Arbitration
Does your contract have an arbitration clause? What does that
mean?
There has been a growing trend in the construction industry towards
settling litigation and disputes in arbitration.
Arbitration differs dramatically from normal litigation. Some
important points about arbitration are as follows:
- In arbitration you generally present your case to a single
individual that makes the decision. Sometimes there are three
"panelists" that sit as arbitrators, but the norm is to only have one
arbitrator. In litigation, you present your case to either a judge
or a jury.
- Arbitration does not usually utilize the rules of procedure or the
rules of evidence. As a result, arbitration usually allows
evidence into the "courtroom" that normally is not considered by the
judge or jury.
- The final hearing in Arbitration usually occurs much quicker than
the final trial in litigation. It is not unusual for the final
arbitration hearing to occur within four to six months. The
typical trial in district or county court does not usually occur prior
to 12 to 18 months, and sometimes much longer.
- Arbitration can be more costly. There is a misunderstanding in
the business community that Arbitration results in lower litigation
costs. Our experience is just the opposite. The reality is
that the amount of work a lawyer must do to prepare a case for trial in
arbitration is not materially different than what must be done for
litigation. Additionally, you still must pay the arbitrator.
It is not uncommon for the actual cost of the arbitrator (not including
the attorney's fees) to exceed $10,000.
- Arbitration can only be entered into if it is agreed to (in writing)
by all parties. Therefore, you must have either agreed before the
dispute arose (i.e. a clause in the contract) or have agreed after the
dispute arose to go to arbitration. Otherwise, you cannot be
forced to take your dispute to arbitration.
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