STA LEGAL LOG – July 2022
Co-Managing Partner (LI),
Kaufman Dolowich Voluck
Attorneys at Law Legal Counsel,
Subcontractors Trade Association
ARBITRATION VERSUS LITIGATION
By: Andrew Richards, Co-Managing Partner(LI), Kaufman Dolowich Voluck,
Attorneys at Law Legal Counsel, Subcontractors Trade Association
Is it better to arbitrate disputes or litigate them in a court of law? That depends on the language of the contract, whether the contractual provisions favor a party’s position, and the merits of the claims. For instance, if the contract contains notice provisions for bringing claims, that party with the claims would rather arbitrate because a judge will more likely dismiss a claim for which the contractual notice was not given while an arbitrator may very well overlook the notice provision and base his/her decision on the equities of the dispute. Another factor that should be considered by the payor is the costs involved in litigation or arbitration. Historically, arbitration proceedings have resolved disputes sooner than litigation. While court litigation can take a year to two years to bring a resolution to a dispute, arbitration proceedings can generally be concluded within a few months.
The qualification of the trier of fact should be taken into account in choosing arbitration or litigation. While a judge may have some experience adjudicating construction disputes, an arbitrator will no doubt have experience in construction disputes since the parties will mutually agree upon an arbitrator or the organization with whom the arbitration demand was filed will provide a list of potential arbitrators who are either contractors, architects, engineers or attorneys who concentrate their practice in construction law. If the resolution of a dispute requires construction knowledge, many clients become frustrated with court proceedings where the judge has little familiarity with construction or the construction process. An arbitrator possessing construction law knowledge will likely rule on the merits instead of conditions precedent in the contract.
In addition, judges within the last few years have dismissed delay claims not only on motions for summary judgment, but also on motions to dismiss. Judges have shown over the last few years that they have no interest in adjudicating complex construction and delay claims, and will “hang their hat” on any contractual provisions that give them “cover” to dismiss the claims. As a result, a subcontractor should choose arbitration over litigation if the subcontractor can negotiate such a provision.