Arbitration serves the construction industry well because arbitration panelists, who preside over binding decisions in arbitration, possess familiarity and subject matter expertise in construction. Construction cases often hinge on technical and complex matters. Also, arbitration generally offers faster and less costly resolution than litigation. In recent decades, arbitration has been critiqued for becoming more resource-intensive, involving extensive discovery. Some have coined this “arbilitigation.” There are ways for parties to act as decision-makers to streamline the process. ConsensusDocs is offering a July 18th live webinar entitled “Unlocking the Advantages of Arbitration Over Litigation,” which you can register for here. The webinar will outline ways to use arbitration most efficiently.
ConsensusDocs: Comprehensive Arbitration Provision
Did you know construction was the first industry to embrace arbitration as a dispute resolution process? ConsensusDocs standard contracts stand out for their comprehensive provisions on arbitration, offering best practice options for choosing arbitration contractually. This is facilitated through a user-friendly check-the-box approach, where the parties can select between arbitration or litigation. Since common law defaults to litigation, parties must explicitly indicate their preference for arbitration when completing a ConsensusDocs standard contract document. The AIA contract documents, through their contract document software, have historically defaulted this choice to arbitration. The ConsensusDocs’ drafters agree that opting for arbitration should be made consciously. Parties can always opt into arbitration after contract signing if they so desire.
ConsensusDocs: Embracing Fast Track Procedures for Arbitration for Smaller Claims
Once arbitration is chosen, ConsensusDocs standard contracts offer a unique feature-defaulting arbitration to a less costly fast track arbitration for matters under $250,000. The American Arbitration Association (AAA) “Fast Track” procedures, designed for efficiency, involve only a single day of hearing and must be completed within 45 days. ConsensusDocs is the first to address expedited arbitration in a standard contract, expanding the presumption of expedited procedures for total claims under $250,000. This provision is a testament to ConsensusDocs' commitment to providing efficient and cost-effective dispute resolution options for the construction industry.
Important Contract Provisions
In addition, ConsensusDocs also explicitly state that both the statute of limitations and the statute of repose apply to arbitration matters. There is some case law that disfavors the application of the statute of limitations in arbitration without express contract language (See this American Bar Association article – “Does the statute of limitations apply at all?").
There are other contract provisions that impact which arbitrative rules are used. ConsensusDocs provides that the current arbitration administrative rules in effect at the time of the arbitration apply. The American Institute of Architects (AIA) standard contracts specify that the old arbitration administrative rules in effect at the time of contract signing should apply. The AAA administrative rules favor using their current rules as they are updated based upon the latest developments and most efficient administration based upon users’ experience and feedback.
Additional Resources
Upcoming ConsensusDocs Webinar: Efficient Arbitration
ConsensusDocs is offering a July 18th live webinar entitled “Unlocking the Advantages of Arbitration Over Litigation” that will outline ways to use arbitration most efficiently.
Expedited Arbitration Procedures for Small Claims Can Save Contractors Time and Money. ConsensusDocs Construction Law Newsletter, March 2024
Some Pros and Cons of Arbitration Clauses in Your Contract. ConsensusDocs Construction Law Newsletter, May 2023.