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How does construction arbitration work?

Contract disputes can be a headache, and it’s not why you got into construction in the first place. You entered this industry to do the work and do it well.

Nonetheless, a contract dispute is likely to come up at some point or another. In the construction industry, many of these contracts include a clause which mandates arbitration as the sold method for construction dispute resolution. If you have to arbitrate or want to consider this route, how does it work?

Arbitration: The basics

Arbitration was designed to offer a streamlined and cost-conscious option for resolving a legal matter outside of court. Not every circumstance would benefit from arbitration, but if both parties agree to it (or are mandated to start with arbitration in a written contract), a lawsuit can often be avoided.

Arbitration can take many forms, but in almost any scenario, an arbitrator or panel of arbitrators is selected for the hearing. Attorneys with expertise in construction law and contract disputes can assist with this role and provide an unbiased perspective.

Many contracts will specify the rules and timeline for resolving a dispute. The framework is like a courtroom trial, in that evidence is presented, witnesses are called and questioned, and arguments are made. It is usually a simplified form of the court process.

At the end, the arbitrator or arbitrators deliver a ruling, which is either binding or non-binding. That means either the arbitrator or arbitrator will make the final call, or their decision can be appealed. This is where arbitration differs from mediation – the arbitrator is neutral and has the authority to make a decision. Whether or not the arbitration ruling can be appealed depends on the terms of the contract.

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