Construction Arbitration
Under the New AAA Construction Industry Rules
Arbitration is a common method for resolving construction disputes outside of litigation. In 2015, the American Arbitration Association amended and updated its widely used Construction Industry Rules for arbitration, and these New Rules will apply to most AAA construction arbitrations commenced after July 1, 2015. The significant changes found in the New Rules, summarized below, have the potential to save time and money for those willing to put these tools to good use.
Summary of the New Rules
| Rule | Summary of Changes |
| R-7 Consolidation and Joinder | The rule concerning consolidation and joinder now has time frames and filing requirements intended to increase the efficiency and decrease the complexity of consolidation and joinder issues. |
| R-10. Mediation | Mediation now is a default step for all cases with claims of $100,000 or more (subject to a party’s ability to opt out). |
| R-23. Preliminary Management Hearing | Provides for an early case management meeting, in person or by telephone, to discuss procedures for a fair, efficient, and economical hearing of the arbitration. Uses a check list of topics to be addressed, and requires the arbitrator to issue a written order of the decisions or agreements made. |
| R-24. Pre-Hearing Exchange and Production of Information | Information exchange measures to give arbitrator(s) a greater degree of control over the exchange of information, including electronic documents. |
| R-25. Enforcement Powers of the Arbitrator | Enforcement power of the arbitrator to issue orders to parties that refuse to comply with the Rules or the arbitrator’s orders. |
| R-34. Dispositive Motions | On prior application, the arbitrator may permit the submission of dispositive motions to dispose of all or part of a claim or to narrow the issue in a claim. |
| R-39. Emergency Measures of Protection | Availability of emergency measures of protection in contracts that have been entered into on or after July 1, 2015. |
Strategies for Saving Time and Money with the New Rules
Arbitration is intended to be faster and less expensive than litigation in Court. Although that does not always prove true, the New Rules suggest several strategies that might help arbitration realize on this age-old promise:
- Take The Preliminary Hearing Process Seriously. The New Rules contain many exhortations that the process should be efficient and cost effective. As with the preliminary conferences under Federal Rule 26, the R-23 Preliminary Management Hearing can be an opportunity to promote efficient proceedings.
- Consider the Fast Track. Under the Fast Track rules, there is no joinder or consolidation, the hearing must occur within 45 days, and the award must be rendered within 14 days of the close of the hearing. The presumed length of hearing is one day. Even the most contentious parties will have difficulty doing much damage to the schedule under these parameters.
- Proceed on Documents Alone. Similarly, claims under $25,000 are committed to the Document Submission Rules, and the parties may always agree to submit the case to submission on documents only. Under those rules, the arbitrator and parties will set a schedule to submit the documents, and establish a date for final submissions, perhaps in conjunction with a telephone conference. In cases where the issues are self-evident, or nearly so, such that a hearing will not add much to the evidence, a document only arbitration can certainly decrease the cost and time.
Conclusion
It remains to be seen whether any of the above changes will significantly affect the time and cost of construction arbitration with the AAA. But the tools are certainly there. Contact Thompson Lee-O’Halloran to learn more about how to use best position your arbitration for success.
