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Arbitration

Arbitration is a form of binding dispute resolution

Arbitration is a binding form of dispute resolution, an alternative to litigation, where evidentiary hearings occur – and sworn testimony is offered – in meeting rooms not courtrooms

Arbitration

Arbitration is a form of ‘binding’ dispute resolution. Like judges, arbitrators are empowered to ultimately determine who ‘wins’ and ‘loses’ a dispute.  Arbitrators convene hearings, take live evidence and testimony from witnesses, and enter arbitration awards to determine the outcome of the dispute.  Final arbitration awards can be quickly converted into court judgments, which makes arbitrators’ decisions binding on the parties. Arbitration is an alternative to court litigation.  These ‘binding’ processes are used when informal settlement negotiations, or ‘non-binding’ forms of ADR like mediation and step negotiation, fail to resolve disputes.   

Advantages of Arbitration

Arbitration has its flaws, but enjoys many advantages over litigation. Arbitrators are often seasoned construction lawyers. They are familiar with industry norms, and often know more about design and construction law and practice than judges.  Arbitrators often produce ‘better’ substantive decisions than judges – at least in the world of design and construction law.

Arbitration has other advantages.  It can be quicker and more cost-efficient than court litigation. Arbitration awards are more final than judge and jury decisions, which can be more easily appealed on the merits. Also, while court filings are publicly available – and often embarrass the litigants – arbitration is conducted mostly in private. 

Legitimate Criticism of Arbitration

Arbitration was once the darling of the construction industry – with parties intentionally sacrificing the safeguards of litigation, and its expensive and inefficient procedures, in favor of more quick and cost-efficient dispute resolution.

Arbitration has now fallen into disfavor with many. Its critics complain about a perceived lack of due process, and that courts are seldom willing to reverse arbitration awards on appeal. They complain that its advantages, like quick and efficient cost resolution, can be lost when the process is seized by lawyers who treat it like their ‘scorched earth’ courtroom trial practice.  

The issue is complex, but the critics are not entirely wrong. To experienced attorneys, the notion that design and construction arbitration is failing its users – at least partially – is not that controversial.  

Given its advantages, Jeremy often selects arbitration as the ‘binding’ form of dispute resolution when preparing contracts. Rather than abandon arbitration, the legal industry should continue to work to improve it.  Arbitration is a important alternative to litigation, which is at least equally flawed.


Advocating to Improve Arbitration

Jeremy’s arbitration-related writings include: 

  • Arbitrator-Directed Arbitration:  A Proposal to Improve Arbitration, Construction Law Newsletter, Volume 35, Number 5 (May 2019)
  • Chapter 20 – Arbitration, Construction Dispute Litigation 2018 Edition, IICLE (Mar. 2018)
  • Chapter 19 – Nonbinding Alternatives to Court Litigation for Resolving Construction Disputes, Construction Dispute Litigation 2018 Edition, IICLE (Mar. 2018)
  • Chapter 13 – Alternative Dispute Resolution Terms in Construction Contracts, Construction Law: Transactional Considerations 2017 Edition, IICLE (2017)
  • Negotiating Dispute Resolution Clauses, Five Keys for Negotiating Business Contracts, IICLE Webinar (Mar. 21, 2014)

Jeremy uses arbitration and litigation to resolve disputes, depending on the case. Design and construction industry clients find themselves before judges and arbitrators. Their counsel must be adept in both forms of binding dispute resolution. 

Jeremy has over a decade of experience prosecuting and defending claims in many American Arbitration Association (AAA) hearings, and has won favorable arbitration awards after AAA evidentiary hearings.

To learn more, contact Baker Law today.