Part 8: Avoiding Common Pitfalls in Arbitration: Insights from a Construction Arbitrator
Understanding the Challenges of Arbitration Arbitration is often considered a streamlined, efficient alternative to litigation. It offers confidentiality, procedural flexibility, and the potential for faster resolutions—qualities that make it particularly attractive to those looking for an expedient and cost-effective way to resolve a challenging dispute. But even arbitration isn’t without its challenges. As a California-based arbitrator with deep experience in construction matters, I’ve seen firsthand how avoidable pitfalls can derail what should be a more efficient process. Whether you’re a contractor, subcontractor, materials supplier, design professional, or project owner, understanding these hurdles—and how to avoid them—is critical. Common Challenges Parties Face in Arbitration Vague or Poorly Drafted Arbitration ClausesMany disputes become more complex due to imprecise arbitration provisions. When the clause doesn’t clearly specify governing rules (e.g., AAA Construction Industry Rules), venue, or number of arbitrators, parties may be forced to initiate litigation to obtain an order directing the case to a specific arbitration provider, and/or find themselves needing to have an initial arbitrator determining procedural issues before the arbitrator deciding the case is formally assigned. Either way, it can be painful to spend time and money resolving procedural issues before ever addressing the merits. Arbitrator Selection That Lacks Industry