CONSTRUCTION INDUSTRY DISPUTE RESOLUTION
STREAMLINED BY NEW AAA RULES
Fall 2009

The American Arbitration Association’s Construction Rules have been updated to help return arbitration and mediation processes to the simpler and more cost-efficient proceedings they once were.

Construction contractual and tort disputes are often resolved in a world of their own.  Principals and attorneys alike regularly opt out of traditional litigation forums, instead resolving disputes before neutral arbitrators and mediators familiar with both construction law and trade practices.  As a result, many commonly used private and public works contracts call for construction disputes to be resolved by binding arbitration before arbitrators appointed by the American Arbitration Association (“AAA”) and administered in accordance with the AAA’s Construction Rules. 

As arbitration has grown, arbitrators are more frequently presented with counsel as familiar with the courts (and discovery and procedural processes they bring with them) as they are with the historic speed (and corresponding simplified procedures) that once came with arbitration.  As a result, arbitrations have become more like court proceedings.  Where arbitrators once directed all parties to simply exchange documents and witness lists in advance of evidentiary hearings, parties to arbitrations can now face scores of depositions, written discovery, “pretrial” motions and other procedures historically unseen in an arbitration.  As a result, parties who elected to opt out of litigation, in search of a speedy and less costly remedy to construction disputes, have complained that arbitration has failed to meet those goals. 

Customer feedback, such as that described above, was one of the sources the AAA used during its most recent review and revision of its Construction Rules. The AAA also sought comments from its executives, case managers, parties, counsel, and neutrals, individually and as part of focus group discussions, as well as AAA’s National Construction Dispute Resolution Committee.  The AAA announced new Construction Rules, effective as of October 1, 2009, that should provide all participants with clearer expectations and structure, shorter time frames, and enough flexibility for arbitrators to resolve construction disputes while meeting the original goals of providing a fair, cost-effective and efficient process. 

James M. Phillippi

Mr. Phillippi is Director of Knapp Petersen & Clarke and a member of the American Arbitration Association’s Panel of Neutrals, where he serves as an arbitrator on its Construction, Large Complex Case, and Commercial Panels.  

Email:  jmp@kpclegalcom