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03/15/2012

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Have been PM on many large projects with mandatory requirements for arbitration . This clause always was considered to be somewhat farcical as arbritration meant that the cost would be split down the middle. It should not be that way, but this occurs when the arbitrators are not truly experienced contructors, or have not studied in detail the specification and plans

I've experienced the same - Arbitrators seem to often seek only a division of costs, rather than making a genuine effort to determine who is responsible for the costs. As such we prefer non-binding arbitration first (sometimes it works) - then proceed directly to litigation.

I have been an AAA construction arbitrator and mediator since 1984 with well over 100 arbitrations conducted. Mr. Jervis is correct, the courts have severely limited the grounds for an appeal of an arbitration award. Arbitration, as an alternative dispute resolution process, was designed to be different and to take complex design/construction cases away from the courts who are generally ill-prepared to hear these cases. But the old canard of "splitting the baby" has been around since I started doing cases and is the subject of some debate within the association. I can honestly say in almost 30 years of hearing cases I have never once split a case 50/50, although I have split attorneys fees and costs this way. I have never even heard of an arbitrator admitting to doing this either. But Mr. Sullivan makes an erroneous assumption that is common to users of arbitration. The arbitrator can only rule on what is presented, period. I am a very experienced civil engineer and contractor. And many times I have wanted to dig into the plans and specs trying to find some basis for the dispute before me. But we are trained to allow the attorneys to present their cases and not go "fact finding" on our own. Can you imagine the ensuing chaos if a judge went out looking for his own information or evidence in a case? Bottom line is do your homeowrk before the award is issued not after because appealing an award is very difficult. And if you want better awards choose your arbitrator very carefully. Don't just rely on your attorney, get involved in the decision. You're paying for him not your attorney. And ask if they have ever "split the baby". Most of us would consider that a fair question. But if the arbitrator fails to adequately study the plans or specs look to your attorney for how he/she presents your case. Arbitrators begin a case with zero knowledge and must get up to speed within days of the hearing. Often we are presented with thousands of documents and then told by the attorneys which documents are actually relevent. It is the party's job to make sure that your arbitrator, or panel, gets the right information in order to make a fair and informed award.

In my own experience, the arbitrator was fair and impartial--he was an AAA man, picked from three who was selected by both parties. I had a lawyer present, but was permitted to make my case myself. The arbitrator was a civil engineer of long experience, although the case centered on a an architectural contract. The facts of the case centered on the design of Phase 2 of a contract. The owner reniged on a committment to pay for Phase 2 on a date certain. A pack-rat Job Captain had kept a set of DD drawings he'd reviewed with the owner and had the owner inital, including a note of when the work was to be completed. Upon seeing these drawings, the arbitrator concluded the owner was trying to weasel out of the committment due to the poor economy, and awarded us full payment and attorney's fees and costs.

A side note: The owner had ceased doing business in my state and refused to pay, but my lawyer had the award converted to a Federal judgement and had it recorded in a neighboring state where the owner was doing business, JUST BEFORE the owner was closing a land deal, and had to settle with us before the deal would close. You've gotta be persistent to deal with sharks like this.

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