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4 Things to Know About Arbitration in Construction

Article-4 Things to Know About Arbitration in Construction

Andrii Yalanskyi / Alamy Stock Photo Disput Resolution.jpg
Here are the considerations construction company owners and managers should understand before allowing arbitrators to deliver a binding decision.

Arbitration is defined as a method of handling a dispute. In arbitration situations, both companies have agreed beforehand to allow arbitrators to deliver a binding decision on the issue. Some individuals, groups or businesses don’t like going to court; in those instances, arbitration is the route they choose. It’s a private resolution option and, for some, a more amicable option.

If you’re considering arbitration, AIA Contract Documents says there are several things you should understand before moving forward:

  1. All parties must be on the same page. For arbitration to be effective, all of the parties involved must be on the same page and in agreement that this is the option that will deliver the best outcome. If one raises concerns and doesn’t think the process will yield favorable results relative to the cause being presented, neither can move forward. That said, it’s critical to understand that both parties must agree that arbitration makes sense before the decision to use this legal instrument is set in stone.
  2. Parties choose the arbitrator. Although parties in dispute do not have a say in the actual outcome of their case, they do have a say when it comes to choosing the arbitrator. Selecting an arbitrator is one of the most unique facets of arbitration in that it allows those in dispute to actually have input in the person deciding their fate. On the surface, this step looks advantageous, and when used correctly, it can be. But any parties considering this route should also remember that choosing a suitable arbitrator is important. Remember, the arbitrator is the judge and jury, so choosing one who is impartial and only concerned with a fair outcome should be the priority.
  3. Arbitration is an unbiassed process. Arbitration is based on the premise that there are no hidden agendas and the person rendering the decision is only concerned with being unbiased and fair. With this in mind, parties can go into the process with a clear mind and leave with a sense of closure that comes from knowing that the final decision was correct. Accepting that decision doesn’t mean they’re satisfied with the outcome, especially if it wasn’t in their favor. But it does mean that any lingering doubts of impartiality are minimal.
  4. Arbitration is meant to be silent. There are no cameras, reporters, or tabloids when it comes to arbitration, as this is an extremely private matter. In fact, the only way the public will ever know the details of the decision is if one of the parties agrees to share them. The arbitrators are bound by law not to disclose any information on the case, and unlike typical court filings, the final decision is not a public record. With that being said, the only way anyone on the outside can find out what happened on the inside is if one of the disputers chooses to share that information.

Arbitration is a viable legal option, especially for those who want their affairs to be kept private. It’s important to remember that both parties have to agree before this process is chosen because, without mutual consent, this option is off the table.

If you’re considering arbitration, be sure to vet the potential arbitrators. Research their record and how they move from a legal perspective, as this will give you a clear path to making a choice that best suits your needs. Both parties must agree on the choice but make the case for the one that makes you feel the final decision will be fair. Arbitration is an extremely unique legal process, and understanding the moving parts and pieces is the key to getting the benefits and results you desire.

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