Originally from Dispute Resolution Journal

Guidance for construction professionals and counsel in structuring contracts and handling disputes to reduce aggravation and achieve better results. Tips range from the tried and true to the bold and daring.

Nothing in the nursery rhyme states that Humpty Dumpty was an egg or that the wall was in danger of collapse.1 If the rhyme were about a construction accident, we would say that this is an example of poor draftsmanship. What caused Humpty’s fall? Did the wall collapse? If so, was it defectively constructed or repaired? Who was responsible for constructing or repairing the wall? What did the contract documents say? What should they have provided? Were the sureties notified? What about “the king’s men”? Were they incompetent or excused by force majeure?

The only outcome construction professionals could deduce from this situation is that a potentially expensive and lengthy legal battle is likely to ensue. Arbitration would appear to be the superior forum. It is private; it uses a variety of streamlined mechanisms that make it quicker and less expensive than going to court; it is less aggravating and stressful; it gives the parties control over the process; and it allows them to select arbitrators with special construction skills and expertise.2 This removes the irrational jury factor and the possibility of a judge unfamiliar with construction deciding the merits in a bench trial. Arbitrators are more accessible than most judges and they do not make the parties wait months to decide pre-hearing motions. Arbitration is also less expensive because the grounds for challenging arbitration awards are extremely limited. The point to remember is that since arbitration is a private process, construction parties have the power to determine the rules of their arbitration universe.

This article provides guidance to help drafters of construction contracts and subcontracts, and construction professionals who sign them structure their projects and minimize disputes. It also provides tips for counsel and their clients when construction disputes arise and the arbitration process will be utilized. Despite all the skill and experience of construction professionals, there is no such thing as a perfect construction project. Problems and disputes are inevitable. Most projects encounter delays (which could have unexpected causes, such as a labor strike, bad weather, late delivery of materials, delivery of wrong or defective products, difficulty breaking ground, inadequate performance, change orders, and/or faulty design or workmanship). The tips suggest ways to help construction parties and their counsel protect their situation when problems do arise. They also alert them to certain key elements of the arbitration process and how to approach them with an eye to helping the arbitrators.