, the judge has the power to make the decision. Whatever the court’s decision is, it is final and must be followed by both parties.
Advantages of Litigation in Construction
The following are the disadvantages of the litigation construction dispute resolution method.
- Legally Binding
Court decisions are enforceable and legally binding, providing a definitive resolution to legal disputes.
- Precedent Setting
Court decisions serve as legal precedents, affecting future disputes and conduct.
- Impartiality and Fairness
The judicial process is intended to ensure impartiality and adherence to legal principles.
- Legal Actions
The courts have the power to impose penalties, injunctions, and specific performance.
Disadvantages of Litigation in Construction
The following are the disadvantages of litigation construction dispute resolution methods.
- Costly
The cost of litigation dispute resolution method is often high because attorney fees, court costs, and discovery processes are lengthy.
- Long-Duration
Litigation can take years to resolve, requiring months or even years to finalize.
- Exposure to the Public
Court proceedings are open to the general public, which enables them to obtain dispute details and sensitive information.
- Combative Nature
Litigation is often combative, damaging business relationships and creating hostility.
- Limited Control
The judge or jury makes the final decision, so parties have little say in the outcome.
Along with the knowledge of these construction dispute resolution methods, it’s crucial to know when to hire a construction lawyer to get legal advice on time to avoid any big disputes.
Crucial Difference Between Mediation and Litigation to Address Construction Dispute
| Criteria | Mediation | Litigation |
| Flexibility and Control | Confidentiality remains the top priority for mediation for construction dispute resolution, as there is no publicity stunt for this process. During mediation, the resolution is done outside the court. Any discussion or arguments during the mediation continue to be confidential until either of the parties decides to release them to the press. | On the contrary, litigation leads to legal judgment, where the court enforces the final decision, and both parties must agree to the resolution. Whatever the verdict of the court proceedings, that is the ultimate resolution to disputes. If either of the parties does not follow the judgment, they might have to face legal action. |
| Maintaining Confidentiality | Confidentiality continues to be the top priority for mediation for construction dispute resolution, as there is no publicity stunt for this process. During mediation, the resolution is done outside the court. Any discussion or arguments during the mediation continue to be confidential until either of the parties decides to release them to the press. | In contrast, confidentiality is not maintained in the litigation process, as it is a public affair, and arguments are made in the courtroom. Filings, hearings, and court decisions become public records, potentially disclosing sensitive information that can significantly damage reputations. |
| Efficient Costs and Time | Mediation is usually cheaper and faster than litigation. There are fewer formal procedures in mediation, and the participants can set their schedules. The problem is usually resolved quickly. By reducing legal fees and disrupting business operations, these parties save money. | Contrary to that, litigation often requires months or even years to complete due to the legal process, pre-trial motions, and discovery phases. During this long process, substantial legal costs can be incurred, and uncertainty can linger for a long time. |
| Enforcement and Binding Nature | The binding nature of mediation outcomes distinguishes it from litigation. A mediation agreement isn’t binding unless both parties sign and formalise it in writing. When one party violates the agreement later, this can be a disadvantage. | Whereas litigation involves proper court proceedings, where the judge can announce the verdict based on arguments heard from both parties. Here, the parties hold little control over the outcome. |
| Remedies and Precedents in Law | Mediation doesn’t establish legal precedents, making it difficult for parties to establish legal standards. Mediation facilitates the settlement of disputes while offering fewer legal remedies than litigation. | The litigation process contributes to legal precedents, guiding future cases and shaping the legal sphere. The court’s decisions establish standards that can be compared in future disputes, making them more predictable and consistent. A court can also award legal remedies, such as monetary damages, injunctive relief, and specific performance, which are not available through mediation. |
Conclusion
In conclusion, compared to mediation vs litigation in construction dispute resolution, both methods have perks and drawbacks. You can choose any one of them according to your preference and project requirements. However, making contractual agreements in construction is always recommended to avoid any construction disputes when you begin any construction projects.
The construction market faces the sword of legal complications that scare investors from investing in building new properties. Complying with legal complications is no longer a hassle with Brick & Bolt, a top-notch construction company in Chennai. We have a team of market leaders well versed in all the legal compliance while constructing your dream space.
With us, you will never have to face any dispute as our team digs deeper into all the legal details, uncovers all the details, and makes sure everything is on track to build your dream home. So, waiting for what, contact us today to build your dream building, staying in line with all the legal requirements.
Before you leave this page, it’s recommended that you read the blog below to learn more about the other construction dispute resolution methods.
Mediation vs Arbitration in Construction Disputes: Choosing the Best Alternative Dispute Resolution