RC125 JulyAug 2026 - Magazine - Page 28
LEGAL
FROM DISPUTE RESOLUTION
TO DISPUTE PREVENTION
The strategic role of standing neutrals in modern construction projects
by Logan Patience and William Katz
ARLIER IN OUR CAREERS, one of the authors spent more
than a decade in construction, working on heavy
industrial, oil and gas, and infrastructure projects.
At that time, aside from the occasional mediation
clause, it was uncommon for contracts to include
dispute resolution mechanisms designed to address
issues before they escalated into litigation.
On one major project, a signi昀椀cant dispute arose roughly three months into a two-year job and quickly became
a major distraction for the remainder of the work. Nearly
every interaction was contentious. Every word written
or read in an email was scrutinized, and information the
company shared with the owner was carefully vetted to
avoid weakening its position in the dispute.
The project su昀昀ered as the parties—at loggerheads
over who was responsible for the issues, their value,
and their impact—interacted as though the other were
unquestionably at fault. In hindsight, it’s unclear whether
the situation would have developed di昀昀erently had
a neutral party been engaged, but a neutral party’s
involvement would almost certainly have improved
the parties’ relationship and resolved several signi昀椀cant
elements of the dispute. An experienced technical expert,
complemented by a legal practitioner, could have brought
the parties to the table, examined the issues with care,
and o昀昀ered a grounded view on responsibility, delay,
productivity impacts, and valuation, sparing everyone
involved considerable time and expense.
Our experience—an all-too-common one in the
industry—raises the question: When disagreements arise
on signi昀椀cant construction and infrastructure projects,
should parties continue to rely on dispute resolution tools
that resolve issues only after the fact, or should they make
greater use of real-time tools, like standing neutrals, to
help prevent contentious matters from escalating into
litigation or arbitration?
While the concept of using standing neutrals has been
considered in some Canadian construction contracts,
E
William Katz, a partner at
Carbert Waite, maintains a
commercial litigation and
dispute resolution practice.
Logan Patience is a
director at HKA and a
project management
professional with 20 years
of experience.
28—RENEW CANADA – JULY/AUGUST 2026
often in the form of dispute review boards, they
have been used sparingly and usually only on large
infrastructure projects. It is the view of the authors that
the industry, and all parties involved, would bene昀椀t
greatly from a broader inclusion of these types of dispute
resolution mechanisms during construction, including
consideration of solutions that di昀昀er from traditional
dispute review boards.
The evolution toward standing neutrals
Over the past few decades, alternative dispute resolution
mechanisms have begun to gain traction in major
construction and infrastructure projects, such as public
works and longer-duration projects, where the costs of
poor project outcomes outweigh the costs associated
with these mechanisms.
For many construction disputes, litigation became too
expensive and too slow. Arbitration was intended, in part,
to provide a more e昀케cient alternative, but it can also be
expensive and time-consuming. In recent years, prompt
payment and adjudication regimes were introduced by
several jurisdictions under lien legislation to promote faster
interim resolution and keep money 昀氀owing and work progressing. These regimes, however, are sometimes honored
in form rather than substance, as parties may fail to engage
with them as their drafters intended.
Most typical dispute resolution mechanisms, such as
mediation, arbitration, and litigation, can take months
and often years to complete. By the time a hearing
through one of those mechanisms takes place, the parties
may have spent months defending positions instead of
identifying a solution to the problem at hand.
Construction disputes need to be better managed
before they negatively impact project outcomes.
A contractor nearing the end of a job may have a
contractual right to put down tools because payment
hasn’t come through, or to refuse to provide the required
turnover documentation for the project. Often, it is more
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