What Is Construction Arbitration?
Nov 11 2025 On Behalf of David M. Duree & Associates, P.C. Construction Law
The complexities and financial stakes of a construction project can lead to legal issues or disputes between parties, including property/project owners, contractors, subcontractors, and suppliers. In construction law, parties who have a dispute may agree to submit their case to arbitration, a form of alternative dispute resolution that seeks to save time and money compared to traditional litigation.
Understanding Construction Arbitration
Arbitration is a process by which parties in a construction project who have a legal conflict submit that dispute to a neutral, independent party to decide on a resolution. Many construction contracts include clauses that require parties to submit any disputes arising from the contract or the construction project to arbitration, rather than allowing a party to file a lawsuit in court for a claim or dispute. Many parties in the construction industry prefer arbitration because it allows them to have a dispute decided by an arbitrator with substantial experience in the industry, rather than a civil judge who may not appreciate its nuances. Construction arbitration can address various issues that can arise during projects, including those involving:
- Payment for services
- Project delays
- Work defects
- Non-performance
How Construction Arbitration Works
Arbitration begins when the parties have an agreement to arbitrate a dispute. The parties may reach this agreement in the original construction contract by including provisions requiring the parties to submit their disputes to arbitration. Alternatively, parties may reach a separate agreement to arbitrate after a dispute arises.
An arbitration clause or agreement will designate a specific arbitral service, such as AAA or JAMS, or a specific set of arbitration rules, such as the AAA Construction Rules or the JAMS Construction Arbitration Rules, to govern the case. The forum and regulations determine how the parties select arbitrators. An arbitration may have only one arbitrator or a panel of multiple arbitrators. The process allows for the selection of arbitrators with experience in the construction industry specifically.
An arbitration proceeding resembles court litigation in many respects, although arbitrations have a much more informal feel. Some arbitrations may involve a limited discovery process for parties to request documents or depose witnesses. At the arbitration hearing, parties can present arguments, evidence, and witnesses to convince the arbitrator or panel of their contention. After the hearing, the arbitrator or panel will issue a written decision, which may find in favor of the claimant and award them compensation.
Benefits of Construction Arbitration
There are several benefits of going through arbitration, including:
- Efficiency: Arbitration typically reaches a result more quickly and at a lower cost than court litigation.
- Expertise: Arbitrators in construction cases usually have industry experience, including in-depth knowledge of construction practices, engineering, or construction law.
- Flexibility: Parties can structure the timeline and process to fit their needs.
- Confidentiality: Unlike trials, arbitration proceedings occur in private, allowing parties to protect business relationships or reputations.
Potential Drawbacks of Arbitration
However, parties in a construction dispute should also consider the disadvantages of arbitration, such as:
- Limited appellate rights: The losing party has limited rights to challenge an arbitration decision, as courts may not overturn decisions even when arbitrators make various legal errors.
- Cost: Construction arbitration can become just as expensive as traditional court litigation, especially in complex cases.
- Potential bias: Some arbitrators develop a reputation for favoring large companies that frequently appear in arbitration proceedings, and those companies will select them whenever possible.
Contact a Construction Law Attorney Today
Are you interested in resolving your construction-related dispute through arbitration? If so, contact David M. Duree and Associates, P.C. today for a free, confidential consultation with a construction law attorney. We’ll explain the process in more detail and advise you on whether it might be a suitable way to solve your disagreement.