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Arbitration Rules Are Looser Than Court

As a general rule arbitration is a lot looser than court.  Rules are a lot more flexible which has its good and bad points.  Some guys can tell the most incredible lies and make them sound so convincing.  If you have interviewed people who were looking to come aboard you know what I mean.  A great interviewer might not make the best candidate for the job in fact he might be the last guy you should hire.  With a good story teller, loose rules and a less than attentive arbitrator justice can take a stroll.

I have been involved in and have had friends involved in arbitrations that ran for months to years with legal and specialists bills from the sane to the insane.  I have won and I have lost and what always concerned me the most, in either case, was the actual decisions.

Losing an Arbitration Case And No Understanding of Why


Why did that happen?

Years ago I lost an  arbitration. After the arbitration the arbitrator told me he had thought I had been right.  With the most self-control I could muster I asked, “If that is the case why didn’t you find in my favor?”  He mumbled, “It was all less than clear”.  To this day I am sure if it had gone to court instead of arbitration I would have won.  And even if I didn’t win I would have understood the reason I lost.  The problem with construction issues that wind up in arbitration is that they are fought in a sea of documents.  Contracts, special conditions, general conditions, correspondence, clauses, sub clauses and it goes on and on.  Even a small case can dish up a wheelbarrow of documents, most of which are incredibly boring and more than a few self-serving.  There are no clerks in arbitration to wade through the mountains of documents, it’s a task assigned to the arbitrators themselves.

The Bigger The Case the Less Clear it Becomes…for The Arbitrator

In large arbitrations the arbitrators resolve the difficult problem of the mountains of documents by either requesting additional documents to add to the mountain of documents or they cherry pick the existing mountain of documents for something they can use in arbitrations sessions.  Either way, the show goes on and on and you keep paying and paying.  My experience is that the bigger the mountain the less likely that it will be climbed.  Meaning there is only a slim chance that anybody is going to review a small hill of documents and you can forget about anybody reviewing a mountain of documents.  As all experienced judges know, that is what clerks are for.  And remember in arbitration there are no clerks.

When I started this article at the risk of being tarred and feathered I emphatically stated that if you could remove the arbitration clause from the contract, do so.

Some Advice for Contracts Signed with The Arbitration Clause Excised

If it’s already too late and you not only signed a contract with the clause in and you experienced a conflict, the arbitration clause was


You signed it, now what?

excised, you went through the arbitration and to your dismay an horror, lost.  Is it over?

Before you throw the towel in you need to take a deep breath and see what your options are.  It might not be over.  Arbitration decisions can be appealed.  The bar is high  but it does happen.  You have a fighting chance if any of the following occurred:

  • Corruption/Fraud
  • Partiality of an Arbitrator appointed as neutral.
  • Exceeding their power.
  • Failure to follow procedure [in New York State, NY CRLR.  Check your state for arbitration body] unless the failure continued with notice of defect and without objection. [If something wrong was done, proceeding continued without objection].

If you feel you have suffered any of the above you need to think about finding a good construction attorney with real arbitration experience and seek to have the ruling overturned.  You might have to think about changing counsel for the appeal

Thank God we are a country of laws and you are a long way from being beaten Pursue the overturned ruling to the full extent of the law.  Nothing takes the heart out of a boxer more than when he has knocked his opponent to the canvas and he gets up, shakes it off and continues to fight.  How many times have you seen that guy get up off the canvas and win the fight?  It’s the sign of a real champion.

Contributed by Ron Pestone Author of THE BOOK OF ELM, COMMON SENSE SUBCONTRACTING WITH ELM JOB COSTING due out in January. You can find him at www.elmpost.com

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