In the construction industry, disputes are exceptionally common, whether they arise due to questions related to design, the project schedule, billing for the work, payment for the work, the work itself, or an unforeseen event. Arbitration provides a preferred alternative to litigation, offering benefits such as speed, efficiency, cost savings, and confidentiality. This blog explores some of the advantages of arbitration for resolving construction disputes.
Key Advantages of Arbitration
1. Speed
Arbitration avoids lengthy court dockets, leading to quicker resolutions. While construction litigation often takes years to resolve, arbitration has the ability to proceed at a more expedited pace. Although arbitration of a complex construction claim may still take time, the amount of time often tends to be less than a court action.
2. Efficiency
This is where arbitration really shines.
The litigation process in the courts often begins with in-depth written discovery, and it is common for discovery disputes to lead to mountains of meet and confer letters, and an inefficient process for having discovery disputes be resolved, with discovery motions set 3-6 months later, due to congested court calendars. In arbitration, the process is much more efficient, as submissions can be made to the arbitrator through letter briefs, with a hearing set in a matter of weeks.
Other types of motions are also far less frequent, due to reduced procedural restrictions, and ready availability of the arbitrator to make interim determinations. Even when a key motion does become necessary, the arbitrator has the freedom to set a briefing schedule that helps to keep the process streamlined.
Perhaps the greatest benefit of the arbitration process is the freedom to present your claims and/or defenses in the way you see fit, without the strictures which are present in either a jury trial or a court trial. While court cases very often have both pre-trial motions and motions made during trial, there is little need for that in connection with an arbitration evidentiary hearing, since the arbitrator will be determining issues of both law and fact. Battles over whether evidence is even allowed to be presented are also far more rare, because the arbitrator can simultaneously weigh the quality of the evidence with the veracity of the persons presenting it.
The arbitration process has a much better ability to “trim the fat” and keep focused on getting to an effective and efficient outcome.
3. Cost-Effectiveness
By reducing the number of inefficient hearings, expediting the process for resolving interim disputes, more reasonable amounts of discovery, and virtually eliminating the massive amount of time spent of pre-trial motions, legal fees, court costs, and discovery expenses can all be substantially reduced, making arbitration far more economical for resolving construction disputes.
4. Confidentiality
Unlike litigation, which is public, such that anyone can download case related documentation from the court’s website, arbitration proceedings themselves are not in the public eye. Although some information related to an arbitration may need to be relayed to a court (such as a need to convert an arbitrator’s decision into an enforceable judgment), far less information tends to be placed in the public domain.
5. Industry Expertise
Parties can select arbitrators with specialized construction law knowledge, leading to less time having to explain construction related terms and commonalities, as well as more informed decisions. Stated plainly, random judicial assignments in the courts may result in the selection of a judicial officer with no prior construction litigation experience, and little to no understanding of common construction practices, much less the differences between Type 1, Type 2, and Type 3 indemnity agreements. However, in arbitration, the parties have the freedom to select an arbitrator with decades of construction litigation experience, so that they can present evidence naturally, without having to repeatedly ensure that the person hearing the evidence understands or is able to fully appreciate the critical construction issues in dispute.
6. Flexibility
Arbitration allows parties to customize the arbitration process to meet their needs, so that the process adapts to your case, rather than forcing you to adapt your case to comply with the strictures of the court system.
Conclusion
Arbitration is an effective dispute resolution method for construction conflicts, offering the potential for faster, more cost-effective, and confidential resolutions. By choosing arbitration, those involved with construction projects can focus on what matters most, obtaining a streamlined and reasonable final resolution.