RETURNING ARBITRATION TO AN EFFECTIVE PROCESS IN CONSTRUCTION CONTRACTS
William R. Joyce
In recent years, the arbitration process has been under increased scrutiny in both the local and national press. Lawyers and business commentators alike have expressed divergent views about whether arbitration, in practical terms, is any less expensive or time-consuming than litigation. That debate, however, has often focused on abuses of the arbitration process that make it more like traditional litigation, rather than on any inherent problems in arbitration and, as a result, has overlooked the fact that arbitration can be an efficient way to resolve disputes outside the court system.
Within the construction industry, that debate is particularly relevant. Deciding between arbitration and litigation as the favored dispute resolution process for disputes arising out of construction projects has
never been more important because of recent changes in the standard construction contracts published by the American Institute of Architects (AIA). Every 10 years the AIA revises and updates these standard
contracts, which are the primary contract documents used across the country on every type of construction project.
In early November 2007, the AIA released the latest revision to its most widely used standard contract document, AIA A201, “General Conditions of the Contract for Construction.” Under the 1997 version of A201, boilerplate provisions mandated that when disputes arise, the parties to the contract must participate in the arbitration process. But that is no longer true. Under the new version of A201, the parties must elect
William R. Joyce is a partner in Faegre & Benson’s Minneapolis office. He heads the firm’s construction law practice.