John E. Bulman, R. Thomas Dunn and Sheya Rivard | Pierce Atwood
Effective March 1, 2024, the American Arbitration Association (AAA) has revised its Construction Industry Arbitration Rules and Mediation Procedures (AAA Rules).
The AAA Rules provide a framework for resolving construction disputes and address a wide range of topics from arbitrator selection to discovery procedures. Many construction contracts contain dispute resolution provisions that expressly incorporate the AAA Rules.
The revised AAA Rules embody several key changes, including those aimed at addressing technological advances and streamlining processes to promote efficiency and clarity within the construction industry. Pierce Atwood partner John Bulman, a member of the AAA’s National Construction Dispute Resolution Committee who serves on the AAA’s Mega Project Panel, said,
“These rule amendments are a welcome addition. Among other matters, they address changes in technology since the July 1, 2015 rules and they eliminate some delays and issues inherent in the application of the 2015 rules relating to consolidation and joinder.”
The revised AAA Rules fall into three general categories, and some of the main changes in each category are:
Embracing Current and Emerging Technologies
Fax numbers have been phased out, and instead, the rules mandate the inclusion of email addresses for all respondent parties and those parties sought to be joined.
While regularly done in practice already, AAA Rule R-23 was modified to confirm that preliminary hearings may be held via videoconference in addition to other methods (by telephone or in person).
Regular Track Procedures
There are important changes to AAA Rule R-7 pertaining to consolidation and joined. Previously, requests for consolidation and joinder could be filed within 90 days of the commencement of the action, which could result in some unanticipated delays. With the amendment, such requests for consolidation and joinder must be filed before the Merits Arbitrator appointment is confirmed. A party requesting leave to file a joinder request after the Merits Arbitrator has been confirmed will need to establish both good cause and prejudice if the request is not permitted.
There are helpful updates relating to arbitrator appointment. Consistent with normal practice, AAA Rule R-14 now expressly provides that the AAA has authority to limit the parties’ arbitrator strikes. AAA Rule R-15 has been revised to specify that party appointed arbitrators must be on the AAA’s National Roster of Arbitrators, unless the parties agree otherwise, or the AAA determines that members of the AAA Roster do not meet the requested expertise required by the parties.
There are other specific modifications aimed at streamlining arbitration proceedings, including:
- Arbitrators must consider the cost of a dispositive motion in determining whether to grant leave for a party to file such a motion. R-34.
- Arbitrators may issue confidentiality orders and must keep all matters confidential. R-45.
- An arbitrator may impose sanctions on their own initiative provided the party against whom sanctions are to be imposed is provided an opportunity to respond prior to the order for sanctions being issued. R-60.
Threshold Amounts for Fast Track Procedures and Large, Complex Construction Disputes
The AAA raised the ceiling for Fast Track Procedures to apply from $100,000 to $150,000. In addition, for Large, Complex Construction Disputes, the AAA increased the threshold for the appointment of a three-arbitrator panel (as opposed to a single arbitrator) from $1 million to $3 million.
These revisions constitute some of the most substantial changes to the rules in nearly a decade, so be sure to familiarize yourself and your clients with the revised AAA Rules to effectively navigate your next construction arbitration matter.
When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.