By Bruce Jervis
Arbitration offers several advantages for resolving construction disputes. Many construction professionals consider it faster and more expeditious than court litigation. But a party that contractually commits to binding arbitration of disputes may not be allowed to change its mind. The party can be compelled to participate and will not be allowed to take the matter to court.
Disputes on construction projects frequently involve multiple parties working under different sets of contract documents. A problem can arise when some parties are committed to arbitration and others are not. It may be impossible to bring all parties together in a single forum to produce a result that is comprehensive, consistent and fair to all. A recent case in Florida illustrates.
A general contractor withheld payment from its steel fabricator because the sub had delayed the project. The dispute was submitted to arbitration in accordance with the terms of the subcontract. The masonry subcontractor filed a delay claim against the general contractor. This too was submitted to arbitration and consolidated with the delay dispute with the fabricator. The fabricator then asserted a delay claim against the masonry sub, alleging it was the real cause of the problem. But there was no contract – and thus no arbitration agreement – between the two subcontractors.
Have you encountered problems of this nature? In your experience, is any effort made to harmonize the dispute resolution mechanisms under the multiple sets of contract documents found on the typical construction project? I welcome your comments.