What is arbitration process in the construction industry? Arbitration, mediation, litigation. These words are very common in the construction industry. Because the industry is full of disputes.
There are a handful of ways to resolve disputes in the construction industry. But the arbitration is the most used method apart from the litigation. In the process of arbitration, Both the parties are agreeing and appointing an independent third party (the arbitrator) to resolve the matter.
Based on the presented evidence and explanations the arbitrator can give a final decision which both parties bonded to accept. Therefore appointed arbitrator should be an expert on the resolving conflicts reasonable way.
Arbitration is very similar to litigation method. Because there are few opportunities to appeal against the decision made by the arbitrator. The main disadvantage of this method is that it can break the relationship between the parties involved.
Appointing of an arbitrator can happen,
- The initially agreed agreement (under the contract) by the parties
- By statue (by government act or law)-Government acts may recommend when and where to resolve disputes using arbitration(The Arbitration Act 1996).
- By order of the court -Court can order to resolve conflict such as minor claims, by using arbitration
what is arbitration- Main characteristics
- lesser cost than litigation and arbitrator can decide whom to bear the costs of the process or how to divide the cost of the process,
- Because of the arbitrator’s given power he or she can thoroughly make a final decision,
- Finality is guaranteed since any of the party has a restricted chance to challenge the decision
- Transparency will be there hence arbitrator should point out the reasons for the final decision made,
- All the matters and evidence presented will be confidential,
- The final decision will be made based on the presented evidence
- Since appointed arbitrator is an expert of the selective discipline process will have more pace.
What is Arbitration-Case study
John T. Jones Construction Co. v. City of Grand Forks, North Dakota (2003).
Project:- Expansion of the wastewater treatment plant in Grand Forks, ND.
Due to delays on completion of the project City of Grand Forks has recovered liquidity damages of 800$ per day from Jones construction. The contract completion date of the project is November 15, 1999, but the actual completion date of the project is March 20, 2000.
Jones claims that cause of the delay as unanticipated soil condition of the site. And they requested $191,570.59 from the Grand Forks.
After several negotiations both the parties are agreed to follow an arbitration procedure to resolve conflict.
After eight days Arbitrator has given decision with 33 pages of a document stating that Jones is not allowed for any additional reimbursement or time extension under the unanticipated site condition. Right of Grand to recover liquidity damages is confirmed by the arbitrator, Furthermore decision has stated that both the parties to bear own arbitration costs and attorney fees.
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Check our article What is the Mediation process