Arbitration Preparation Guidelines

Pre arbitration resolution attempts

You have either initiated the arbitration process, received a demand for arbitration or are about to enter the arbitration process. Many contracts, specifically the AIA contracts include a section on resolution that mandates: 1) provide the dispute to the architect, 2) mediate the dispute, 3) file for arbitration. Many disputes do resolve via the architect and mediation. However, mediation can be costly and it is recommended that both sides attempt to limit the time, costs and parameters of meditation.

How to Commence an AAA Arbitration

1. By Demand for Arbitration

If the contract or insurance policy has an arbitration clause providing for arbitration under the rules of the American Arbitration Association, the following steps are necessary to commence arbitration:

(1) Complete and sign the Demand for Arbitration forms in triplicate. This form may be found on the AAA’s Web site, www.adr.org. Use of this form is not mandatory; a dispute may be filed with the AAA by correspondence provided all of the necessary information is provided. Keep copies of all documents for your own records.

(2) Attach a copy of the arbitration clause contained in the contract or insurance policy to each completed Demand.

(3) Send one of the completed Demands with a copy of the clause to the respondent (the other party to the arbitration). Some states require that the Demand be forwarded by Certified Mail-Return Receipt Requested. Please check your state’s arbitration statute if you are uncertain about this requirement.

(4) Send the two remaining Demands with copies of the clause to the Case Management Center of the AAA cited in the contract or, if no locale is specified, to the AAA Case Management Center nearest the desired hearing site. Include a check or charge card authorization for the appropriate filing fee with the Demands. The fee schedule can be found in the enclosed rules, or in the rules posted on the AAA’s Web site located at www.adr.org.

The respondent will file an answering statement which may include a counterclaim. Filing of a counterclaim will also require the same fee structure noted below.

By Submission to Arbitration

If there is an existing dispute with no arbitration clause, or an arbitration clause that does not provide for arbitration under the AAA rules, the parties may file a submission agreement to the AAA for administration. Parties must complete the following steps to commence arbitration:

(1) The parties must jointly complete and sign four copies of the submission form, including the claim and counterclaim, if any, amounts.

(2) Each party must retain one copy of the submission form.

(3) Send the two remaining submission forms to the AAA Case Management Center nearest the desired hearing site. Include a check or charge card authorization for the appropriate filing fee with the submissions.

These fees are required by the AAA in accordance with the following schedule:

2. Amount of Claim

Initial Filing Fee

Case Service Fee

Above $0 to $10,000

$500

$200

Above $10,000 to $75,000

$750

$300

Above $75,000 to $150,000

$1,500

$750

Above $150,000 to $300,000

$2,750

$1,250

Above $300,000 to $500,000

$4,250

$1,750

Above $500,000 to $1,000,000

$6,000

$2,500

Above $1,000,000 to $5,000,000

$8,000

$3,250

Above $5,000,000 to $10,000,000

$10,000

$4,000

Initial AAA phone conference and selection of arbitrator

After receipt of the proper documents and fees, the AAA will initiate a telephone conference the purpose of which is to discuss selection of arbitrators. In most instances, the parties will select one arbitrator from a list of approximately ten resumes of arbitrators provided by the AAA. The arbitrators are experienced architects, engineers, contractors, attorneys and construction managers. The selection process usually depends on location, type of dispute (legal or factual), conflicts of interest and cost. The arbitrator will require compensation usually at a rate between $250 to $350 per hour to cover preparation/study time and for each day of the arbitration, which sum will be prepaid to the AAA.

Scheduling conference

After the arbitrator is selected, the AAA will schedule an initial scheduling conference. The conference will set the ground rules for the arbitration, discuss document production, expert inspection and disclosure and arbitration dates. The arbitrator will set a finite date to complete discovery, exchange of witnesses names, exchange of expert reports, set dates for exchange of exhibits and briefs and set dates for the arbitration.

Documents

The key to any successful prosecution or defense of an arbitration will be proper documentation of your position. Hopefully, all requisitions, change orders, requests for authority and communications have been maintained. Below is a list of some of the documents that will be necessary.

