It probably varies between states, but I believe that this is correct for at least some before heading to the courts, if it can't be resolved between the parties themselves.
  

There is still resolution through the courts, if all else fails?

Thanks,

Dik

This does vary, as apsix said.  There are a variety of ways of settling construction disputes in Australia.  Most of the conciliation, mediation, adjudication, arbitration, etc. schemes are ordered by the courts.  Arbitration would be "mandatory" because a court had ordered it.  This is increasingly the case, and I believe that is because the courts are overloaded.  Mandatory arbitration does not necessarily result in a binding decision.  It is only binding if the parties accept the result, but in practice, most cases are settled at some point before proceeding to litigation in the courts...just due to the expense and uncertainties involved.

Thanks, Hokie...

Dik