Avoid litigation at all costs was the mantra several years ago. Supporters of arbitration claimed that it was less expensive, quicker and avoided run-away juries. But, are these claims still true? Is arbitration still better? Well, it depends. Some claims may benefit from arbitration, but the benefit is not always clear.
AIA Contracts Don’t Push Arbitration
For those of you using AIA contracts, you have probably seen that arbitration is still an option under section 6.2 of the A101. In that section, the parties check a box to agree to arbitration, litigation or other resolution.
Filing Fees and the Cost of the Arbitrator Can be Expensive
If you have a relatively small contract, resolving your claim may prove very expensive. Filing fees for arbitration exceed $700.00. And, you will have to pay to have the arbitrator hear and decide your case. That’s in addition to your own attorney’s fees. You could well spend over $5,000 just to have the arbitrator decide your case – again, not to mention your own attorneys fees.
Arbitration Does Not Avoid Discovery
Parties to arbitration will conduct some discovery. Arbitration does not eliminate the need for document exchanges and depositions.
Arbitration May Provide a Specialized Decision Maker
Probably the biggest benefit to arbitration is that the decision maker may have specialized experience in the area. Large construction disputes oftentimes include very specialized issues and having a decision maker familiar with those issues may assist resolution of the matter.
Mediation is Available in Arbitration and Litigation
Mediation is always an option, regardless of which way you pursue your claim.
At the end of the day, arbitration as an alternative dispute resolution process is still viable, but it does not appear to be the beat all/end all process for all construction disputes. The size and complexity of project will likely dictate whether litigation or arbitration is the appropriate path.