Specific Functions and Responsibilities
An arbitrator in the construction industry plays a crucial role in resolving disputes that arise from complex construction projects. Their primary function is to act as a neutral party who listens to both sides of a dispute, evaluates evidence, and makes a binding decision. This role requires a deep understanding of construction law, contract interpretation, construction terms, the different roles and responsibilities of the persons involved with construction projects, the applicable standards of care, and the complicated issues that can arise both during and after completion of construction projects.
Arbitrators manage the arbitration process from start to finish, in conjunction with counsel for the parties. This involves conducting preliminary hearings, setting schedules, ensuring compliance with procedural rules, and ultimately delivering an impartial award. In construction disputes, arbitrators may need to consider technical details, such as construction means and methods, industry standards, and both foreseeable and unforeseeable events which can impact project timelines.
Importance of Industry-Specific Knowledge
The importance of having an arbitrator with industry-specific knowledge cannot be overstated. Construction projects involve technical issues that an arbitrator without decades of construction litigation experience might not fully understand or appreciate. An arbitrator with a background in construction litigation, who has handled cases on behalf of property owners, general contractors, subcontractors, and materials suppliers can better appreciate the nuances of the dispute and make more informed decisions.
For instance, disputes over construction delays may involve complex design, approval, scheduling and/or performance issues, as well as supply chain issues. An arbitrator familiar with these factors can more accurately assess the causes, and determine appropriate remedies. Similarly, disputes over quality of work or adherence to industry standards require an ability to appreciate and understand construction techniques, sequences and regulations.
Examples of Common Construction Disputes
Several types of disputes are commonly resolved through arbitration in the construction industry:
- Contract Disputes: These can involve disagreements over contract terms, interpretation, and performance. Issues may arise regarding the responsibilities of the parties, their affirmative obligations, scope of work, payment terms, and change orders.
- Payment Issues: Disputes over payment can occur between property owners and general contractors, general contractors and subcontractors, or general contractors and vendors/ materials suppliers. These might include prerequisites for payment, underpayment, payment delays, or non-payment.
- Delays: Construction projects often face factors which impact the construction timeline due to various factors which may or may not be foreseeable, such as weather, fire, earthquake, flood, COVID, supply chain disruptions, or changes in the project scope. Disputes can arise over who is responsible for these extensions of time and their financial impact.
- Defects and Quality of Work: Disagreements can occur over the quality of materials used or whether the work performed complied with the applicable standards of care. These disputes might involve claims for removal, replacement, and/or repair, not only to the work itself, but also resultant damages, as well as whether there is a loss of use associated with the efforts to remedy the defects.
- Project Management Issues: Disputes can also arise over project management practices, including scheduling, sequencing of subcontractors, timely payment, and the adequacy of project supervision.
The role of an arbitrator in the construction industry is multifaceted and demands a high level of expertise and industry knowledge. By understanding the specific functions and responsibilities of an arbitrator, parties can better appreciate the value they bring to resolving complex construction disputes. As we continue this blog series, we will dive deeper into the arbitration process, helping you navigate the intricacies of this valuable dispute resolution method.
