As construction attorney Christopher Hill explains it, arbitration in a construction contract typically means that any disputes between parties is submitted to an individual or individuals (usually other construction professionals) who follow rules set forth by the American Arbitration Association and ultimately deliver a binding decision. In a mediation, the dispute resolution process is guided by a mediator (also often a construction professional), but the outcome is decided by the parties.
While there are situations in which arbitration may be the best alternative, Hill believes that mediation is almost always the best path to a dispute resolution. "Keep in mind that arbitration does not avoid the trial, "Hill writes, "it just changes the venue and some of the procedural rules."
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