What is Alternative Dispute Resolution (ADR)?
Alternative Dispute Resolution (also known simply as “ADR”) refers to a set of alternative methods that can be used to work out disagreements between parties. ADR (also known as an “ADR clause” or a “dispute resolution clause) also refers to the specific language contained within a construction contract that sets out how a dispute between the parties on a construction project will be handled.
The most common ADR methods are:
- construction mediation
- construction arbitration
- dispute resolution boards
Who needs to use ADR?
An ADR clause will always be contained (as a separate clause or section) within a construction contract.
Therefore, if a party signs a construction contract that includes an ADR clause, then that party (as well as any other parties that sign the contract) are legally bound to the terms included in the ADR clause.
Generally speaking, a party to an ADR clause will be bound to use the prescribed dispute resolution method while also waiving their right to litigate the dispute in court.
Does ADR change according to the project type?
Not really. ADR can be used on just about any type of project. It really comes down to the project contract. If the signed contract contains an ADR clause, then it will be the required method for resolving any dispute no matter what the project is.