By Douglas J. Roberts, Esq.
If you are scouring your written contract to determine whether you are going to have to litigate a case in court, or whether you’re bound by an arbitration clause, then chances are you have already missed your best opportunity to choose your preferred method of dispute resolution – – at the time you signed the contract.
Absent a binding arbitration clause in a contract, the parties to a dispute will find themselves litigating their construction matter in state or federal court. Litigation and arbitration both have their pros and cons. In this article, we’ll discuss some of the more common ones.
The cost to initiate a lawsuit, typically filing fees and service of process, is usually around $500 or less. Conversely, depending on the amount of your demand, filing a demand for arbitration with the American Arbitration Association can run into the hundreds and sometimes thousands or even tens thousands of dollars. The filing fee in court entitles you to have either a judge or jury hear your dispute, however, this means that your fact-finder will likely not have any specialized knowledge in construction issues, which necessitates the use of expert testimony to bring home the facts to the layperson.
Arbitration, while more costly, typically will result in a single arbitrator or panel of arbitrators being appointed to hear your dispute. Most panel arbitration are members of the construction law bar, architects, engineers and contractors. Thus, while the cost of the forum can be significantly higher than a court filing, you are paying for what should be an arbitrator or panel of fact-finds that understand construction.
There is a significance difference between arbitration and litigation on the issue of discovery, or the process by which parties obtain information from one another in a dispute. Discovery in court in virtually unlimited and parties are free to request documents, serve interrogatories and requests for admission of important facts, take depositions of parties and non-parties and otherwise leave no stone unturned. Arbitration has no discovery unless permitted by the arbitrator and while parties typically agree to exchange documents and witness lists before final hearings, there are usually no depositions taken and the final hearings take place without much of the drawn out litigation that ensues in a construction law court case.
Finally, the right to appeal an arbitration award is severely restricted by statute and the opportunity for the losing party to overturn an unsatisfactory result is therefore minimal. In court, the losing party has the ability to file a “plenary” appeal, which means that it can raise any issue it claims was error as a basis to have a judgment reversed or demand a new trial. All of these considerations should be taken into account BEFORE you sign your contract, not after.
About the Author: Douglas J. Roberts has been Board Certified in Construction Law since 2005, the first year the Florida Bar offered its members the opportunity to achieve such a designation. He served as a judicial intern to the Honorable Arthur Birken, Broward County Circuit Court Judge, a certified legal intern with the Broward County State Attorney’s Office, and has practiced in the area of Construction Law for over 15 years, during which he has represented the FDCI, Hewlett-Packard, a Panel Bankruptcy Trustee in the Southern District of Florida, as well as general contractors, subcontractors, suppliers, sureties and owners in South Florida. Mr. Roberts has been recognized by his peers as a “Florida Super Lawyer” and focuses his practice exclusively on construction law related representation.