By Stephen A. Hilger, Esq.
This is Part 5 in a 20-part series of blogs dealing with issues of arbitration in the construction industry.
Once you have made the decision to utilize arbitration as a dispute resolution mechanism, the next question becomes what vehicle you should use to accomplish that purpose.
One of the most prominent names in the arbitration field is the American Arbitration Association. In the construction industry, the AAA has specific rules which have stood the test of time for arbitrating simple and complex construction disputes. Those rules can be found at www.adr.org. In general, those rules are pretty well established, pretty well understood, and can provide a good vehicle for resolving disputes. There are also court cases which have interpreted specific AAA rules. However, you are not limited to the rules of the American Arbitration Association.
Since arbitration has become more popular, other rules have emerged. You can and should establish in your contract which rules you intend to be bound by. If you find yourself in a very complex construction dispute where your contract requires arbitration under the AAA rules, that does not mean that you cannot, by addendum, modify those rules either in the arbitration clause of your construction agreement or in a separate post-contract addendum.
One of the primary criticisms of the disposition of cases through the American Arbitration Association is the fees and costs associated with the case. These fees can be adjusted to some degree by doing a private arbitration.
In a private arbitration, the parties either specify the private nature of the arbitration in their construction agreement or enter into a separate post-contract arbitration clause where the rules of engagement for the arbitration are spelled out in detail. When that occurs, the parties can select the specific rules under which they choose to abide, and include both the AAA rules and additional rules that are typically not within the American Arbitration Association rules. For example, the parties can add clauses regarding confidentiality, extended discovery, rules of evidence, and the like. From my experience, I either use the American Arbitration Association rules or, in the event of a complex construction dispute, I would attempt to negotiate favorable additional rules either in the arbitration clause of the construction agreement or in a supplemental arbitration agreement.
Attorney Stephen Hilger is engaged in complex commercial litigation with an emphasis on construction law, has tried many cases in multiple state courts, and has appeared in several state courts of appeal, the Michigan Supreme Court, United States District Courts, United States District Courts of Appeal, the United States Supreme Court on cert, and multiple arbitration tribunals across the country.
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