International Construction Law Review
NEW RULES FOR EXPEDITED CONSTRUCTION ARBITRATION IN THE UNITED STATES
JESSE B GROVE III
Retired Partner, Thelen Reid Brown Raysman & Steiner LLP 1
The United States construction industry originally embraced arbitration primarily because litigation in state or federal court costs too much and takes too long.2
Arbitration is now subject to the same criticism. Cost and delay (one inevitably goes with the other) are now the main concerns about arbitration under the rules most widely used. One often hears the lament that “the lawyers have taken over the process”, but what that really means is that the process has become too expensive in the hands of lawyers doing things very much like they do in court.
This is no minor issue. Small disputes can hardly be said to be worth the effort. Large disputes produce legal fees that can mount into the millions. Clients are making their lawyers miserable with complaints and the lawyers, once stuck in the process, are helpless to do anything about it. Countless unproductive hours are spent on budgeting, mostly serving to increase the friction due to the woefully inexact nature of the game. Pressures are applied to hourly rates and staffing. Some in-house counsel are making reputations by ratcheting down outside legal costs regardless of the wisdom of their techniques for doing so. There is hardly any gathering of construction lawyers today that does not feature a panel agonising over how to control costs of dispute resolution.
How we got to this point does not matter. Suffice to say that there will always be tension between dispute resolution efficiency and due process. When organisations like the American Arbitration Association (“AAA”) set up task forces to work on arbitration rules there are fierce battles between those who want the full (or fuller) panoply of procedural protection and those who just want to get it done. The divisions are usually identifiable as being between those who normally expect to be seeking damages (contractors, subcontractors) and those who normally expect to be resisting claims (employers, contractors). This is not always the case. Any party with a “bet the company” dispute wants as much due process as possible while
1 The author was the Chairman of the drafting sub-committee of the International Institute for Conflict Prevention & Resolution (CPR) Construction Advisory Committee which produced the new Rules described in this article.
2 That was a big step. Hundreds of years of development of evidentiary and procedural protection of due process and fairness was essentially cast aside in favour of arbitrator discretion.
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New Rules for Expedited Construction Arbitration in the US
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