Construction Law

Common Questions About Construction Arbitration featured image

Common Questions About Construction Arbitration

When it comes to a construction dispute, you have several options for resolution. You may choose mediation, arbitration, or litigation. One of the most effective ways of settling a dispute quickly and privately is with arbitration, one of several alternative dispute resolution (ADR) methods that we offer. If you’ve found yourself caught up in a construction dispute with no end in sight, arbitration may be for you.

Any time a construction professional is caught in a dispute, it is important to contact a Ft. Myers construction dispute lawyer who will discuss your legal rights and the best course of action to proceed. An attorney will help you understand the ins-and-outs of arbitration and any other ADR method available to you.   

Related: Should I Resolve My Dispute By Arbitration?

What Exactly IS Arbitration? 

Arbitration is a formal way to resolve a dispute. During the process, the opposing parties will both present their case to a third party, known as the arbitrator. After the arbitrator listens to both sides of the case, taking into account the evidence presented, they will make a determination. The arbitrator’s decision is both private and binding, unless the parties mutually agree to an advisory opinion.

Compared to other ADR techniques, such as mediation and negotiation, arbitration is more structured. When choosing arbitration, the parties have the ability to decide how formal the procedure will be and what rules need to be followed regarding evidence. There are a few general principles that make up the process of arbitration.

  • The main objective of arbitration is to receive a fair resolution of disputes with the assistance of an impartial third party without any unnecessary expenses or delays.  
  • All parties involved should be free to agree on how to resolve their disputes. Parties are not able to move forward with arbitration if not all parties agree to that method of ADR.
  • Courts should not interfere with the arbitration process.

Related: When Can Arbitration Be Utilized to Settle a Dispute?

Is Arbitration More Costly Than Litigation?

Arbitration is often chosen because it is more flexible and less expensive than the litigation process. While arbitration costs are creeping up, in general, it’s more cost-effective than litigation. This is because litigation calls for a more detailed discovery process, which can drive up costs. Additionally, court costs can easily make litigation more expensive.

In fact, the average cost of construction disputes in North America is a staggering $19 million. This is due to a number of factors, not the least of which being that disputes last close to 18 months on average. During this time, construction companies encounter cash flow issues as a result of stalled projects and mounting legal fees. By comparison, arbitration can effectively resolve a dispute in a fraction of the time. 

Is Arbitration as Effective as Litigation?

Arbitration is designed to be as decisive as litigation without the mess and, in many ways, reflects the best parts of the litigation process. There are opening statements, and both sides present evidence and their arguments to an arbitrator, an independent third-party brought in to settle the dispute. Like a judge, the arbitrator will review the evidence and make a final decision. This final decision can also be enforced by a court, if necessary, lending further weight to the arbitration process.

Related: 3 Important Distinctions Between Litigation and Arbitration

Is a Judge Involved in Arbitration?

The most common method for selecting an arbitrator is the disputing parties, either by mutual agreement or by each party, directly appointing someone to be the arbitrator. This arbitrator may have served as a judge during their career, or they may be a seasoned attorney in the field. Either way, the arbitrator will be experienced in the construction industry and settling construction disputes. 

Furthermore, if you feel that the arbitrator chosen is inappropriate, you can discuss your concerns with a Ft. Myers construction lawyer who can work to change the arbitrator. Additionally, it’s important to note that, in arbitration, there is no jury. 

Is Arbitration Enforceable? 

As mentioned earlier, arbitration can be as effective as litigation. The arbitrator’s final decision is binding unless otherwise stated in the construction contract. The construction contract is the most important factor in deciding how disputes play out. If you’re concerned with disputes, your contracts should include a clause that requires mediation or arbitration to be explored before litigation. 

As a construction law firm, we’d be remiss if we were in any way misleading about the arbitration process. Make no mistake; arbitration is a challenging process that will test your resolve. Like litigation, your arguments will come under scrutiny and your skills as a contractor may even be brought into question. However, you must remember that, above all else, arbitration is a fair and logical process, especially when you bring in an independent arbitrator to resolve your dispute.

Who Decides on Arbitration?

Arbitration is part of the construction contract. This means that prior to beginning the process, Ft. Myers construction lawyers will discuss with you how and why to include an arbitration clause and the best phrasing for such a clause. 

If you are facing a construction dispute, contact Cotney Attorneys & Consultants. Our legal team will provide you with sound advice at every level and assist your firm with any construction needs. Not only do we advise our clients on legal matters, but we also provide a myriad of other valuable services for construction businesses, including contract review, employment law advice, and litigation and arbitration services. We also advocate for clients involved in licensing complaints, permitting issues, stop-work orders, business immigration, and more. 

If you would like to speak with a Ft. Myers construction arbitration lawyer, contact us today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.