Definition

These four mechanisms represent the main non-litigation paths for resolving a property or construction dispute. Negotiation is direct party-to-party discussion. Mediation involves a neutral facilitator who helps the parties reach their own agreement. Adjudication is a statutory right under the Housing Grants, Construction and Regeneration Act 1996 that produces an interim binding decision in construction contracts. Arbitration is a private, consensual procedure under the Arbitration Act 1996 that produces a final binding award. Each has a distinct character, cost profile and binding effect.

Why this matters for Conflict Avoidance, Management and Dispute Resolution

  • Level 1 knowledge: you must be able to define each procedure and state whether its outcome is binding, who decides, and what it costs relative to the others.
  • Recommending the wrong procedure can cost the client money, damage a commercial relationship or produce an unenforceable outcome.
  • Construction contracts must include adjudication provisions by law; surveyors administering contracts must understand what this right means in practice.
  • Many leases and property contracts specify mediation or arbitration as the agreed route — surveyors must check the contract before advising on options.

Key principles

Negotiation

The most informal procedure: the parties, usually with advisers, discuss the dispute directly and try to reach a commercial compromise. The outcome is binding only once recorded in a written settlement agreement. Negotiation is fast, cheap and confidential, and should always be attempted before escalating to any formal process.

Mediation

A voluntary, confidential process in which an independent mediator facilitates negotiation without imposing a decision. Settlement is binding only once signed. Mediation typically takes one day, preserves the commercial relationship and is significantly cheaper than adjudication or arbitration. The RICS Dispute Resolution Service (DRS) and CEDR are the main appointment bodies in the UK.

Adjudication

A statutory right in construction contracts under the Housing Grants, Construction and Regeneration Act 1996. Either party may refer a dispute at any time; the adjudicator must decide within 28 days (extendable to 42 days with consent). The decision is immediately binding and enforceable by summary judgment. Either party may have the dispute finally determined by arbitration or litigation, but in practice most decisions are accepted.

Arbitration

A private, consensual process under the Arbitration Act 1996 producing a final, binding award enforceable as a court judgment. The parties must agree to arbitrate — either by contract clause or after the dispute arises. Rights of appeal are very limited. Arbitration protects commercially sensitive information but can be as slow and expensive as litigation in complex cases.

Relevant RICS guidance and legislation

  • Housing Grants, Construction and Regeneration Act 1996 — creates the right to adjudication in construction contracts and governs payment notice requirements.
  • Arbitration Act 1996 — sets out the framework for arbitration, the arbitrator's powers and very limited rights of appeal.
  • RICS guidance note: Conflict Avoidance and Dispute Resolution in Construction — explains when each procedure is appropriate and how the RICS supports ADR.
  • RICS Dispute Resolution Service (DRS) — provides appointment services for mediators, adjudicators, arbitrators and independent experts.
  • Civil Procedure Rules — govern the consequences of unreasonable refusal to engage in ADR before or during litigation.

Ethics and Rules of Conduct angle

The RICS Rules of Conduct require members to recommend the procedure most likely to achieve a satisfactory outcome at proportionate cost — not default to the one they know best. Members must give an honest assessment of the client's prospects under each procedure, including the risk that a binding decision goes against them. Recommending arbitration when mediation would achieve the same result faster and cheaper, without explaining the difference, has not fully discharged the service obligation.

APC-style Q&As

Q (Level 1)What is the key difference between mediation and adjudication?

In mediation, the mediator has no power to impose a decision — the parties must agree a settlement themselves, and that settlement is binding only once signed. In adjudication, the adjudicator imposes a binding decision within 28 days that the parties must comply with immediately, regardless of whether they agree with it.

Q (Level 1)Is an adjudication decision final?

No. An adjudication decision is binding on an interim basis — the parties must comply with it immediately, but either party may have the dispute finally determined by arbitration or litigation. In practice, the majority of adjudication decisions are accepted and not revisited.

Q (Level 2)When would you recommend mediation over adjudication for a construction payment dispute?

Mediation is preferable where the parties have an ongoing commercial relationship, where there are multiple interrelated issues to trade off, and where speed and cost are important but a binding decision is not critical. Adjudication is preferable where a swift enforceable decision is needed — for example because of insolvency risk — or where the relationship has irretrievably broken down.

Q (Level 2)Can a party refer a dispute to adjudication and mediation simultaneously?

Yes, there is no legal bar to pursuing both simultaneously, though in practice commencing adjudication makes mediation more difficult as positions harden. Some parties use the threat of adjudication to incentivise settlement in mediation. If mediation settles the dispute, the adjudication can be withdrawn. It is good practice to attempt mediation first and reserve adjudication for cases where mediation fails or where the time pressure makes waiting impractical.

Q (Level 3)A landlord and a commercial tenant cannot agree the rent on a lease renewal. The lease is silent on dispute resolution. What options do you advise and what would you recommend?

(example) Where the lease is silent, the parties can agree any procedure. I would first recommend a without-prejudice negotiation meeting between the surveyors, exchanging comparables. If that fails, mediation with a RICS-appointed mediator is likely to cost a fraction of arbitration and has a high settlement rate for rent disputes. If mediation fails, the choice is between independent expert determination and arbitration; for a single rent issue, expert determination is usually faster and less adversarial than a full arbitration. If the parties cannot agree on procedure, either may apply to RICS to make an appointment. I would advise against litigation — there is no good reason for a rent review to enter the public court record.