Alternative dispute (claims) resolution mechanisms


Claims and disputes resolution includes all processes for resolving a conflict, from consensual to adjudicative, from consultation/negotiation to litigation. While some disputes (claims) may best be left to the courts (litigation), some can be resolved by disputing parties, either by themselves or with help of a third party. If such methods fail, non-binding and binding arbitration are also available as alternatives to adjudication. Justice, Treasury Board, the Canadian Construction Association, other industry associations, various law societies and the courts themselves all continue to urge the expanded use of alternative disputes /claims resolution mechanisms as 'preferable' to litigation.

Dispute (claim) resolution

Dispute Resolution (DR) is used to define the full range of dispute (claim) resolution mechanisms, which includes negotiation, mediation, non-binding and binding arbitration, and litigation.

Business Dispute Management Program

Part of Public Services and Procurement Canada (PSPC)'s Oversight Branch, the Business Dispute Management Program offers a range of Alternate Dispute Resolution (ADR) services for managing conflict and resolving disputes - from providing advice and coaching in managing conflict, to facilitating voluntary processes for the resolution of disputes.


Negotiation is a voluntary, non-adjudicative and informal discussion between the contractor and PSPC to determine what interests they have in common to arrive at a mutually satisfactory outcome. Every effort should be made to achieve settlement via negotiation. While much time and effort is required to negotiate a settlement of a claim, it is usually far less than the time, cost and effort involved in properly preparing and presenting a case to a mediator, an arbitrator, or the courts.


Mediation is an 'assisted' negotiation. It is a voluntary process and involves intervention of a mutually acceptable, neutral and impartial third party selected either internally or externally. The mediator assists the parties in structuring the negotiation, maintaining channels of communication, identifying and clarifying issues, articulating their needs and creating alternative ideas to resolve the dispute (claim). The mediator assists disputing parties in voluntarily reaching their own mutually agreed settlement of the issues in dispute. The mediator has no decision- making powers and cannot impose a resolution on the parties. The mediation may be a formal meeting or a series of meetings with the mediator 'shuttling' between the parties, or an informal series of conversations assisted by the mediator. The information exchanged during the process is regarded as 'without prejudice' communications for the purposes of resolving negotiations and must be treated as 'confidential' by the parties and their representatives unless required by law, e.g., Access to Information Act, Financial Administration Act and Privacy Act.


Arbitration is a procedure used as an alternative to litigation when negotiations and mediations are unsuccessful. The procedures are established in law under the Commercial Arbitration Act.

The parties to a dispute appoint one or more persons, who become arbitrator(s), to review the evidence and arguments of the parties and render a decision (called an award) which is binding on the parties. In real property contracting the arbitration process is not to be used for construction contact disputes (claims) under $25,000 or over $250,000 without the approval of a Senior Committee, such as the Subcommittee of the Litigation Committee.

Date modified: