New AAA Fixed Time and Cost Arbitration: Affordable Dispute Resolution?
A prior post discussed the advantages of the AAA’s Fast Track Arbitration Procedure. More recently, the American Arbitration Association has created a new set of rules that also seek to minimize the cost and time for dispute resolution through arbitration. According to the AAA, these “Supplementary Rules for Fixed Time and Cost Construction Arbitration” will allow parties to determine:
- the maximum time to complete arbitration;
- the number of hearing days;
- the arbitrator’s costs; and
- the AAA fees.
To apply the new rules to construction disputes, the parties’ agreement must indicate that the Supplemental Rules will apply. Even if the Supplemental Rules are not incorporated in an agreement, the parties may elect to use them.
The AAA has provided an example of what parties may expect.
[F]or cases in the $250,000 to $500,000 range, the rules prescribe a maximum of 180 days from filing to award, with no more than three hearing days. Arbitrator compensation for hearing days and study time (limited to 12 hours) is capped at $275 an hour. Administrative fees to the AAA are fixed at $5,000.
Parties to a construction contract or subcontract should consider the pros and cons of the Supplementary Rules as a potential alternative to the traditional construction arbitration rules.