This post is Part II of our discussion on resolving construction disputes less expensively and more efficiently.[i] Read Part I here. Arbitration is a form of dispute resolution that is particularly well suited to construction disputes. Here are some tips on how lawyers and stakeholders can make things move quicker in arbitration:
1. The Initial Contract. A successful arbitration begins with the arbitration clause in the contract. Arbitrators derive their authority from the contract, and therefore, the wording of the contract clause with regard to choice of law, locale, amount of discovery, and procedural rules are important matters for consideration. Lawyers who draft construction contracts should be aware of the “have it your way” arbitration process and include appropriate provisions to tailor the process to the needs of their clients.
2. Options. Even when confronted with a well-written arbitration provision, because arbitration is purely a contractual process, the parties can change their pre-dispute arbitration agreement after a dispute arises, including the following:
- Changing the institution that will administer the arbitration;
- Changing the number of arbitrators;
- Adding or deleting a fee-shifting provision;
- Defining the scope of discovery or information exchanged;
- Changing the way arbitrators are appointed; and
- Agreeing on streamlined discovery, etc.
3. Not All Evidence is Equal. Lawyers, in an arbitration setting, can highlight certain evidence (witnesses and documents) that is most important and necessary to their case by identifying and focusing on that evidence first and foremost. It signals the arbitrator to the importance of this evidence and focuses the arbitrator’s attention on the key issues in the case. As identified in Part I, identification and deciding key issues are critical to the quick and inexpensive resolution of disputes.
4. Neutrality in Arbitrator Selection. In a three-arbitrator case, having each party select an arbitrator that will act as their advocate and both parties select a third arbitrator is not a great idea and, generally, does not work. Arbitrators should be selected based on their ability, industry knowledge, and neutrality. When the panel is comprised of neutral, disinterested decision-makers, clients will have confidence in the result.
5. Appeal. Many arbitration opponents cite the lack of appeal as a basis for not choosing arbitration. International Institute of Conflict Prevention and Resolution (CPR), Judicial Arbitration and Mediation Services (JAMS), and American Arbitration Association (AAA) all have optional appellate processes. Not all arbitrations are well suited for appeal, but an incorporation of the appellate process can lessen the risk and provide some piece of mind to those who are concerned that the arbitration is final and conclusive, not subject to further inquiry.
Comment: Arbitration, because it is a contractual form of dispute resolution, can be specifically customized to a particular dispute’s needs. If the lawyers are unable to streamline the process, generally, the arbitrators should do so. The arbitrators, after all, work for the parties to the contract, not the lawyers.
[i] This post draws heavily on a recent ABA Journal article by the Judicial Arbitration and Mediation Services (JAMS). JAMS is a well-respected arbitration and mediation service, employing retired judges as neutrals. Since its formation, JAMS has published many influential guidelines and protocols for expediting arbitration. JAMS, Five Things You Didn’t Know About Arbitration, ABA Journal: Law News Now, April 29, 2014.