Licensed Architect - Winter 2015 - (Page 8)

Legal Issues The New Construction Industry Arbitration Rules BY SHAWN GOODMAN T he American Institute of Architects (AIA) form contracts provide for American Arbitration Association (AAA) arbitration of disputes between the parties if they elect arbitration by checking the box that calls for it.1 This past summer, AAA implemented some significant changes to its "Construction Industry Arbitration Rules and Mediation Procedures." The following is a brief summary of some of the more significant ones. Rule R-7, Consolidation or Joinder: The former R-7 was flawed. It included no limitation on when a party could ask for consolidation of arbitrations or joinder of additional parties. It was also silent on how much time an objecting party would be allowed to respond. As a result, former R-7 was rife with the possibility of misuse in the name of gamesmanship. It was not unheard of for a party to wait until the eve of arbitration to file a request for consolidation or joinder, which would require the appointment of a separate, R-7, arbitrator to decide it. If that arbitrator allowed the consolidation or joinder, the whole proceeding would be delayed, and worse, while the new parties were brought in, allowed additional time to do discovery, etc. The new R-7 calls for any requests for joinder or consolidation to be forthcoming before the "Merits Arbitrator" is selected, or before the passage of ninety days after AAA determines that all filing requirements have been satisfied, whichever comes later. Late requests can be considered only on a showing of good cause. This change should cut down on the above-described gamesmanship by ensuring early requests for joinder and consolidation, and substantially cutting down on all of the problems which late joinder and consolidation used to engender. The new R-7 also sets forth response times: ten or fourteen days, respectively, after AAA's notice of the request for either consolidation or joinder. If a party to the arbitration does not object to a joinder request, it waives any objection. The new R-7 also allows AAA to stay arbitrations while the R-7 arbitrator decides whether to allow or deny consolidation or joinder. 8 | Licensed Architect | Winter 2015 Rule R-10, Mediation: Prior R-10 merely included a statement that the parties could, if they consented to it, mediate their dispute. It also set some limits on arbitrator participation in mediation. The new R-10 "kind of" calls for mediation if any claim or counterclaim is more than $100,000. However, the requirement is rather hollow because, unless the underlying contract mandates mediation, either party can opt out after giving notice to AAA and the opposition party. Of course, the AIA contracts already do mandate mediation as a condition precedent to any further dispute resolution, so new R-10 will not affect proceedings brought arising out of AIA agreements.2 Rule R-23, Preliminary Management Hearing: This rule has been completely rewritten. The old one did require a preliminary hearing and set forth a list of topics to be discussed at it. The new R-23 leaves to the discretion of the arbitrator whether to hold a preliminary hearing and, if so, the timing of it.3 The new rule further provides that, at the hearing, the "parties and the arbitrator should be prepared to discuss and establish a procedure for the conduct of the arbitration that is appropriate to achieve a fair, efficient, and economical resolution of the dispute," and references new rules P-1 and P-2 for the topics to be addressed. P-1 takes up the purpose of the hearing, stating that "[c]are must be taken to avoid importing procedures from court systems, as such procedures may not be appropriate to the conduct of arbitrations as an alternative form of dispute resolution that is designed to be simpler, less expensive and more expeditious." P-2 includes a more detailed list of topics than did former R-23, e.g., site visits or not, and allocation of costs in cases of burdensome discovery. Rule R-24, Pre-Hearing Exchange and Production of Information: The old R-24 allowed the arbitrator to "direct...production of documents and other information" and "resolve any disputes concerning the exchange of information." The new R-24 starts off by talking about "efficient and economical resolution of the dispute," but then goes on to say that the arbitrator can "on application of a party or on the arbitrator's own initiative:" i. require the parties to exchange documents in their possession or custody on which they intend to rely;

Table of Contents for the Digital Edition of Licensed Architect - Winter 2015

President’s Letter
Legal Issues The New Construction Industry Arbitration Rules
ADA Advice Accessible Showers: The Devil is in the Details
Conference Recap
ALA New Members
Continuing Education Architectural Coatings: Field Performance and the Application Process
Chapter News
Second Chances: Evaluating Repair Approaches for Historic and Contemporary Window Systems
Insurance Information “Go” “No-Go” Project Evaluation
Firm Management Want To Be More Profitable? Here’s How
Index to Advertisers

Licensed Architect - Winter 2015