Mediation is a form of alternative dispute resolution (ADR) where parties involved in a construction dispute seek to resolve their differences through facilitated negotiations with the assistance of a neutral third party called a mediator. Mediation is a voluntary, confidential, and flexible process that aims to help parties find a mutually acceptable resolution to their dispute.

Here are key features of mediation in construction contracts:

1. Voluntary Process:
   Participation in mediation is typically voluntary. Parties agree to participate and can withdraw from the process at any time if they believe it is not leading to a satisfactory resolution.
2. Neutral Mediator:
   The mediator is an impartial and neutral third party who does not have decision-making authority. The mediator facilitates communication between the parties, helps identify issues, and assists in exploring possible solutions.
3. Confidentiality:
   Mediation is a confidential process. Communications made during the mediation cannot be used as evidence in later legal proceedings. This confidentiality encourages open and honest discussions.
4. Informal Setting:
   Mediation is generally conducted in an informal and private setting, providing a more relaxed and collaborative atmosphere compared to formal legal proceedings.
5. Flexible and Creative Solutions:
   Mediation allows parties to explore a wide range of solutions that may not be available in a formal legal setting. The flexibility of the process often leads to more creative and customised solutions that address the specific needs and concerns of the parties.
6. Speed and Cost-Effectiveness:
   Mediation is often faster and more cost-effective than traditional litigation. It allows parties to resolve disputes without the delays and expenses associated with court proceedings.
7. Preservation of Relationships:
   Mediation can help preserve ongoing relationships between parties, which is particularly important in the construction industry where parties may need to work together on future projects.

The mediator does not impose a decision on the parties; instead, they guide the discussions and help facilitate communication, encouraging the parties to reach a voluntary agreement. If an agreement is reached, it is typically documented in a settlement agreement that becomes binding upon the parties.

Mediation is widely used in the construction industry as a means to efficiently and amicably resolve disputes, fostering a cooperative and collaborative environment. Many construction contracts include mediation clauses, providing a structured framework for initiating and conducting the mediation process in the event of a dispute. A recent case in the Court of Appeal (Churchill v Merthyr Tydfil Council [2023]) shows a move toward mandatory mediation.