There is no “one-size-fits-all” approach to choosing the dispute resolution procedure in construction contracts. The appropriate form of dispute resolution depends on the particular situation of each project and the parties’ priorities. In this article, I will give you some things to consider when deciding whether arbitration makes sense as the form of dispute resolution for your next project. Read more.
Cost is usually the first consideration, and there are two sides to this coin. If you choose to have a private organization administer the arbitration proceeding, those organizations tend to charge a filing fee that, in my experience, is significantly higher than the filing fee you may pay to a court to file a lawsuit. In most instances, you also will have to pay the arbitrator(s) for their time devoted to the arbitration. You don’t have to pay a judge or jury for their time to decide your case.
Attorneys’ fees and costs are also an issue. Arbitration is intended to be more streamlined and efficient, but large cases will still require the cost of significant discovery and possibly experts to help prove claims and support defenses. That said, you can control those costs relatively effectively in arbitration. The parties can agree up front on the scope of discovery, number of experts, etc., to control costs. Further, most arbitrators understand that arbitration is supposed to be relatively simplified and will make decisions geared toward reasonably limiting discovery and avoiding unnecessary motions.
