What to Know About Construction Arbitration

Construction disputes are not uncommon but resolving them efficiently is a challenge. Expedient, cost-effective resolution is necessary – not only to resolve disputes but also to maintain relationships and allow the parties to get back to business. Arbitration has long been a preferred method for binding construction dispute resolution. Arbitration often offers a less expensive and more streamlined experience than traditional litigation Feel free to reach out to us for a full discussion of how arbitration may or may not be a good fit for your company or project. Here are some basics about construction arbitration:

What is Construction Arbitration?

Construction arbitration is a form of binding alternative dispute resolution that is specifically tailored to handle conflicts within the construction industry. The process enlists the services of an impartial third-party arbitrator with specific construction law expertise. The parties can engage an arbitrator through the assistance of an independent organization, such as the American Arbitration Association or the ADR Center, or if the parties are able to agree upon the selection of an arbitrator, they can reach out directly to engage the arbitrator.

Key Benefits of Arbitration in Construction

• Speed: Construction arbitration can be significantly faster than traditional court proceedings. Discovery is typically limited, there is no court docket to contend with, and the arbitrator has construction law experience and thus manages the arbitration in a manner that best suits the interests of all parties.
• Cost-Effectiveness: While arbitration is not always less expensive than litigation, it often reduces overall legal costs by providing a more expedient, less formal dispute resolution vehicle.
• Flexibility: Construction arbitration allows parties to choose experienced and knowledgeable arbitrators, who are best equipped to understand the construction-related issues and are more likely to have prior experience with similar matters.
• Confidentiality: Unlike court cases, which are public, arbitration proceedings are private. This can be essential to maintain your reputation, protect valuable information, and keep your business running effectively.

How Does Construction Arbitration Work?

• Initiation: The construction arbitration process typically begins when one party files a demand for arbitration. In most instances, the construction contract contains a disputes provision with a forum selection clause. The rules to be applied to the arbitration (e.g., AAA Construction Industry Rules) are usually stipulated in the construction contract.
• Selection of Arbitrator(s): The parties are free to agree upon the selection of an arbitrator. In large cases, the parties will often utilize a panel of three arbitrators. If the parties cannot agree on the selection of an arbitrator, depending upon the contract language, filing for arbitration with a provider of arbitration services or seeking court intervention to compel arbitration is usually the next step.
• Preliminary Hearing: This initial meeting sets the ground rules for the arbitration process. We will discuss issues such as the need for the filing of a more definite statement of the claim, filing of any counterclaims, whether additional parties are necessary, the filing of a statement of damages, deadlines for disclosures of documents and expert witnesses, scheduling matters, and other details, all of which will be incorporated into a Case Management/Scheduling Order by the arbitrator.
• Discovery: Typically, discovery consists of an exchange of document requests, compliance with same and the disclosure of experts. Sometimes, in larger cases, a very limited number of depositions will be necessary and appropriate.
• Dispositive Motions: Absent an agreement by the parties to the contrary, the arbitrator has discretion to allow (or not) dispositive motions.
• Hearings: Arbitration hearings tend to be more informal than trials. However, make no mistake about it – an arbitration hearing is a trial. The hearing is held in an office rather than a courtroom and the arbitrator doesn’t wear a black robe. However, the arbitrator is the fact finder and is adjudicating the dispute. The arbitrator will set forth the rules for the proceeding. The rules of evidence are typically relaxed but the decision belongs to the arbitrator. The order of proof, the order of witness examination and other aspects of the arbitration follow the same structure as a court trial.
• Award: After the hearing is concluded, the arbitrator(s) will issue a decision, known as an award. The decision is binding and enforceable in court. There are very limited grounds for challenging an arbitration award. The parties should stipulate (in the construction contract or at the preliminary hearing) as to the form of award they require.

When to Choose Arbitration for Construction Disputes

Construction arbitration is particularly well-suited to disputes where each party would prefer a more expedient resolution and is willing to abide by a decision from an experienced third party, knowing that there are very limited rights of appeal. It is also beneficial in scenarios where confidentiality and technical knowledge are priorities for the parties.

Work With Connecticut’s Trusted Construction Arbitration Attorney

Construction arbitration can sometimes be a viable alternative to litigation. However, the decision should only be made after consulting with an experienced construction lawyer.  Whether you are a contractor, a project owner, or a lawyer for an industry participant, including well drafted construction arbitration provisions in your contracts could save time and money while providing a clear path to resolution.

The team at Ciulla & Donofrio LLP offers comprehensive construction arbitration assistance to companies throughout Connecticut. In addition to representing dozens of clients in connection with construction matters, Jeff Donofrio has extensive experience serving as a mediator and arbitrator in construction cases. Contact us today to learn more!