Mechanic’s liens are created by state statute and are enforced through foreclosure by a court of law, but only a “valid” lien that complies with the statutory requirements can be enforced. Considering the statutory/judicial foundation of the remedy, one might think that only a court can rule on the validity of a mechanic’s lien. What happens, however, when the parties to a construction contract agreed to have all disputes related to the contract decided by arbitrators?
An Illinois court recently ruled that the validity and enforcement of a mechanic’s lien are two distinct matters. While courts have exclusive jurisdiction to enforce a valid lien, parties may contract to have arbitrators decide the validity of a lien claim. The AIA contract documents have conferred such authority on the arbitrators.
The second case in this issue involves a contractor seeking relief from a firm-fixed-price federal construction contract. Neither an unexpected pandemic nor a government declaration of a public health emergency vitiated the fixed price. The risk of cost escalation rested squarely with the contractor.
The third case addresses the job site safety ramifications of a prime contractor’s contractual right to order a work stoppage. Does the broad right to stop work create a safety obligation to every worker at the site, including employees of subcontractors? Or, is control over the activities of those workers required before the contractor owes a duty to the workers?
