You may not even know about it, but you may have to settle the next dispute about payment for construction through arbitration. Most construction contracts these days include arbitration clauses, so read your contract! In the event of a dispute, the article will require you to go to arbitration instead of filing a claim in court. It is important to know what it is and how Arbitration helps works so that you can effectively protect yourself. Let's take a closer look at the construction arbitration process.
4 construction arbitration procedures
The AAA Construction Industry Arbitration Rules define 4 separate construction arbitrations, which depend on the dollar amount in dispute and the dispute in question. These include:
- Normal tracking procedure
- Dispute resolution by filing documents
- Fast track procedure Arbitration helps
- Large, complex construction disputes.
Which procedure is applied to your dispute depends on the amount of disagreement and the need for a physical meeting between the parties to resolve the issue. However, all proceedings are initiated based on a written request for arbitration. This is the responsibility of the victim. If the contract contains an arbitration clause and the contractor is sent directly to the courthouse, Arbitration helps the case will be dropped due to the waiver of arbitration.
The main procedure, as mentioned above, is a kind of informal mini-trial. The actual process will differ depending on the procedure. As a rule, after submitting an application, there are 4 main stages:
Stage 1: Selection of the arbiter (s)
Most procedures allow some kind of participation in the selection process. When using AAA, the Association will send a list of potential arbitrators. Arbitrators are usually construction attorneys, contractors, or other industry professionals. Both parties can choose specific names and arrange them in order of preference. The Association will then take this into account and appoint an arbitrator (or arbitrator) Arbitration helps as the final decision-makers.
Stage 2. Preliminary hearing.
A preliminary hearing will be scheduled as soon as possible to discuss how the arbitration will proceed. This can be done in person or over the phone. These are just preliminary discussions to agree on the applicable rules and procedures. During this time, the parties can exchange or request additional documents or evidence from the other party to prepare their arguments.
Phase 3. Hearing.
This is the real essence of this process. Both parties will meet with the arbiter and present their arguments. While the parties can represent themselves, Arbitration helps many choose to use their own attorney. Other parties who may be present at the hearing may be witnesses, interpreters, and some may even invite a stenographer to record the hearing. The arbiter will listen to both sides of the story, ask additional questions, and conclude the hearing.
Step 4. Solution
After the formal closure of the hearing, a countdown begins within which the arbiter (s) must make a decision and a final decision. The decision of the construction arbitration is final and binding on both parties. If a party refuses to pay compensation, Arbitration helps the decision can be enforced by filing a claim in court.
Benefits of Arbitration
The main advantage of construction arbitration is that it is fast and simple. The decision will be made quickly, requires fewer documents, and is relatively informal.
Besides, as noted above, the arbiter is usually either a construction lawyer or another professional in the construction industry. This is a huge bonus. The judges are legal experts and it takes too long to explain the situation in a way that is understandable to someone outside the construction industry. The arbitrator will be able to understand the details of the dispute and use his experience to determine the best solution.
Another advantage is that they are less constrained by the strict interpretation of the law. When dealing with the judicial system, the parties can easily lose the lawsuit due to technical problems or minor errors. On the other hand, Arbitration helps arbitrators are not required to strictly adhere to law or procedures. They can make a decision based on what they think is fair and reasonable.
Disadvantages of Arbitration
One drawback is that while it seems cheaper than a lawsuit, most people prefer to have a lawyer present at their arbitration hearing. Also, Arbitration helps there is an administrative fee for filing documents. Compensation must also be paid to the arbitrator. These sums can accumulate quickly and end up being as costly, if not more costly, than litigation.
Another problem faced by the construction arbitration system is the inability to appeal the decision. Appeals from arbitration are only permitted under certain circumstances, such as corruption or fraud. So, once the decision is made, the deed is done! The winning party can bring the decision to court and it becomes fully enforceable.
Also, mixing construction disputes with arbitration can make things more complicated. There are several sides, the mechanics are meeting deadlines and several other potential problems. Read our CEO Scott Wolfe Jr.'s article to learn how arbitration clauses can create
