What is the Construction Arbitration Process?

is a process used to resolve disputes between contractors and clients in the construction industry. In this process, both parties agree to appoint an independent third party, known as an arbitrator, to resolve the dispute. The arbitrator will review the evidence and explanations presented by both parties and make a final decision, which both parties are bound to accept.

Arbitration is similar to litigation, but with less opportunity for appeal and the potential to damage the relationship between the parties involved. It is generally considered to be a less costly option than litigation and may be chosen by the parties initially agreed upon in their contract, required by government act or law, or ordered by a court.

One example of construction arbitration is the case of John T. Jones Construction Co. v. City of Grand Forks, North Dakota in 2003. In this case, John T. Jones Construction Co. was hired to expand the wastewater treatment plant in Grand Forks, ND. The City of Grand Forks claimed damages due to delays in completing the project and Jones Construction argued that the cause of the delay was due to unanticipated soil conditions on the site.

Both parties agreed to arbitration to resolve the dispute, and the arbitrator ultimately ruled that Jones was not entitled to any additional reimbursement or time extension, but that the City of Grand Forks was entitled to recover liquidity damages. The arbitrator also ruled that both parties would bear their own arbitration costs and attorney fees.