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What Construction Businesses Need to Know About Using Arbitration as a Method of Dispute Resolution

Large-scale commercial construction and infrastructure projects rarely run according to the exact specifications of the plan or the budget, leading contractors to assert claims for additional time or money for delays, disruptions, or other events that have caused damages. Similarly, employers make claims for delays, back charges, or defective work performed by the contractor. When claims like these arise, the last thing a contractor or project owner wants to be stuck with is a lengthy and expensive courtroom battle that results in a loss of time, productivity, and professional relationships. Ideally, you want any conflicts, no matter how minor, to be resolved through a cost- and time-effective method of dispute resolution. 

One private and contractual form of dispute resolution that construction businesses frequently use to settle disputes is arbitration. In this brief article, we’ll explore everything you need to know should you decide to use arbitration as the method of dispute resolution for your construction dispute, including advantages, disadvantages, and the arbitration process as a whole. For expert guidance throughout the process, you’ll want to get in touch with a Ft. Myers construction arbitration lawyer from Cotney Construction Law.

Related: Common Questions About Construction Arbitration

The Process of Arbitration

Arbitration is essentially a court trial without the court. The disputing parties agree, either in the contract before the dispute arises or through a subsequent agreement, to submit their dispute to the process of arbitration rather than pursue a lawsuit in court. Most standardized construction contract forms nowadays will have an alternative dispute resolution clause that calls for the use of the American Arbitration Association (AAA), a nonprofit organization that has been a trusted provider of alternative dispute resolution services for over 50 years. Depending on the dollar amount and the nature of your dispute, there are four separate arbitration procedures you may come across: Regular Track, Resolution of Disputes through Document Submission, Fast Track, and Large, Complex Construction Disputes. Fast Track procedures are reserved for cases where the claim or counterclaim exceeds $100,000, while Large, Complex Construction Disputes procedures are immediately applied to all cases where the claim or counterclaim exceeds $1,000,000. 

Each of these procedures will vary slightly; however, the general procedure for arbitration is as follows:

  • Selection of the arbitrator: The arbitrator is typically chosen by the parties based on the subject matter of dispute. For construction disputes, this typically means a construction attorney, lawyer, contractor, or some other type of industry professional. 
  • Pre-hearing: A pre-hearing is scheduled immediately afterward to discuss how the arbitration will take place, either over the phone or in person. At this time, the disputing parties are welcome to exchange or request documents in their possession which they intend to rely on. 
  • Hearing: Once the agreed upon date and time has arrived, it’s time for both of the disputing parties to meet with the arbitration and present their case. You may require a Ft. Myers construction dispute lawyer at this point to represent you. The arbitrator will listen to both sides of the dispute, ask follow up questions, and then conclude the hearing.
  • Decision: Now that the hearings have closed, it is up to the arbitrator to make a decision and final award. The decision rendered is final and legally binding for both parties, meaning it can be enforced through a lawsuit in a court of law.

Related: The Arbitration Process and the Construction Industry

Advantages of Arbitration

The greatest benefit of selecting arbitration as the method of dispute resolution for your construction dispute is the ability of the disputing parties to be involved in the selection of the arbitrator. Nearly all juries and judges lack the years of experience in the construction industry and in-depth knowledge of construction law needed to successfully hear a construction dispute. The nature of construction contracts, industry standards, and advanced technical concepts can be daunting to even the most qualified of courts. By using an experienced construction arbitrator selected by the parties, such as a construction lawyer, you’ll be greatly increasing your chances of receiving a more informed resolution.

Another great benefit is efficiency and privacy. While it may take years to resolve a construction dispute in court, a typical arbitration can be decided in as little as six to twelve months. In terms of privacy, the specifics of your dispute, important documents, and other sensitive materials never have to enter the public eye unless the losing party seeks to have their award vacated by a court. To learn more about the vast array of benefits of choosing arbitration for your dispute, get in touch with a Ft. Myers construction lawyer.

Related: Should I Resolve My Dispute By Arbitration?

Disadvantages of Arbitration

However, arbitration, as with any method of dispute resolution, is also not without its drawbacks. There are a number of fees the disputing parties are responsible for covering during this process, including initial filing fees, administrative fees, and the arbitrator’s professional fees and expenses, just to name a few. Additionally, discovery, the process by which parties in court typically prepare for trial via pretrial examinations, is typically not available in arbitration proceedings. And, finally, appeals from the process of arbitration are only allowed under specific circumstances, so it may prove difficult to impossible to appeal a rendered decision. Your best bet for success going into arbitration, or any other method of dispute resolution for that matter, is always to partner with one of the Ft. Myers construction lawyers from Cotney Construction Law who can provide you with timely and informative legal counsel.

If you would like to speak with a Ft. Myers construction arbitration lawyer, please contact us today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.