A standing neutral is a trusted, independent expert advisor (or a panel of three advisors) chosen by contracting parties to help resolve any disputes that arise between them during the contractual relationship. This technique is typically used in the context of a business relationship where long-term cooperation is paramount, such as projects undertaken in the construction and oil industries. It is seen as a first response technique, designed to prevent any problems from escalating into adversarial disputes.
Contracting parties who have arranged for a standing neutral are incentivized to concentrate on fixing the problem rather than fixing the blame. They use their mutual knowledge to reach a solution between themselves, instead of relinquishing control to the neutral. “The mere act of appointing a standing neutral is like a magic bullet for reducing or even eliminating disputes between parties to a contract. Throughout the construction phase, Groton could keep current with the progress of the project by using a webcam streaming live video from the construction site. Despite the typical construction problems that emerged during the project’s building phase, the parties were able to resolve all problems between themselves. Not once did they need to consult with him.