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Building Contract Arbitration Clause

Building Contract Arbitration Clause: What You Need to Know

In the construction industry, disputes can arise over various issues, ranging from project delays to defects in workmanship. To avoid lengthy and costly litigation, building contracts often include an arbitration clause, which requires parties to submit any disputes to a neutral third party for resolution.

If you are drafting or reviewing a building contract, it`s essential to understand the key elements of an arbitration clause and its implications. Here are some factors to consider:

1. Scope of the Clause

The scope of the arbitration clause should be clearly defined to avoid any confusion or disagreement. It should state which issues are subject to arbitration, such as disputes over payment, performance, or termination. It`s also essential to determine who is covered by the clause, such as the contractor, subcontractors, and suppliers.

2. Selection of the Arbitrator

The arbitration clause should specify the process for selecting an arbitrator, such as using a particular arbitration provider, or allowing each party to select an arbitrator. It`s crucial to choose a qualified and impartial arbitrator who has experience in construction disputes.

3. Rules of the Proceedings

The arbitration clause should set out the rules of the proceedings, including the location and language of the arbitration, the timetable for submitting evidence, and the types of evidence that are admissible. It should also specify the fees and costs of the arbitration, including the arbitrator`s fees, administration costs, and venue expenses.

4. Finality and Enforcement of the Award

The arbitration clause should specify that the arbitrator`s decision is final and binding on the parties. It should also state that the award can be enforced by a court if necessary, as provided by the applicable laws.

Benefits of Including an Arbitration Clause in a Building Contract

1. Cost Savings

Arbitration can be a more cost-effective and efficient way to resolve disputes than going to court. It can save parties time and money by avoiding lengthy litigation, discovery, and appeals.

2. Expertise and Neutrality

Arbitration allows parties to choose an arbitrator who has expertise in the construction industry and who is neutral and impartial. This can result in a fairer and more informed decision than a court judgment.

3. Confidentiality

Unlike court proceedings, arbitration can be kept confidential, which can protect parties` business interests and reputations.

Conclusion

A well-drafted arbitration clause can be an effective way to resolve disputes in the construction industry. It provides a faster, more efficient, and less costly alternative to litigation while ensuring a fair and impartial decision. As a copy editor, it`s essential to ensure that the arbitration clause in a building contract is clear, complete, and complies with the applicable laws and regulations.

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