Your client is a contractor, subcontractor, or material supplier on a construction project and claims that it has not been paid for labor, services, and/or materials. The contract has an arbitration clause and your client wishes to arbitrate rather than litigate. The client also wishes to avail itself of its statutory construction lien rights. Many issues are raised when the remedy of lien enforcement and the contractually agreed dispute resolution process of arbitration are available. Among these issues are:
I. What are the risks that taking certain actions will result in a waiver of either lien rights or arbitration rights? For example, if your client follows the construction lien procedures in the applicable lien statute, such as sending a preliminary notice of lien and recording a claim of lien, would those actions result in a waiver of the right to arbitrate?
II. Must your client file a lien enforcement action in court; or can it simply make a demand for arbitration seeking to enforce the lien within the time period for filing a lien enforcement claim?
III. Does a mediated settlement waive lien rights? Does proceeding with arbitration and confirming the award act as a waiver of lien rights?
IV. Do arbitrators have jurisdiction to hear and determine a claim to enforce or discharge a lien?
V. If your client pursues arbitration and the arbitrator has jurisdiction over the claim, must you present evidence to support the lien enforcement claim absent a stipulation that the lien enforcement will be addressed later? Or is the failure to present evidence to prove the lien in arbitration a waiver of lien rights?