Construction Arbitration Rules: AAA, JAMS, and the Procedures Governing Construction Disputes Outside Court

Construction arbitration provides alternative to court litigation for construction disputes. AAA (American Arbitration Association) Construction Industry Rules govern most US construction arbitrations. JAMS (Judicial Arbitration and Mediation Services) rules also commonly used. Arbitration is contractual — parties agree to arbitration in contract. Procedures more flexible than court but more structured than mediation. Costs and outcomes differ from litigation. Understanding arbitration helps construction firms navigate dispute resolution effectively.

This post covers construction arbitration rules.

Arbitration vs Litigation

Arbitration distinct from court:

Arbitration distinct from court litigation. Private process vs public court — arbitration confidential by default. Selected arbitrator(s) vs assigned judge — parties select arbitrator with industry expertise. Industry expertise possible — construction-knowledgeable arbitrator vs general jurisdiction judge. Faster typically (12-24 months vs 3-7 years for litigation). Final and binding with limited appeal grounds. Costs vary — arbitrator fees can be substantial; discovery typically less expensive. Specific to contract requirement — arbitration only applies if contract requires.

AAA Construction Industry Rules

AAA rules most common:

AAA Construction Industry Rules most common in US construction. Tiered procedures based on claim size: Fast Track (claims under $100K), Regular (between thresholds), Large Complex (claims over $1M). Specific procedures per claim size adjust complexity to dispute. Arbitrator panel selection from AAA construction roster. Specific timing rules including hearing scheduling. Discovery typically more limited than litigation — reducing cost and time. Most AIA contracts (A201, etc.) default to AAA Construction Industry Rules.

Arbitrator Selection

Arbitrator selection process:

Arbitrator selection process. AAA panel of construction arbitrators with industry experience. Parties strike or rank candidates from list — typically each strikes acceptable number, rank remainder. Single arbitrator for smaller claims (under $1M typically). Three-arbitrator panel for larger or complex claims. Industry experience valued — construction lawyers, retired judges with construction backgrounds, industry experts. Neutral arbitrator without bias. Specific to claim complexity guides arbitrator and panel selection.

Discovery Limitations

Discovery typically limited:

Discovery typically limited in arbitration vs litigation. Document exchange typical — parties produce relevant documents. Limited depositions — often none, sometimes few key witnesses. Specific to arbitrator's discretion managing process. Faster process due to limited discovery. Lower cost than full discovery. Different from litigation where discovery often substantial portion of cost. Sometimes expanded for complex cases by arbitrator order.

Hearings

Hearings final phase:

Hearings are final phase. Evidentiary hearing(s) typically days to weeks for substantial cases. Witnesses provide testimony similar to court. Documents introduced as exhibits. Expert witnesses common in construction — scheduling experts, cost experts, technical experts. Less formal than court — rules of evidence somewhat relaxed. Specific procedures per arbitrator. Closing arguments typically post-hearing.

Awards

Awards binding:

Awards binding on parties. Written award after hearing typically within 30-90 days. Reasoned award (explaining reasoning) typical modern trend; previously sometimes just bare result. Final and binding subject to limited grounds for vacatur. Limited appeal grounds under Federal Arbitration Act (FAA) — fraud, arbitrator misconduct, exceeding authority, evident partiality. Confirmation in court for enforcement — award becomes judgment after court confirmation. Vacatur grounds narrow vs broader appeal in litigation. Specific to type of award (bare, reasoned, findings of fact and conclusions of law).

JAMS Construction

JAMS alternative provider:

JAMS provides alternative to AAA. Specific construction rules. Arbitrator panel of retired judges and experienced lawyers. Sometimes preferred for complex commercial cases. Different procedures vs AAA — generally similar but procedural differences. Specific to contract designation — contract specifies which administrator. Some contracts allow choice between AAA and JAMS.

Cost Considerations

Costs vary:

Cost considerations. Arbitrator fees substantial — hourly rate for arbitrator(s) plus hearing days. Filing fees per AAA schedule based on claim size. Reduced discovery cost vs litigation. Faster typically produces lower attorney fees overall. Expert witnesses similar to litigation. Hearing room and court reporter. Specific to case complexity. Sometimes arbitration more expensive than expected when arbitrator fees considered.

Bottom Line

Construction arbitration provides alternative to court litigation. AAA Construction Industry Rules most common; JAMS alternative. Arbitrator selection through panel process. Discovery typically limited. Hearings before arbitrator(s). Awards final and binding with limited appeal. Faster than litigation typically. Confidentiality benefits both parties but limits precedent. Costs vary — arbitrator fees substantial but reduced discovery. For construction firms, understanding arbitration is essential because most modern construction contracts require arbitration. Quality dispute resolution strategy considers arbitration procedures, arbitrator selection, and case presentation. Arbitration is mainstream construction dispute resolution that contractors should understand.