Do You Arbitrate or Litigate?

Contractors and their lawyers are very familiar with arbitration being the preferred method for the resolution of any dispute. It is called for in most construction contracts. But what happens if an agreement is not very clear and the parties are uncertain if their misunderstanding is to be presented to an arbitration panel or to a court. Who gets to make that decision?

The supplier of impact resistant doors and the general contractor on a hi-rise project had a difference of opinion over whether delivery of ordered product was timely but it wasn’t clear if they had agreed to arbitrate or litigate their dispute. So they presented that question to the court. In short order a judge decided that by incorporating a reference to the Construction Industry Rules of the American Arbitration Association within their contract, the parties had sufficiently evidenced their intent to have arbitrators, not a court, hear and decide that it the matter – an important warning for everyone dealing with construction contracts. If you want to be clear how a dispute is to be resolved in any agreement, be it litigation or arbitration, better specify your preference in your contract.