When it comes to construction contracts, a well-drafted mediation clause can save time, money, and headaches down the road. By clearly setting expectations for how disputes will be handled before litigation or arbitration, mediation clauses help ensure that parties use mediation effectively, before cost is spent on litigation or arbitration.
Why mediation clauses matter
Without a mediation clause, parties may delay or avoid mediation altogether, missing opportunities for early resolution. A clause signals a mutual commitment to attempt mediation first, preserving business relationships and controlling costs. It also provides a roadmap for when, how, and where mediation will occur.
Key elements to include
- Timing: Specify when mediation should happen—often within a certain number of days after a dispute arises or a written notice is given. This encourages early engagement before positions harden.
- Selection of mediator: Identify how the mediator will be chosen—whether by mutual agreement, from a specific panel, or via an appointing authority. This avoids delays and disputes about mediator selection.
- Scope: Define what types of disputes fall under the mediation clause. Some contracts limit it to certain claims (e.g., payment disputes), while others cover all claims arising from the contract.
- Confidentiality: Include provisions to ensure that mediation communications remain confidential and cannot be used in subsequent proceedings.
- Good faith obligation: Often, clauses require parties to participate in mediation in good faith, emphasizing sincere efforts to resolve disputes.
The takeaway
An effective mediation clause is more than boilerplate—it’s a strategic tool that sets the stage for constructive dispute resolution. Construction contracts should include clear, practical language that promotes early, fair, and confidential mediation tailored to the project’s needs.
Michael Bosse is a seasoned construction attorney and skilled mediator, helping owners, contractors, and subcontractors resolve disputes efficiently and fairly outside of court. With nearly three decades of experience spanning contract negotiation, complex litigation, eminent domain, and more, Mike brings a practical, client-focused approach to facilitating constructive dialogue and achieving mutually beneficial outcomes. Bernstein Shur’s Construction Law group combines deep industry expertise with a hybrid transactional and litigation practice, offering clients comprehensive support through every stage of their projects—from contract drafting to dispute resolution and beyond.