The construction industry has long been a source of some of the most frequent and complex litigation. Delays, unpaid remuneration, construction defects, and subcontractor conflicts – each of these issues can spiral into a multi-year legal battle. Consequently, the legislator has decided to mandate participation in mediation by introducing Article 458³a § 1 to the Code of Civil Procedure (KPC), effective as of 1 March 2026.

What is the nature of the change?

Previously, courts had the discretion to refer parties to mediation, but were under no obligation to do so. The new provision fundamentally changes this: in cases arising from construction work contracts and other contracts closely related to the construction process, the court is obliged to refer the parties to mediation before the preparatory hearing or the first hearing set for the trial. In other words, before the judge addresses the merits of the dispute, the parties must first explore whether an agreement can be reached with the assistance of an impartial mediator.

Simultaneously, under Article 458³a § 3 KPC, upon referring the parties to mediation, the court should continue to take steps to prepare for the preparatory hearing or trial. This is intended to prevent the mandatory mediation referral from unnecessarily prolonging the case. It remains to be seen how the courts will implement this duty in practice.

Which cases fall under the new provision?

The scope of the regulation is broad. It encompasses not only disputes arising from construction work contracts but also those stemming from other agreements strictly related to the construction process. The interpretation of the term “strictly related to the construction process” will likely be defined by evolving judicial practice.

Is mediation truly mandatory?

While the referral to mediation by the court is mandatory, the mediation itself remains based on the principle of voluntariness – the mediator does not issue a ruling and cannot impose a settlement upon the parties. A party’s refusal to participate in mediation requires an express objection, submitted within one week from the date of the announcement or service of the court order referring the parties to mediation, pursuant to Article 205⁸ § 2 KPC. If the mediation proves unsuccessful or if the parties refuse to participate, the case will return to the standard judicial track.

What are the benefits of mediation?

Successful mediation takes weeks or months, rather than years. According to Article 458³a § 2 KPC, the duration of court-referred mediation in construction cases is up to three months, with the possibility of a court-granted extension upon the request of the mediator or both parties, if it facilitates an amicable resolution. In practice, this provides the parties with a genuine, time-limited opportunity to reach a settlement without engaging in protracted litigation. This timeframe is sufficiently flexible to allow for multiple mediation sessions, the gathering of documentation, and technical consultations – which are of particular importance in complex construction disputes. Crucially, mediation takes place in camera, and information disclosed during the process is confidential and cannot be utilised in subsequent proceedings.

Mediation is also significantly more cost-effective than litigation; the mediator’s fee is a fraction of the costs associated with legal counsel, expert witnesses, and court fees, particularly in multi-year disputes spanning several instances. Finally, mediation allows the parties to craft bespoke solutions that stabilise their ongoing commercial relationship, such as a remedial schedule, contract modifications, or the mutual set-off of claims.

Undoubtedly, the effectiveness of the new regulation will depend on the attitude of the parties themselves – whether they view mediation as a formal hurdle to be cleared or as a genuine opportunity for an expedited resolution.

To address these new legal requirements and the growing market demand, we have established a Mediation Centre at our firm. Our team includes experienced mediators specialising in construction and contract disputes, ready to support our Clients at every stage of the mediation process – whether acting as legal counsel or as impartial mediators. If your company is facing a prospective construction dispute or if you have already been referred to mediation by a court, please contact us – we will assist you in resolving the dispute effectively and efficiently.

This article is for informational purposes only and does not constitute legal advice. The legal status is accurate as of the date of publication.