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AAA Revises its Construction Industry Arbitration Rules and Mediation Procedures

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This one is for the lawyers. Or for those of you who are claims-minded . . . 

Effective March 1, 2024, the American Arbitration Association (“AAA”) revised its Construction Industry Arbitration Rules and Mediation Procedures. For those involved in construction, this is important since the AAA Rules are the default arbitration rules contained in AIA form contracts and are often the arbitration rules referenced in other construction contracts as well.

So, what are the changes?

  • General: Fax numbers have gone the way of the Dodo bird and replaced by email addresses for all parties. Also, while already done in practice, preliminary hearings may now be held via videoconference in addition to telephone and in-person (Rule R-23).

  • Standards of Conduct: Requires parties and their legal representatives to conduct themselves in accordance with the AAA’s Standards of Conduct for Parties and Representatives subject to the right of AAA to decline administering future cases involving those parties and/or representatives (Rule R-2).

  • Consolidation and Joinder: Absent a showing of good cause and prejudice, requests for consolidation and joinder must now be filed before an arbitrator is confirmed. Previously, requests for consolidation and joinder could be filed within 90 calendar days of commencement of an arbitration. In addition, parties now have 14 days, rather than 10 days, to respond to a request for consolidation by another party (Rule R-7).

  • Deposits: Provides that if a party joined in arbitration fails to make the required deposits, the party that sought the joinder must cover those costs (Rule R-59).

  • Arbitrator Selection: Requires selected arbitrators to be on the AAA’s National Roster of Arbitrators unless: (1) the parties agree otherwise; or (2) the members of the AAA Roster do not meet the requested expertise required by the parties (Rule R-15).

  • Arbitrator Strikes: Expressly authorizes the AAA to limit the number of arbitrator strikes (Rule R-14).

  • Emergency Arbitration Procedures: A party may now request an emergency arbitration even if the applicable contract contains a condition precedent to arbitration such as mediation. If a request for an emergency arbitration is made, the AAA may appoint an emergency arbitrator within 3 days, and the emergency arbitrator has 3 days to establish a schedule to consider the application for emergency arbitration (Rule R-39).

  • Service of Notices: Notices may not be served using “alternative methods of communication or other platforms” (Rule R-44)

  • Costs of Dispositive Motions: Requires arbitrators to consider the cost of dispositive motions when determining whether to grant leave for a party to file such a motion (Rule R-34).

  • Confidentiality Orders: Authorizes arbitrators to issue confidentiality orders (Rule R-45).

  • Arbitrator-Imposed Sanctions: Authorizes arbitrators to impose sanctions on their own initiative provided that the party against whom sanctions are imposed has an opportunity to respond before sanctions are ordered (Rule R-60).

  • Record of Proceedings: Proceedings may now be a transcribed record rather than just a stenographic record (Rule R-29).

  • Form of Awards: Arbitrator signatures on awards may now be electronic or digital (Rule R-48).

  • Modification of Awards: Requires that parties requesting an arbitrator to modify an award – although an arbitrator cannot redetermine the merits of an award – are to be Ade in writing to the AAA rather than directly to the arbitrator (Rule R-52).

  • Fast-Track Procedures: Fast track procedures now apply to claims that do not exceed $150,000 rather than $100,000 (Rule F-1).

  • Fast-Track Motions: Provides that motions are not permitted in fast track cares absent a showing of good cause (Rule F-8).

  • Complex Construction Disputes: The threshold requirement for appointment of a three-arbitrator panel, rather than a single arbitrator, has risen from $1 million to $3 million (Rule L-3).

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