With an emphasis on a more cost-effective and efficiently managed process, the American Arbitration Association has revised the Construction Industry Arbitration Rules and Mediation Procedures in 2024. Now in effect, below is a summary of the significant updates to the arbitration rules and mediation procedures.
Notable Areas of Change
1. Increased Dollar Thresholds
a. Fast Track Procedures now available to cases up to $150k (previously $100k).
b. A three-arbitrator panel is now mandatory for cases exceeding $3M (previously $1M).
2. Incorporating Technology Updates
a. The rules now require all parties and representatives to include the email address of all parties on documents.
b. The requirement for fax numbers was removed from the rules.
Regular Track Procedure Revisions
Rule R-2: AAA and Delegation of Duties
• A new subsection (b) was added to Rule 2 confirming that all parties and their representatives must abide by the AAA’s Standards of Conduct.
o This codifies the expectation of civility and professionalism for all participants.
R-7: Consolidation and Joinder
• The 90-day requirement to join parties was removed; the new rule requires all consolidation and joinder requests to be filed prior to the Merits Arbitrator appointment confirmation.
o This change substantially shortens the amount of time a party has to join a new party to an arbitration to prevent unanticipated delays.
o The appointment of the Merits Arbitrator can occur quickly if the parties agree on an arbitrator, so it will be important to request joinder almost immediately after the filing/service of a demand for arbitration.
o The Rule does provide for joinder after the selection of a Merits Arbitrator if there is good cause shown and no prejudice.
• The Rule now specifies that if an R-7 arbitrator is required, the AAA will make an administrative appointment.
Consolidation 7(a):
• The written response time to reply to consolidation requests was extended from 10 to 14 days.
Joinder 7(b):
• The reference to R-4 was removed.
• More specification how Joinder/Motions/Requests are to be filed.
• Any party being joined must affirmatively object within the objection period or the objection to joinder is waived (saving parties time and money).
R-9: Jurisdiction
• All arbitrators (R-7, Merits or Emergency) have the power to rule on jurisdictional issues.
R-14: Arbitrator Appointment from National Construction Panel
• AAA now possesses the authority to limit arbitrator strikes.
R-15: Direct Appointment by a Party
• The party appointed arbitrator must be on the AAA’s National Roster of Arbitrators (unless the expertise required by the ADR Provision cannot be met by the AAA).
R-16: Appointment of Chairperson by Party-Appointed Arbitrators or Parties
• The Panel Chair appointed by party arbitrators is required to be a member of the AAA National Construction Roster of Arbitrators (with some limited exceptions).
R-23: Preliminary Management Hearing
• Preliminary Hearings may be held in-person, by video conference or telephonically
R-29: Official Record of Proceedings (previously Official Record of Hearing)
• Instead of explicitly stenographic records, this Rule was amended to allow all transcription options.
R-34: Dispositive Motions
• A requirement was added for arbitrators to now consider the time and cost associated with briefing a dispositive motion in determining whether to grant leave for a party to file such a motion.
o These changes focus on reducing the cost of arbitration as well as improving the efficiency of the arbitration process.
R-39: Emergency Measures of Protection
• The AAA will now allow the appointment of the Emergency Arbitrator within three business days (previously one business day).
• Additionally, the Emergency Arbitrator has three business days to address the request for emergency relief. The request for emergency relief may be filed regardless of any condition precedent to arbitration that may exist in the parties’ contract.
R-44: Serving of Notice
• The amended Rule now includes the permission for parties to serve and file case documents via electronic platforms. E-filing was adopted as the default process for submitting documents.
o This revision will enhance the efficiency of the AAA and allow parties quicker access to filed documents.
R-45: Confidentiality (New Rule!)
• New to the AAA Construction Arbitration & Mediation Procedures, R-45 requires explicit confidentiality of the AAA and Arbitrator for all matters. Additionally, this Rule gives arbitrators the specific authority to issue confidentiality orders.
R-48: Form of Award (Formerly R-47)
• The amended Rule confirms that the signature of the arbitrator may be electronic or digital on the award.
R-52: Modification of Awards (Formerly R-51)
• This Rule has been amended to grant arbitrators the authority to clarify their awards in addition to addressing errors.
R-59: Deposits (Formerly R-58)
• The addition of section (b) specifies that if a party joined under Rule R-7 fails to make deposits required under the rules, the party that sought their joinder shall be responsible for covering those costs.
R-61: Sanctions (Formerly R-60)
• The arbitrator now has the authority to impose sanctions on their own initiative, so long as the party to be sanctioned is provided with an opportunity to be heard.
Fast Track Procedure Revisions
Note: The Fast Track Procedures have been re-numbered beginning with Procedure F-10 (updated to F-9).
F-1: Fast Track Applicability
• The claim threshold has increased to any case exceeding $150k (previously $100k).
F-8: Exchange of Information and Discovery (Formerly F-8 & F-9)
• F-8 and F-9 have been combined into a single rule. The new rule specifies that motions are not permitted except for good cause shown.
F-13: Form of Award
• This amended rule specifies the form of award for fast-track cases, providing that, if the parties request a reasoned award, an abbreviated opinion, or findings of facts and conclusion of law, the case will be removed from the Fast Track and the arbitrator may charge their regular rates.
Procedures for Large, Complex Construction Disputes Revisions
L-3: Arbitrators
• The threshold for a three-arbitrator panel was increased to $3M (previously $1M).
If you have any questions about the updates to the construction arbitration and mediation procedures, the construction attorneys at Arthur Chapman Kettering Smetak & Pikala, P.A. are available to assist you.
