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The Construction Industry Council Model Mediation Agreement and Procedure

28 February 2019

The Construction Industry Council ("CIC") recently published a draft Model Mediation Agreement and Procedure for consultation. The CIC advises that it intends to publish the final documents early in 2019 (following closure of the consultation), and is also seeking to establish a panel of construction industry mediators to underpin those documents.

Model Mediation Agreement and Procedure

The CIC Model Mediation Procedure identifies mediation as a process whereby the "parties agree to work together and get the mediator to help them resolve their dispute amicably. Mediation is not adversarial and works best where the parties are willing to cooperate together to solve a shared problem."

The CIC Model Mediation Procedure sets out the rules for CIC Mediation, and the ways in which the CIC can help the parties to select a mediator, or to appoint a mediator if asked. Unless agreed otherwise, where a Mediation Agreement provides for mediation under the CIC Model Mediation Procedure, the latest version of the Procedure shall be deemed to have been referred to as part of that agreement.

CIC Mediation begins when the CIC acknowledges receipt of a Mediation Request Form (set out in Schedule One to the Model Mediation Procedure), and following payment of the CIC Mediation Fee (proposed to be £300 plus VAT).

The Model Mediation Procedure provides that the parties can either "agree on a mediator chosen from a list of mediators provided by the CIC, or from another list" (as is usual, therefore the parties can choose whoever they wish to be their mediator). Alternatively after consulting with the parties "with respect to their expectations and needs", the CIC may nominate a Mediator from the CIC Panel of Mediators (the Panel is discussed further below). The CIC will seek confirmation that there is no conflict of interest from a prospective mediator before making any nomination.

After nomination or selection the Mediator is expeditiously to discuss with the parties the manner in which the mediation will be conducted. Following such discussions the Mediator is to prepare a Mediation Procedural Agreement, and will ask the parties to sign it. The Mediation Procedural Agreement will provide for the exchange of case summaries (in good time in advance of the mediation, and no less than seven days in advance of the mediation).

The parties are to exchange attendee lists seven days in advance of the mediation, including the job titles of the attendees. Under the Model Mediation Procedure, in addition to its legal or other representation, each party will bring a "business principal" to the mediation who will act as lead negotiator with full authority to settle the dispute and to sign the settlement agreement. Amendments may be needed if legal representatives are to attend the mediation with a delegated authority to negotiate a settlement, and there is no business principal to be in attendance as well.

The Model Mediation Procedure also envisages that the parties may agree in advance, as part of any agreement to mediate, that in the event a settlement is not reached, the mediator will offer a non-binding conclusion within seven days after conclusion of the mediation day.

In addition to standard provisions as to each party bearing its own costs, confidentiality of the mediation, exclusion of the mediator's liability and the like, there is a curious provision in the Model Mediation Procedure providing that: "the running of any contractual or statutory limitation period is suspended from the date of signature of the Mediation Request by the last person to sign the same until the termination of the Mediation … , or at the latest six months after the date of the last person signing the Mediation Request, unless otherwise agreed by the parties in writing". A defendant will need to be aware that an agreement to utilise the CIC Model Mediation Agreement and Procedure (if adopted in its current form), will effectively mean entry into a Standstill Agreement, potentially for up to six months!

The CIC intends that parties to construction contracts will adopt the Model Mediation Procedure by reference to the Procedure when drafting contracts. Parties will need to be aware that an apparently innocuous provision in the dispute resolution clauses of an agreement may mean that they are potentially signing up to an effective extension of the primary limitation period.

Fixed Fee Mediation

The Model Procedure provides for a mediation service for all construction and engineering disputes concerning sums under £100,000 for a fixed fee of £6,000 (excluding expenses). This could be a useful offering in the market for resolving lower value claims.

The CIC Panel of Mediators

The CIC is also inviting expressions of interest to join the panel. The CIC's Panel will comprise experienced accredited Mediators who are members of one or more CIC member organisations and with a minimum of 10 years’ experience in their primary profession. The CIC's qualifying requirements should ensure that a panel of quality construction mediators is formed, from which the CIC will be able to propose/nominate mediators to assist parties to resolve their disputes.

Under The Model Mediation Procedure, Members of the CIC Panel of Mediators commit to follow the European Code of Conduct for Mediators. The Code of Conduct sets out a number of principles as to competence, independence and impartiality, the process to be followed at the mediation (including as to the fairness of the process) and confidentiality.

Niall Lawless Chair of the CIC’s Adjudicator Nominating Body (ANB) Management Board said during the consultation; “Mediation saves disputing parties money and time, it engenders practical solutions, and it preserves and restores relationships. When mediation works it can be like magical. The consultation period has now finished, and the publication of the CIC's documentation is awaited. It is to be hoped that the CIC documentation, allied to a panel of quality mediators, achieves these aims – if it does the CIC's initiative is to be welcomed.