Everyone’s first question… WHAT WILL IT COST? The price of filing and managing an arbitration case varies across the country. Perhaps the best known Arbitration company – the AAA American Arbitration Association – has on their website the following costs; for Construction Claims up to $75,000, an Administrative Fees of $1,550 based on an ‘Initial Filing Fee’ of $750 along with a ‘Final Fee’ of $800 (due before the first hearing is scheduled). So, at the AAA it costs $1,550 to schedule a hearing where the claim is less than $75K, and then the other party must also pay a second Administrative Fee $1,550 if they file a counterclaim, bringing the Administration Costs to $3,100. The AAA also charges an additional fee to rent the room that the arbitration will be held in. In addition to those charges, you must pay for the arbitrator. Rates charged by arbitrators typically range between $250-$750 per hour (per arbitrator). At the present time, when both parties are cooperative, DMA is offering the Arbitration Administration Fee FREE OF CHARGE and the arbitrator charged at the rate of $350 per hour, subject to Arbitrator availability. Case manager is billed at $75 per hour. Most cases are resolved in a day or less. Most hearings are held directly at the jobsite, so there is no room rental fee in most cases. Fair, reasonable and rapid solutions to construction related disputes... reasonable in process, reasonable in decision, reasonable in costs. Is arbitration a new thing? No, arbitration has been around a long time, in fact, it is likely the oldest form of dispute resolution known to man. You just hear about it more often now because more and more people are turning to arbitration as the means to settle their dispute. In the past, having a town elder or a tribe elder resolve disputes was the means to settle disputes long before the concept of a United States, let alone our judicial system even existed. The origin of the word ‘arbitrate’ is from the mid-16th century from the Latin arbitrat- ‘judged’ from arbitrari, from arbiter “judge, supreme ruler.’ How long does the process take? It depends, sometimes an on-site arbitration can be filed, heard, decided and resolved in about a week. Other times it could take longer, especially if the parties don’t have a pre-agreed to arbitration agreement as part of their contract. Both sides need to agree to arbitrate, and if there is no prior agreement to do so, it could take some time for both parties to agree, then to agree on a date, etc. How long it takes depends more on the parties involved than the process itself. Once the parties have agreed on a date and time, a simple dispute could be decided in as little as a few hours. Complex cases with multiple parties, could take several days or longer. We try to resolve DMA cases in single day hearings, but it is up to the parties involved. The parties decide how long the hearing takes. By focusing on the relevant facts, the hearing can be quite short. The short answer is that from start to finish arbitration process from the date filed to decision typically takes a few weeks or as little as just a few days – as compared to the litigation process which is often a year or longer to resolve the same dispute. What does binding mean? Binding means that the decision is final, and the parties are compelled to abide by the decision written down in the award by the arbitrator. Since there is little or no right to appeal, binding arbitration really means it is over. In litigation, when you win your lawsuit, the other party typically appeals the case, and the process (and the attorneys’ fees) continue. Our arbitration clause is signed, but it’s a vague ‘boiler plate’ clause, can we still use DMA? Yes. If the parties to the dispute agree that they want an expert in the field of construction as their arbitrator, it’s possible for the DMA arbitrator to preside over their hearing using either the DMA Rules & Procedures, or other rules if so specified in the parties agreement. The choice is up to the parties involved. What is mediation? In mediation, the parties typically sit in separate rooms. The mediator travels back and forth between rooms bringing offers back and forth between the parties. The mediator usually does not have the authority to make recommendations. They just reiterate offers made by each party to the other party of the dispute. Anything decided at the mediation is usually not binding, and the parties are not compelled to abide with their mediation result. How do the courts feel about private arbitration? The courts love private arbitration. Why? Because it lessens the burden on their case load. Arbitration takes cases that would otherwise ultimately be on the court’s docket, and have those cases settled privately out of court. Why did the court order me to go to non-binding arbitration? Our courts are overwhelmed. One way the courts have tried to alleviate the work load is to adopt arbitration themselves as a means to streamline their own process. Attorneys like non-binding arbitration because it’s like a ‘test run’ trial. The attorneys often see how the other side will put on their entire case, and they get an idea how the arbitrator receives the evidence, so they can make appropriate changes before the trial. The parties often need to put on their best case in the arbitration, because the judge tends to agree by the arbitrator’s findings, and the loser in court-ordered non-binding arbitration hearings sometimes find themselves trying to prove to the judge why the judge shouldn’t find the same result. Why is it sometimes hard to get good legal advise on arbitration? ADR stands for Alternative Dispute Resolution. Mediation, arbitration, binding arbitration are all forms of ADR. ADR eliminates the process involved with litigation. Most attorneys make the majority their living off the process of the law, not off the result of their efforts, therefore some attorneys view ADR not as Alternative Dispute Resolution, but as Annual Decline in Revenue. That said, in the past 15 years or so, many more attorneys have jumped on the band wagon, and have trained and become arbitrators themselves, so there are more attorneys who are knowledgeable about arbitration using industry experts as arbitrators, and advise their clients to incorporate arbitration clauses for their clients since it’s often in their clients best interest. Why did I used to hear so many bad things about medical arbitration? What is that? There are those who argue that the patients in medical arbitration cases, had little or no choice in signing the arbitration clauses, as they would be refused medical attention at many places and even refused medical insurance in some cases for refusal to sign the arbitration clause; thereby, making the voluntary requirement in question. The patient might have little or no other choices for medical treatment and possibly signs under duress. Additionally, others feel that the neutrality of the arbitrators appointed by such large corporations, like the insurance companies, is in question. These sorts of issues are not common to the construction related disputes that DMA is involved with. The only arbitration I’ve heard of is Baseball Arbitration. How does that differ from this? In baseball arbitration the player picks a number (for salary) and says, “that’s what I’m worth”. The owners pick a number and say, “that’s as much as I’m willing to pay.” At the arbitration, the owner presumably brings their number up a little. The player presumably brings their number down a little. Based on their knowledge of the industry and specifically on player salaries paid to other players of similar abilities, the baseball arbitrator must pick one of the two numbers, either the owner’s amount, or the player’s amount, which ever seems to be more reasonable. The arbitrator is not authorized to award a number in between the two parties’ requests. What if I want to arbitrate and the other party does not? That depends. If the other party has not agreed to arbitrate, they cannot be forced to do so. Arbitration is voluntary. However, if the other party has already signed an arbitration agreement and is unable or unwilling to participate, the arbitration can, in some cases, take place without the other party being present. It depends on the arbitration clause that the parties agreed to. If the arbitration agreement or the rules and procedures state that the arbitration cannot take place without the other party present, you may need to consult an attorney, and possibly file a ‘Motion to Compel Arbitration’, or take other action. Refer to the DMA Rules & Procedures Section 21: Participation & Attendance for the DMA rule regarding non-participation. Construction_Arbitration_Rules_%26_Procedures.htmlshapeimage_2_link_0

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