Construction law folder

Construction Arbitration

Arbitration has been a favourite method of resolving disputes in the construction and civil engineering industries for many decades, allowing disputes to be settled by experienced and appropriately qualified experts (as opposed to a judge in a court setting).

What is construction arbitration?

Strictly speaking, arbitration is another form of Alternative Dispute Resolution (ADR), being an alternative to litigation, but it is a procedure that can only be adopted where the parties have consented, for example, by expressed agreement, or by reference to arbitration giving rise to a right to arbitrate under the Arbitration Act 1996.

There is often a clause in the construction contract allowing for arbitration proceedings to be launched if a dispute arises. However, parties can still agree that the best way to resolve a dispute is by the process of arbitration even if such a clause does not exist.

The arbitration process

To refer a dispute to arbitration, it is a pre-requisite that there is an arbitration agreement in writing. In order to determine whether there is an arbitration agreement in place, certain components in the agreement are required to be present.

In many cases, parties have a dispute resolution provision in their contract that requires the parties to mediate first. If mediation is unsuccessful they can then submit the dispute to arbitration.

If an arbitration agreement exists, the terms may stipulate what the procedure is to appoint an arbitrator; alternatively, the Arbitration Act 1996 gives a default procedure.

Once an arbitrator (or arbitrators) is appointed, it is common for a preliminary meeting to be held between the parties, legal representatives and the arbitrator, to examine the dispute and agree on a process and timetable.

Both parties then have time to prepare for presentations, exchange information and provide written evidence to the arbitrator for review before the hearing.

At the hearing, both parties present their evidence and witness statements to the arbitrator. The hearing isn’t as formal as a litigation hearing although the process is similar. Once the arbitrator has considered all the information and evidence, he will make a decision and dictate the award. 

Unlike statutory adjudication, an arbitration award is final, save for very limited rights of appeal.

Advantages of arbitration

  • Arbitration is held in private with no public record of proceedings.
  • Ability to choose an arbitrator with relevant experience in the given matter.
  • The arbitration process is truly international. Parties to a contract can be based in different parts of the globe, with the subject matter in another part of the world, whilst the substantive law of the contract, the law of the seat, and the law of the arbitration agreement, could all be different from the parties’ home countries and the country of the subject matter.
  • If the dispute is uncomplicated, the speed of proceedings is likely to be short as there are obligations by all involved to save on costs.
  • Decisions are binding.

Is arbitration the right choice for me?

The decision whether to opt for arbitration over other dispute resolution procedures is an important one.  Time, expense, the experience of the arbitrator, and the binding nature of arbitration are all factors that should all be carefully considered.  

Although domestic arbitration has fallen out of favour in recent years because of the growing preference for adjudication, arbitration remains a preferred choice for complex dispute resolution cases. Certain cases require levels of detailed and careful examination that only arbitration can offer.

If you are unsure whether arbitration is the best option for you, get in touch with Michael Gerard Solicitors who will be able to advise you on the best dispute resolution options available for your situation.

Construction arbitration solicitors

At Michael Gerard Solicitors, we are able to manage the whole arbitration process, from advising whether a valid arbitration agreement exists, appointing an arbitrator, representing a party in arbitration proceedings, to enforcement of an award or, if necessary, challenging the award.

To speak to a solicitor at Michael Gerard Solicitors about a construction dispute of any kind, call us on 01858 414 290 or alternatively, send us a message.