To Arbitrate or Not to Arbitrate?  

by   David W. T. Carroll, Esq.
Carroll, Ucker & Hemmer LLC
175 S. 3rd St., Suite 200
Columbus, Ohio 43215
(614) 547-0350
fax: (614) 547-0354

    For over 20 years, the AIA form documents have contained arbitration clauses.  There is an arbitration clause in the Owner-Architect Agreement and in the General Conditions for Construction.  Arbitration, however, is a mixed bag.

    In arbitration, a person that one hopes is knowledgeable in construction decides whatever issues are in dispute, instead of eight unknowledgeable people who were unsuccessful in avoiding jury duty.  Those points are good, but there are definite drawbacks to arbitration.

    Arbitration can be expensive.  Compared to court costs, the American Arbitration Association fees are based upon the amount of the claim and are quite expensive ranging from $500 up to $7000 for cases seeking between $1 million and $5 million.  In addition there is a fee paid to the arbitrator or panel of arbitrators.  Of course, there are also lawyers’ fees and expenses if lawyers are involved.

    If the arbitrator does a poor job, the parties are stuck with the decision.  There is no effective appeal unless the arbitrator engaged in some egregious misconduct.  There is no appeal to a higher court. 

    Under the rules of the American Arbitration Association, there are only limited rights to exchanges of information.  Unless the parties voluntarily exchange information, we have trial by ambush.

    You are not required to have a lawyer.  But if there is enough money involved, most people do use lawyers, because lawyers are trained to present claims.  So, the potential do-it-yourself savings evaporate.

    On the other hand, if the contractor is making a claim for extras (for example, claiming plan omissions) and arbitrates under the A201 General Conditions, neither the contractor nor the owner have the right to force the architect into the same arbitration.  Without the arbitration clause in the owner architect agreement, the owner and contractor could agree to go to court where the architect could be joined in the same lawsuit, with the consequent expense of a defense (or paying an insurance deductible).  If the owner must arbitrate with the architect, the owner in an arbitration cannot simply say to the contractor, you two fight it out.  The architect can help the owner and wait for the result of the owner’s arbitration.  By then, the owner and the contractor may well have settled their differences between them without a claim ever having to be made against the architect.

    I never object to omitting the arbitration clause from the Owner-Architect Agreement.  Nor do I object to leaving it in as long as my client understands the ramifications. 

For more information, email David W. T. Carroll


The information on this web site is for general reference only.  To apply the information to an individual situation, you must consult a qualified professional.  Unless you contract for specific services from us, there is no attorney-client relationship established.

Carroll, Ucker & Hemmer LLC
175 S. 3rd St., Suite 200
Columbus, Ohio 43215
614) 547-0350
fax: (614) 547-0354


Email: dcarroll@cuhlaw.com

All members of Carroll, Ucker & Hemmer LLC are licensed to practice law in Ohio.  

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