ARBITRATION OF CONSTRUCTION CLAIMS
By Attorney Randall J. Andersen
October, 2012
By Attorney Randall J. Andersen
October, 2012
Disclaimer: The information contained on this page is not legal advice. The information provided on this website is for general informational purposes and is not necessarily updated to account for changes in the law. You should consult with an attorney for legal advice regarding your individual circumstances.
Arbitration clauses are favored by the court system in Wisconsin. The Wisconsin Arbitration Act, which was enacted in 1931, provides that agreements to arbitrate disputes are enforceable. The agreement to arbitrate must be in writing, and is usually included as part of the original construction contract.
With arbitration, the parties select an independent arbitrator, rather than the court system, to resolve disputes. The theory supporting arbitration is that it allows for a speedier, simplified method for resolving disputes. Because the process is expedited, it can result in cost savings to both parties.
Litigation usually involves a public hearing. Arbitration proceedings are generally not open to the public. With arbitration, there is limited discovery (meaning depositions, interrogatories, etc.). Strict adherence to the rules of evidence is not required in arbitration proceedings. Arbitrators frequently have expertise in the industry, which can be of value in resolving disputes. The decision of the arbitrator is usually final, and an appeal is possible only in very limited circumstances (which may be viewed as an advantage or disadvantage, depending on which side of the table you are on).
The fact that discovery (meaning depositions and interrogatories) is limited in arbitration proceedings may also be viewed as an advantage or a disadvantage, depending on your point of view. Limited discovery means less expense to the parties, but in some cases it could interfere with the ability to prepare your case for hearing.
Some arbitration agreements provide for arbitration proceedings to be presided over by a panel of more than one arbitrator (frequently three), particularly for larger disputes. Since the parties are responsible for paying the arbitrators (and their own attorneys) this can increase the cost of arbitration significantly. With litigation, on the other hand, the parties are not responsible for paying for the judge’s time (other than the payment of a nominal filing fee to start the lawsuit).
The lack of appeal rights means that the parties must be careful to select an arbitrator who is competent and unbiased.
One problem with arbitration that we encounter from time to time is the situation where not all parties have signed a contract agreeing to arbitrate disputes. This can lead to a situation where both arbitration and litigation take place with disputes originating from the same construction project (which usually is not an efficient way to resolve disputes).
Advantages of litigation over arbitration include the fact that there is a large body of law which directs how disputes in litigation are resolved. A judge is assigned to the case by the court system, eliminating the need for the parties to argue over who should serve as arbitrator. If the parties are not satisfied with the decision at the trial court level, they normally have the right to appeal to the Court of Appeals.
With smaller disputes, litigation was sometimes viewed as favorable because it avoids the need to select and pay for the services of an arbitrator. However, in recent years, organizations such as the American Arbitration Association have attempted to streamline the process and reduce the cost of arbitrating smaller disputes.
With arbitration, the parties select an independent arbitrator, rather than the court system, to resolve disputes. The theory supporting arbitration is that it allows for a speedier, simplified method for resolving disputes. Because the process is expedited, it can result in cost savings to both parties.
Litigation usually involves a public hearing. Arbitration proceedings are generally not open to the public. With arbitration, there is limited discovery (meaning depositions, interrogatories, etc.). Strict adherence to the rules of evidence is not required in arbitration proceedings. Arbitrators frequently have expertise in the industry, which can be of value in resolving disputes. The decision of the arbitrator is usually final, and an appeal is possible only in very limited circumstances (which may be viewed as an advantage or disadvantage, depending on which side of the table you are on).
The fact that discovery (meaning depositions and interrogatories) is limited in arbitration proceedings may also be viewed as an advantage or a disadvantage, depending on your point of view. Limited discovery means less expense to the parties, but in some cases it could interfere with the ability to prepare your case for hearing.
Some arbitration agreements provide for arbitration proceedings to be presided over by a panel of more than one arbitrator (frequently three), particularly for larger disputes. Since the parties are responsible for paying the arbitrators (and their own attorneys) this can increase the cost of arbitration significantly. With litigation, on the other hand, the parties are not responsible for paying for the judge’s time (other than the payment of a nominal filing fee to start the lawsuit).
The lack of appeal rights means that the parties must be careful to select an arbitrator who is competent and unbiased.
One problem with arbitration that we encounter from time to time is the situation where not all parties have signed a contract agreeing to arbitrate disputes. This can lead to a situation where both arbitration and litigation take place with disputes originating from the same construction project (which usually is not an efficient way to resolve disputes).
Advantages of litigation over arbitration include the fact that there is a large body of law which directs how disputes in litigation are resolved. A judge is assigned to the case by the court system, eliminating the need for the parties to argue over who should serve as arbitrator. If the parties are not satisfied with the decision at the trial court level, they normally have the right to appeal to the Court of Appeals.
With smaller disputes, litigation was sometimes viewed as favorable because it avoids the need to select and pay for the services of an arbitrator. However, in recent years, organizations such as the American Arbitration Association have attempted to streamline the process and reduce the cost of arbitrating smaller disputes.