RESOLVING CONSTRUCTION DISPUTES BY MEDIATION: HONG KONG EXPERIENCE By Kwok-Wing Chau 1 ABSTRACT: This paper reviews the state of the art of modern mediation processes and presents the experience of integrating mediation and arbitration to resolve disputes in Hong Kong's construction industry. Mediation, the principal mode of resolving disputes in ancient China, may have originated in Confucian philosophy, which stresses harmony and compromise. Resolving construction disputes using an adversarial approach such as arbitration is considered to be in opposition to the maintenance of a harmonious relationship between the two parties. The modern arbitration process may duplicate a litigation proceeding, leading to procrastination and cost escalation. The attention of the paper is focused on various dispute- resolution alternatives such as mediation, which can provide for both time and cost savings. Besides, it is strongly favored by those in the industry that disputes be resolved within the construction industry itself. Hence, mediation is believed to have promising prospects in this field. INTRODUCTION Recently, mediation has become a very much preferred means of settling disputes. Many kinds of disputes, such as maritime, divorce and family, economic, and international trade, are nowadays resolved by mediation (Holland 1989; Rouse 1987; Wall 1981; Wall 1984). Various discussions have taken place all over the world regarding mediation during the last decade, and Chinese parties, in particular, have taken a leading role (Jianxin 1987; Lee 1985). In other countries as well, mediation is attempted as an alternative way of resolving disputes. The parties may experiment with mediation of their disputes for many reasons; for example, time and cost savings, cultural tradition, reliability of a negotiated accommodation, desirability to continue amicable business relationships, willingness to settle without laying blame upon either party, and so forth. Modern litigation or arbitration of construction disputes between parties tends to be particularly burdensome, protracted, and damaging to business relationships, which has prompted the increasing popularity of various dis- pute-resolution alternatives, such as mediation. There have been many in- stances in which the parties involved in arbitration proceedings have pro- crastinated for an unacceptable period, with ever-mounting subsequent costs. It has been claimed that most of the advantages have been eliminated in many arbitration proceedings by their having become virtual duplicates of litigation procedures. While litigators are trained in and are familiar with adversarial proceedings in which they are able to exercise their wit by ref- erence to the legal rules, laymen do not see any advantages in applying this mode of disagreement settlement in their cases. The prevailing tendency is against acute adversarial ways of resolving disputes. l Lect., Dept. of Civ. and Struct. Engrg., Hong Kong Polytechnic, Hung Horn, Kowloon, Hong Kong. Note. Discussion open until March 1,1993. To extend the closing date one month, a written request must be filed with the ASCE Manager of Journals, The manuscript for this paper was submitted for review and possible publication on May 11, 1991. This paper is part of the Journal of Management in Engineering, Vol. 8, No. 4, October, 1992. ©ASCE, ISSN 0742-597X/92/0004-0384/$1.00 + $.15 per page. Paper No. 1856. 384