Arbitration has long been a staple for resolving construction disputes, ideally in a prompt and cost-effective manner by arbitrators familiar with the construction industry.
For decades, the AIA documents required arbitration, but more recently the parties are given an option to “check the box” for arbitration or litigation.
Some in the construction industry have become less enthusiastic about arbitration as it began to resemble “litigation light” with significant discovery costs and delays, as well as significant administration costs.
However, if properly administered and enforced by arbitrators who remember the goals of speedy and cost-effective arbitration, a well-run arbitration can still be preferable to litigation in the courts, during normal times. And that advantage has increased exponentially now that COVID impacts have slowed our court systems to a glacial pace in many locations. Now, arbitration has become about the only way to resolve a construction dispute cost-effectively in a reasonable period of time.
Contracting parties would be wise to seriously consider mandatory arbitration in their next negotiated contract.
