Not every Tennessee construction dispute goes to trial. In some cases, negotiation achieves agreeable results, and in other cases alternative dispute resolution takes place. For the past century, arbitration has prevailed in many commercial disputes, including construction disputes. According to the American Bar Association, the process can sometimes save time and money compared to traditional litigation.
With traditional construction litigation, when parties cannot reach an agreement through negotiation they turn to the courts. Arbitration, however, is a private process that involves two disputing parties and a neutral third party. The goal is to resolve the dispute with efficiency and without a formal courtroom process.
Advantages of arbitration
Unless a contract contains an arbitration clause specifying a particular arbitrator, the parties in dispute work together to select an arbitrator. Rather than incurring court fees, pre-trial costs and fees associated with record searches and interrogatories, arbitration costs depend on arbitrator fees and attorney fees. Hence, arbitration tends to cost less than litigation.
Disadvantages of arbitration
The American Arbitration Association says that with few exceptions, arbitration is binding, which means parties cannot appeal the final ruling. The evidentiary process with arbitration is more limited than it is with litigation. For example, some arbitration processes may consider hearsay as acceptable evidence. Each party to the arbitration is responsible for their own attorney fees. In litigation, the prevailing party may recoup attorney’s fees from the losing party.
Attorneys evaluate arbitration on a case by case basis
Not every construction dispute is suitable for arbitration. Some parties are willing to incur the extra time and expense involved in litigation to preserve the right to appeal an unfavorable outcome. Arbitration, however, can be an effective process for efficient resolution of disputes.