Is mediation a method for resolving disputes?

Is mediation a method for resolving disputes? The Victorian Supreme Court says, "No" – At least for the purposes of the Victorian Building and Construction Industry Security of Payment Act.

In a decision handed down just last month, Justice Vickery determined that a clause in a construction contract which provided for mediation (or indeed, any other non-binding dispute resolution procedure), was not a valid method of resolving disputes under the contract for the purpose of section 10A of the Building and Construction Industry Security of Payment Act 2000 (Vic) (the Act).

This somewhat surprising decision is likely to have a significant impact on the security of payment landscape in Victoria, as it opens the door to the adjudication of claims for variations other than those previously agreed by the parties, a process that was not widely envisaged (and indeed, actively sought to be avoided by parliament) prior to this determination.