Many contracts for design and construction projects reference the American Arbitration Association’s (AAA) arbitration and mediation rules. Although no longer mandated in AIA and EJCDC contract forms, the AAA system often is seen as the default methodology to avoiding litigation.
The newly updated AAA Construction Industry Arbitration Rules and Mediation Procedures include more than a dozen revised or new provisions intended to produce a more streamlined, cost-effective, and tightly managed process.
According to the AAA, a significant focus was placed on the need for effective management of the arbitration process, hence the revised rules providing arbitrators with additional tools and authority to do so. The changes include the following:
- A mediation step for all cases with claims of $100,000 or more (subject to the ability of any party to opt out).
- Consolidation and joinder time frames and filing requirements to streamline these increasingly involved issues in construction arbitration proceedings.
- New preliminary hearing rules to provide more structure and organization to get the arbitration process on the right track from the beginning.
- Information exchange measures to give arbitrators a greater degree of control in limiting the exchange of information, including electronic documents.
- Enforcement power of the arbitrator to issue orders to parties that refuse to comply with the rules or the arbitrator’s orders.
- Permissibility of dispositive motions, such as motions to dismiss or for summary judgment, to dispose of all or part of a claim or to narrow the issue in a claim.
Basically, the AAA rules provide three tracks for arbitration pursuit, based on the value of the disputed amount. A fourth track allows for a decision regardless of amount, but to be submitted for a ruling by a single arbitrator based upon the inclusion of relevant documents and written arguments with no hearing.
The AAA added mediation to its dispute resolution process at the request of industry representatives, and mediation has proven effective in resolving construction disputes with less time and expense. Formerly, mediation was a prerequisite to arbitration, which resulted in delays to arbitration. Under the amended rule, mediation is required for all disputes exceeding $100,000, but takes place concurrently with the arbitration to avoid delay. Given the consensual nature of mediation, a party may unilaterally opt out if their agreement does not include mandatory mediation.
Although dispositive motions tend to have elements of court litigation and are less appropriate in arbitration because they can waste time and money and make the arbitration process less efficient, there can be instances where a pre-hearing motion disposing of a claim makes sense in arbitration, such as if a claim is clearly barred by the applicable statute of limitations. A new rule provides that upon prior written application, an arbitrator may permit motions that dispose of all or part of a claim or narrow the issues in the case.
A new rule provides a procedure if a party needs emergency interim relief in an arbitration case. The provisions include: appointment of an emergency arbitrator within one business day of receipt of a request for emergency relief; expedited determination of whether immediate and irreparable loss or damage requires emergency relief; and authority to require posting of security as a condition for an interim award of emergency relief.
The 2015 amendments to the AAA Construction Industry Arbitration Rules and Mediation Procedures are clearly aimed at providing parties and arbitrators the tools they need to enhance the efficiency and effectiveness of the arbitration process and maintain its desirability as an alternative to court litigation.