Benefits (And Detriments) Of Construction Arbitration

When negotiating construction contracts, parties are typically focused on “big ticket” issues like scope of work, timing and payment. Often contracts are offered as “take it or leave it,” with little, if any, room for negotiation. Important issues can also be “hidden” in the boilerplate. One such important issue is dispute resolution. Most construction contracts now include an “alternative dispute resolution” clause that requires the parties to resolve all disputes by arbitration rather than by going to court. What does this mean and is it a good thing?

Arbitration is simply an alternative to resolving disputes by filing a lawsuit in court. There are important differences, however. The intent of arbitration is to try and resolve disputes more cheaply and more quickly than in court. With a lawsuit, the dispute is resolved in front of either a judge or jury. While the parties have to pay their own attorneys and experts’ fees, they do not have to pay for the judge and