2 Harcourt Buildings sets up mediation joint venture

Commercial law chambers 2 Harcourt Buildings is launching a contracted mediation scheme on 3 October, aimed at cutting the cost of resolving disputes within the construction industry.

It is a joint venture involving a company called ResoLex, set up by the chambers of Roger Henderson QC and project management consultancy Symonds.

Leading insurance company Aon, which has a 30 per cent share of the construction insurance market, has offered its support for the scheme, alongside service sector lobbying group British Invisibles.

Contracted mediation involves parties entering a contract agreeing that all contractual disputes will be resolved through mediation, rather than the more aggressive alternatives such as arbitration or litigation.

It is the insurance sector that stands to gain most from reducing the cost of resolving disputes, as it has to pay out to construction companies holding policies that cover legal claims.

Barrister Patrick Green from 2 Harcourt Buildings will become a non-executive director, and it is understood that the company will be co-chaired and co-managed by both the chambers head and Symonds' executive chairman Chris Booy.

Green claims that the annual costs to both insurers and construction companies arising from litigation will be dramatically reduced. He adds that the Woolf reforms have set a trend, with litigation and arbitration being the biggest losers to mediation.

A 141 per cent rise in mediation cases was reported by the Centre for Dispute Resolution (CEDR) since Woolf.

Green says: "Contracted mediation is different to traditional mediation because parties can resolve differences before they even become disputes.

"Historically, the construction industry has been ripe for a conflict, but banks and insurance companies are funders of construction projects. Most parties can see the benefits because the outcome of disastrous projects may have serious consequences without their direct involvement in the conflict."

The advantages are simple, claims Green. "I've been involved in a dispute that would have cost tens of millions to litigate, but was resolved in a matter of days," he says.