Unfortunately, despite the best efforts of everyone involved to have a comprehensive contract and to honor the terms of that agreement, it is the case that sometimes there are disputes which cannot be resolved without the intervention of a third party in the form of court litigation or binding arbitration. As a construction arbitration professional, Lisa Dudzik Australia would suggest that there are advantages and disadvantages to arbitration that should be weighed carefully before you decide what approach is best for you.
Time
If a timely resolution of a dispute is a prime consideration for your business, arbitration may be the best option because it generally proceeds more quickly than a court proceeding where backlogs are becoming common. Additionally, because there are only limited possibilities to appeal the outcome of a binding arbitration, there is less potential for proceedings to be indefinitely extended. However, a fast resolution depends on the commitment of all parties to adhere to agreed-upon deadlines, and on the willingness of the arbitrator to enforce the schedule in the case of delays.
Expertise
Because arbitrators are selected with input from the parties to the dispute from a pool of professionals with experience in the relevant industry, choosing to resolve disputes this way means that you are likely to have the situation dealt with by someone with experience in the construction industry. This is not insignificant because there are aspects to construction disputes that may not be familiar to a judge in a court setting. Additionally, in the court system judges are assigned and may or may not have any experience with construction arbitration.
Outcomes
It is often the case that arbitration results in outcomes that don’t heavily favour one side or another. For this reason, if you feel that you are entirely “in the right” it may be better to pursue a resolution of the dispute in the court system.
Privacy
In a court case, there will be a public record of the proceedings which may be reviewed by any member of the public. Arbitration is private process in that there is no public record kept (although this does not necessarily mean that the record is confidential).
Cost
If the arbitration process is relatively straight-forward, it may be less costly thank a litigation in the courts because there is no need to hire a lawyer, pay court fees, or the cost of the trial itself. That said, a complicated arbitration process is not inexpensive because the arbitrator’s time and location fees must be paid.
Different jurisdictions
In situations where the parties to a dispute do not reside in the same jurisdiction – as is often the case in large infrastructure projects – there is often a preference for arbitration. This is partly because the ability to choose arbitrators means that neither side feels the advantage of being the “home team.” It may also be easier to enforce the outcomes of arbitration across international jurisdictions as an international convention signed by 150 member states. National court decisions may be much harder to enforce in other countries.
Hopefully, through careful contracting and good will on all sides, there will be no need to bring construction disputes to a third party. If it becomes necessary, be sure to consider the options carefully to choose the best approach for your needs.