When navigating a construction project in Florida, disputes over contracts, work quality, payment or other issues may arise. While litigation is a common method to resolve conflicts, it comes with drawbacks, such as high costs, prolonged litigation timelines and unpredictability. Arbitration, a method of alternative dispute resolution, offers distinct advantages, particularly in the construction industry.
Unraveling construction arbitration
Construction arbitration involves a process where involved parties mutually agree to present their dispute to an impartial third party, the arbitrator. This arbitrator, typically an expert in the construction field, holds hearings for both sides and delivers a binding decision. The arbitrator’s ruling is final and enforceable by the courts, unless specified otherwise by the parties.
Arbitration versus litigation
Arbitration tends to be faster and more cost-effective than litigation, bypassing the delays and expenses associated with court procedures. It offers more flexibility and informality as parties can select the arbitrator, set procedural rules, determine the location and schedule the arbitration.
Arbitration maintains a higher degree of confidentiality compared to litigation, with proceedings and awards not being public records. With an arbitrator well-versed in the construction field, applying industry standards and practices leads to a more predictable outcome.
Navigating the construction arbitration process
The inclusion of arbitration in construction disputes can be voluntary or mandatory, depending on the contractual agreement. Many construction contracts feature an arbitration clause that mandates arbitration for any arising disputes. In the absence of such a clause, parties can still opt for arbitration through a signed submission agreement.
Parties retain the autonomy to choose arbitration rules and organizations governing their case. For instance, the Construction Industry Rules of the American Arbitration Association provide guidelines for arbitrator selection, discovery, hearings and awards. The AAA offers various arbitration procedures tailored to different construction dispute complexities.
Optimal use of construction arbitration
Construction arbitration might not be suitable for every dispute, given potential limitations like waived legal rights, enforceability issues, confidentiality concerns and potential conflicts of interest. Therefore, careful consideration of goals, expectations, risks and alternatives is crucial before committing to construction arbitration.
