AIA Documents Offer Dispute Resolution Choice
Kegler Brown Construction Newsletter April 1, 2006
For a very long time, the AIA contract documents have mandated arbitration under the American Arbitration Association ("AAA") rules. In its recent design-build contract documents, AIA has deviated from this tradition and now allows the parties to the contract greater flexibility to determine (by checking a box) whether they favor litigation or arbitration.
Parties ought to think hard about whether they want to arbitrate or litigate any dispute. Those arguments favoring arbitration typically include that it is often (but not always) less expensive and speedier than litigation, and that arbitrators are generally knowledgeable about construction. Those favoring litigation argue that they prefer the ability to appeal an adverse decision, particularly if it involves a large sum of money. Many make the decision based upon their level of confidence in the local courts, some of which can have crowded dockets. In any event, freedom of choice has entered the AIA documents arena.
Apparently AAA is considering an appeal process for arbitration disputes involving more than $500,000.00, when an appeal process is specifically drafted into the arbitration clause. ASA opposes this appeal process for fear that it will further erode the purported advantages of arbitration – a speedy and cost effective result.