Construction Law

New AIA documents and Arbitration

By Werner Sabo

Much is being written about the 2007 AIA Documents, which were released in early November. One of the much-discussed differences in these documents is the fact that arbitration is no longer the default dispute resolution mechanism, being replaced by a "check-box" system whereby three options are provided: arbitration, litigation and "other." If none of the boxes is checked, then litigation is the default mechanism, following mandatory mediation.

It was with great interest that I opened the new documents using the AIA's Electronic Documents software system. I immediately printed out several of the new documents, including various owner-architect agreements and an owner-contractor agreement. At this point, I had not filled in anything. I was, therefore, astonished to find that the "arbitration" box had been checked on all of the documents where that option appeared. Thinking that I had made some type of mistake, I again started a brand new document and made sure not to check anything.  Once again, the arbitration choice was checked.

I mentioned this to several other people, one of whom apparently has a friend that worked on the electronic version of the documents, and I was informed (this was third or fourth-hand) that the reason this had occurred was that one of the boxes had to be initially checked in order to make the program work, and that the AIA did not favor arbitration. (note that I did not actually speak to this person directly, so I can't vouch for what was actually said). After thinking about this for about half a second, I realized that they could just as easily have selected the "litigation" check box as the one that was initially selected by the software, particularly as that choice is supposed to be the default.

The reason I bring this up is not to blame the AIA for anything. After all, arbitration was the preferred method in the AIA documents for decades. And, the paper documents do not have anything pre-checked. However, most users today are using the electronic documents and may not be aware that they actually need to check the litigation box if that is what they intend. If they just read the articles that claim that litigation is the automatic "default," they may not even look at this provision when drafting the documents if they actually want to have litigation as the real default. They may be surprised years later to receive a demand for arbitration. If they are attorneys, they may be open to a claim for legal malpractice if their client insisted on not using arbitration and they relied on the "default" litigation story.

Perhaps the real lesson is to always read every word of every contract.

Full post as published by Construction Attorney Blog on November 08, 2007 (boomark / email).