The Guide to Construction Arbitration by David Brynmor Thomas and Stavros Brekoulakis is a helpful guide for anyone who is unfamiliar with construction arbitration. This comprehensive guide outlines the essential aspects of construction disputes. It also discusses venue and process. After reading the Guide, you will be able to make the best decision for your construction dispute.
Costs
Construction arbitration is a popular way for parties to settle disputes in the construction industry. The parties can appoint arbitrators with industry and technical expertise. However, these arbitrators must have a mix of technical expertise and case management skills, as well as confidence in making difficult procedural decisions. As such, it is critical to choose arbitrators carefully.
The construction arbitration process is complex. There are often large amounts of technical documentation to be reviewed. Therefore, arbitration rules for the construction industry should be designed to facilitate efficient document disclosure. Nevertheless, these processes often do not align with the expectations of the parties. Arbitration costs are not a trivial factor and must be carefully considered before pursuing construction disputes.
In North America, the average cost of a construction dispute is $19 million. This figure is largely due to the time required for the dispute to be resolved, which can eat up cash flow for construction companies. Arbitration can save both time and money. Arbitrations can settle disputes in just a fraction of the time required for litigation.
The parties who choose construction arbitration generally do so with cost considerations and the potential for a swift remedy. This is particularly true for subcontractors at the lower end of the construction value chain, who often have limited cash reserves and rely on fragile credit lines. As such, any disruption of their cashflow ecosystem is an existential threat. This is why it is essential to have an effective and affordable arbitral regime.
Another drawback to construction arbitration is the lack of appeals. Although the speed of a construction arbitration proceedings is faster than a court case, the lack of an appeals process can result in an undesirable outcome. For example, an arbitrator may make an erroneous decision without considering any precedents. In addition, few published court decisions have dealt with construction-related issues. This means that arbitrators often make decisions that are clearly wrong.
Arbitration hearings are usually more informal than trials. During the arbitration hearings, the Rules of Evidence do not apply. As a result, documents and testimony containing hearsay may be admitted. The arbitrators may also ask questions of witnesses and parties of a technical nature. This can compromise the merits of meritorious claims.
Venue
Construction arbitration is a popular dispute resolution method that reduces costs, involves a neutral expert in the industry, and is private. But not every state enforces venue selection in arbitration agreements. In some states, an arbitration agreement that specifically specifies a place of arbitration is invalid. However, a well-drafted arbitration agreement will trigger FAA preemption and allow arbitration to take place in the place specified in the agreement.
Venue provisions are usually enforced in construction contracts by the courts. However, contracting parties must carefully review and abide by these provisions before entering into a construction agreement. A choice-of-law clause in a contract that requires parties to arbitrate outside Florida is invalidated under Florida law. Therefore, the initial consideration for practitioners handling construction disputes is whether a venue clause is necessary.
Often, a contract will stipulate that any disputes involving a construction contract must be settled in the state where the contract was signed. However, a home-court statute may make the venue provision void. These laws require disputes to be resolved in the state where the contractor or subcontractor lives, and a dispute brought outside a state’s jurisdiction is invalid.
Whether a construction dispute is a construction lien or not is another matter altogether. If the owner transfers a construction lien to a bond, this is an additional issue. In these situations, the owner may require a payment bond for materials, labor, and services rendered. If the owner cannot be located in a state that has a construction lien, the construction lien can be transferred to the bond.
A dispute in construction involves virtually every party to the project. Because the number of parties involved in construction disputes is large, adding them to an arbitration is more difficult than adding them to a lawsuit. As a result, arbitration is confined to those parties who agree to participate. Typically, the parties can negotiate this during the contract negotiation.
Process
The Process of Construction Arbitration aims to resolve disputes between parties without compromising the interests of either party. Arbitrators are appointed for this purpose. They take an oath of impartiality upon being appointed. The role of arbitrators is to apply recognized principles of construction law and to ferret out the truth. They are not charged with making public policy decisions or making new laws. In addition, they are not expected to punish anyone.
Most construction contracts contain an arbitration clause. This clause binds the parties to resolve disputes through arbitration. In order for the arbitration clause to be binding, both parties must have signed a contract or other agreement. The clause should state the exact date on which arbitration will take place and limit the amount of discovery that can be conducted.
During construction projects, disputes often arise. Construction arbitration is the most common way to resolve these disputes. It can be conducted with a single arbitrator or a panel of arbitrators. The arbitrator acts as the judge and jury and will make decisions based on the evidence presented to him or her. The arbitration process is also known as an alternative to litigation.
Construction arbitration is a fast and efficient method for resolving construction disputes. It is much faster than a court case and the parties can maintain their privacy and confidentiality. In addition, arbitrators are often chosen based on their expertise in construction and contract law. A judge is not likely to have the necessary knowledge and experience to render a decision in a construction dispute.
The parties may also include clauses that govern mediation and arbitration. The clause may specify a location for the meetings, tolling of statutes of limitations, and other items of concern to the parties. In many cases, construction disputes require mediation or arbitration before proceeding to a court trial. The parties may also choose to resolve their disputes by a third-party arbitrator.
The process of construction arbitration varies depending on the complexity of the construction dispute. While most construction arbitrations follow Regular Track Procedures, which mimic a civil trial, there are several alternatives. For example, Fast Track Procedures are typically used when a construction dispute is valued less than $100,000. These procedures are designed to resolve disputes more quickly, with an expedited process for appointing the arbitrators and a one-day hearing.
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