Loren & Kean Law and its client recently prevailed in a four-day construction arbitration. The case involved competing claims where the contractor asserted outstanding monies owed and delay claims, and the owner asserted construction defect claims. Working with its client and its experts, Kyle Ohlenschlaeger and Bruce Loren were able to present a clear case to the arbitrator, who ultimately ruled in our client’s favor. Thereafter, Loren & Kean was able to secure its client an award of all attorneys’ fees and costs incurred. During the proceeding, we were reminded of some of the benefits and downsides of arbitration as compared to a court proceeding.
The main benefit to the arbitration process is that it is more streamlined, allowing parties to get to a final hearing faster by providing more access to the arbitrator than you would typically have with a judge. For instance, a discovery dispute that would require briefing, pre-hearing conferences and scheduling a hearing in Court can often be resolved in arbitration by a few simple emails. This process allows faster access to a final decision and also helps keep the costs of the dispute at a reasonable level.
The final hearing itself is also more of a streamlined process, as there is little room for formal objections or disputes over permissible evidence. Arbitration is all about the inclusion of evidence, and the arbitrator is likely to let the parties discuss nearly anything that they desire. The arbitrator’s goal will be to hear the full story from both sides, and then determine the credibility of the evidence presented. As a result, the parties are usually able to spend less time on the formalities of evidence rules and instead present their case and evidence in a more focused manner.
These differences are not all beneficial. We have found that arbitration, despite being less formal, can often take just as long as a trial. While a court will generally limit the parties from straying too far from the dispute, in an arbitration, the testimony of the parties themselves can become drawn out. When given the freedom from an arbitrator, parties tend to want to tell their entire story, which would be limited to issues central to the case if the dispute were in court.
Arbitrators are also not bound to the law in the same way a court would be. If an arbitrator rules against you, even if he or she clearly ruled in conflict with the applicable law, there is little a party can do to reverse the decision. The rights to appeal an arbitration decision are nearly non-existent, and are essentially limited to situations where the arbitrator was impartial or refused to give a party a fair opportunity to be heard.
Another issue that can present itself in arbitration is the ability to enforce the award. Unless the losing party agrees to pay the arbitration award, there is no mechanism in the arbitration to enforce the decision of the arbitrator. Instead, the prevailing party needs to bring a petition in court to confirm the arbitration award and enter judgment, which adds additional time and expense before the prevailing party can execute upon, or go after, known assets of the losing party.
Kyle and Bruce are proud to have secured a victory for our client in this recent arbitration, and having gone through this more in recent years we are more accepting of the arbitration process than we were in the past. Although it is not for everyone, and not suited for every dispute, the arbitration process can be beneficial when approached in the correct way. This is most often accomplished by addressing some of the downsides to arbitration up front when entering into a contract to arbitrate. This can be done in many ways, such as agreeing in advance as to the number of arbitrators that will hear the dispute, how arbitration fees will be divided, what evidence will be permitted, the extent of permissible discovery, and even the length of the arbitration proceeding itself. The attorneys at Loren & Kean Law are available if you have any questions regarding the arbitration process, or want to discuss an agreement containing an arbitration requirement.
Bruce E. Loren and Kyle W. Ohlenschlaeger of the Loren & Kean Law Firm are based in Palm Beach Gardens and Fort Lauderdale. Loren & Kean Law is a boutique law firm concentrating in construction law, employment law, and complex commercial litigation. Mr. Ohlenschlaeger focuses his practice on construction law and a wide range of commercial litigation disputes. Mr. Loren has achieved the title of “Certified in Construction Law” by the Florida Bar, exemplifying the Bar’s recognition of this expertise. The firm’s construction clients include owners/developers, general contractors, specialty contractors in every trade, suppliers and professional architects and engineers. Mr. Loren and Mr. Ohlenschlaeger can be reached at [email protected] or [email protected] or 561-615-5701.