  1. Copies of all documents which comprise any contract, subcontract or agreement of any type by and between claimant and respondent and any third party for work on the project including, but not limited to, all documents which claimant/respondent intends to enter as an exhibit at any
  2. Copies of all documents including, but not limited to, contracts, subcontracts, or agreements of any type, whether oral or written, respecting, referring or relating to any work performed by any subcontractors, suppliers, agents or employees on the Project.
  3. Copies of all change order proposals
  4. Copy of all change orders
  5. Copy of all communication concerning change order proposals or change orders
  6. Copy of all requests for payment, submittals for payment and responses thereto as exchanged between claimant, respondent and, if applicable with the architect/construction manager.
  7. Copies of all plans, drawings and specifications and all amendments thereto, relating to the work performed at the Project.
  8. Copies of all correspondence between claimant and respondent, or their agents, or any designer, architect, supplier or subcontractor, relating to the work performed at the Project.
  9. Copies of all checks or payments made by defendant to any subcontractor for work performed at the Project.
  10. Copies of all documents and correspondence with any local governmental authority or their employees or agents relating to work performed at the Project, including but not limited to inspection reports and violations/deficiency notices.
  11. Copies of all applications for permits, or certificates of completion and/or compliance, issued by any local governmental authority relating to the work performed at the Project.
  12. Copies of all professional licenses maintained by claimant/respondent relating to its construction business and copies of any correspondence, memoranda, reports or other written record from any licensing authority concerning plaintiff’s license(s), including any determinations with respect to revocation of said license(s).
  13. Documents respecting, referring or relating to the procurement, fabrication and delivery of material and equipment to the Project.
  14. Documents pertaining to equipment utilized by claimant/respondent, or any third party or any of their contractors, subcontractors or consultants on the Project, including all records of rental equipment.
  15. Documents pertaining to any order for the utilization of labor, materials or services made by, between, among or to claimant/respondent or third parties, respecting, referring or relating to the cost, construction, management or operation of the Project or to any agreement, contract or subcontract.
  16. Documents, including, but not limited to, payroll records and any other logs, diaries, labor reports, daily or other time sheets, respecting, referring or relating to the manpower used by claimant/respondent, or any third party on the Project and all records of reimbursement or expenditure on behalf of any employees for travel or disbursements during the period of work on the Project.
  17. Documents, respecting, referring or relating to any change orders, field orders, work orders or proposals for changes in or additions or deletions to the work on the Project, or for any scheduled or unscheduled overtime or program thereof, whether or not approved or made a part of the contract or subcontracts or other agreements, by, between, among and to claimant/respondent, or any third party or any subcontractor or consultant, including, but not limited to, any expert or consultant, and whether or not actually performed.
  18. Documents respecting, referring or relating to requests for information, interpretation and clarification of the terms, conditions, drawings, plans or specifications of any contract, subcontract or other agreement, however made and all logs, files and responses thereto.
  19. Documents, including, but not limited to, daily reports, field reports, logs, records, diaries or other documents reflecting the labor, materials or services used or the progress of or conditions or activities on the Project.
  20. Documents, including, but not limited to, internal memoranda, telephone call records, diaries, reports, files or similar records respecting, referring or relating to the Project.
  21. Documents pertaining to any payments of any kind made by, between, among and to claimant/respondent or to any third party, respecting, referring or relating to the costs, bonding, construction, management or operation of the Project.
  22. Documents, including, but not limited to, internal memoranda, correspondence or other documents prepared by or for claimant/respondent, or any third party for use in scheduling, monitoring, reviewing or in any manner relating to the performance of any contract, subcontract or agreement relating to the Project.
  23. Documents respecting, referring or relating to any meetings pertaining to the Project, including, but not limited to, memoranda, reports, minutes or other documents pertaining to pre-job meetings, progress meetings or other meetings by, between, among and to claimant/respondent or any third party relating to work on the Project.
  24. Documents respecting, referring to or relating to visits to or inspections of the Project by claimant/respondent, construction manager, any third party, or their employees, agents, consultants and representatives or third parties including, but not limited to reports and memoranda.
  25. Documents respecting, referring or relating to requests for extensions of time, all types and manner of submittals, working drawings, shop drawings or samples submitted to Plaintiff or its representatives, including those submitted by claimant/respondent, construction manager, any third party, or other contractors or subcontractors for the Project and all logs, responses and documents relating thereto.
  26. Documents or drawings depicting or purporting to depict “as-built” conditions, including, but not limited to, any final computation of costs, labor, materials or services for the Project.
  27. Copy of the Articles of Incorporation for claimant/respondent
  28. Copy of any and all shareholders agreements for claimant/respondent from the date of the corporation’s formation to the current date.

In some instances, the entire project file is either made available for inspection and/or exchanged.

Preparation for the hearing

Preparation will include extensive meetings with all those involved with the project, including claimant/respondent past and present employees, non-party witnesses and review of all pertinent project documents. The entire claim/defense must be synthesized and boiled down to presentable and supportable facts, claims, assertions and statements and each document must be cross-referenced with each witness. It is essential that the monetary items of your entire case be summarized on one to two pages to function as a guide for the arbitrator. All pertinent documents are bate-stamped and placed in tabbed binders, with binder sets being provided to the other side, the arbitrator and sets available for reference by witnesses.

The hearing

The hearing is usually conducted at the AAA headquarters located at 1633 Broadway, NY, NY. The hearings usually run from 9:30am to 4:30pm, but times may be adjusted according to agreements.

The arbitration progresses similar to a non-jury trial with the claimant and respondent being allowed to present opening statements, witnesses present direct testimony and undergo cross-examination, documents from the previously supplied binders are offered into evidence, the claimant rests and the respondent presents their defenses and counterclaims. Often, during the arbitration and at the conclusion of both sides, the arbitrator will ask questions. At the conclusion of the hearings, both sides will be permitted to make closing statements and often supporting briefs are submitted within thirty days after the close of the arbitration. Depending on agreement of the parties, the arbitrator will set forth a non-reasoned award (setting forth awarded amounts) or set forth a detailed reasoned award (setting forth factual support and arguments utilized by the arbitrator in reaching the awarded amounts.

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