{"id":1247,"date":"2013-01-29T08:22:15","date_gmt":"2013-01-29T15:22:15","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=1247"},"modified":"2013-01-29T08:22:22","modified_gmt":"2013-01-29T15:22:22","slug":"the-only-four-good-reasons-to-put-arbitration-in-your-contract","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/the-only-four-good-reasons-to-put-arbitration-in-your-contract\/","title":{"rendered":"The Only Four Good Reasons to put Arbitration in Your Contract"},"content":{"rendered":"<p>Liz Kramer &#8211; January 4, 2013<\/p>\n<p>Let\u2019s say you are considering updating your form contract, or you are in the midst of negotiating a new contract with someone. Should you include mandatory arbitration for resolving any disputes? Assuming you have the choice, my view is you should only include arbitration if at least one of these four factors are present:<\/p>\n<p>Having a knowledgeable industry professional decide the dispute is very important (an architect, engineer, doctor, reinsurance expert, etc), instead of a judge or jury without that expertise, because disputes are likely to be very technical.<\/p>\n<p>Keeping the proceedings confidential (and not publicly available in court filings) is very important to you. (Although, if either party moves to vacate, much of your arbitration proceeding could become part of a court record.)<\/p>\n<p>You do not want class actions. (They can be precluded in an arbitration agreement; it is less clear whether they can be precluded without an arbitration agreement.)<\/p>\n<p>You want to arbitrate because other parties on the same project or deal have arbitration provisions. (For example, if the owner and general contractor on a construction project are bound to arbitrate, the owner and architect may also want to agree to arbitrate in case the architect is implicated in claims between the owner and general.)<\/p>\n<p>It is a relatively short list. But, in my view, these are the only four bases on which arbitration has a significant advantage over litigation. You will note that speed of resolution is not on the list (unless parties opt for expedited proceedings, arbitrations generally take about as long as court proceedings \u2014 the median case valued between 1 and $10 million dollars administered by the AAA took 414 days to get to an award). You will also note that cost is not on the list (in my experience on complicated commercial matters, there is no cost saving to arbitration and I found a recent study supporting my anecdotal evidence). Speed and cost used to be the primary reasons people chose arbitration.<\/p>\n<p>There are other potential reasons to choose arbitration that I am also discounting. For example, the risk of an illogical jury verdict is not significantly greater in my mind than the risk of an illogical arbitration award. I also do not see any advantage to the greater informality and looser rules in arbitration, or find it less adversarial. And, although you can make someone conduct the arbitration hearing in the basement of your building, you could just as easily have a forum selection clause choosing your home town courthouse in most circumstances, so I do not count that as a big advantage for arbitration.<\/p>\n<p>It\u2019s the start of a new year and a great time to step back and revisit our reasons for inserting arbitration in our contracts.<\/p>\n<p>via <a href=\"http:\/\/www.lexology.com\/library\/detail.aspx?g=5732b2d6-aed8-40ac-abd8-26eef41393b3&amp;utm_source=Lexology+Daily+Newsfeed&amp;utm_medium=HTML+email+-+Body+-+Federal+section&amp;utm_campaign=Lexology+subscriber+daily+feed&amp;utm_content=Lexology+Daily+Newsfeed+2013-01-09&amp;utm_term=\">The only four good reasons to put arbitration in your contract &#8211; Lexology<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Liz Kramer &#8211; January 4, 2013 Let\u2019s say you are considering updating your form contract, or you are in the midst of negotiating a new contract with someone. Should you include mandatory arbitration for resolving any disputes? Assuming you have the choice, my view is you should only include arbitration if at least one of&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/the-only-four-good-reasons-to-put-arbitration-in-your-contract\/\">Continue reading <span class=\"screen-reader-text\">The Only Four Good Reasons to put Arbitration in Your Contract<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[41,9],"tags":[280,72],"class_list":["post-1247","post","type-post","status-publish","format-standard","hentry","category-arbitration","category-construction-contracts","tag-aribitration","tag-construction-contracts-2","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>The Only Four Good Reasons to put Arbitration in Your Contract - Advise &amp; Consult, Inc.<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/the-only-four-good-reasons-to-put-arbitration-in-your-contract\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Only Four Good Reasons to put Arbitration in Your Contract - Advise &amp; Consult, Inc.\" \/>\n<meta property=\"og:description\" content=\"Liz Kramer &#8211; January 4, 2013 Let\u2019s say you are considering updating your form contract, or you are in the midst of negotiating a new contract with someone. 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