The American Arbitration Association (AAA), one of the longest-standing and experienced alternative dispute resolution (ADR) administrators, has unveiled a significant update to its Construction Industry Rules and Mediation procedures. This update, last revised in 2015, became effective March 1, 2024. Changes to the AAA Construction Industry Rules are significant as these rules are incorporated by default in American Institute of Architects standard construction forms, which are widely used in the industry.
Advancements in remote access technology drive a substantial number of new changes. Others are designed to streamline the arbitrator appointment process and certain prehearing procedures and to make arbitration more cost-efficient by enhancing the arbitrator’s case management authority. Some of the more notable changes are:
Fast Track
F-1: The limit for cases eligible for AAA’s Fast Track Procedures has been increased from $100,000 to $150,000 so long as no claim or counterclaim exceeds that amount.
F-8: Consolidates two prior rules into one. The new rules specify that motions are not permitted under the fast-track procedure except for good cause shown. Additionally, discovery is not permitted under the fast-track procedure except in extraordinary circumstances. The rule clarifies that a case may be removed from the fast-track procedure if discovery is allowed.
Regular Track Procedures
R-7: The rules governing consolidation and joinder have been clarified and streamlined. Requests for consolidation and joinder must now be filed before the merit arbitrator is appointed unless good cause is shown, and prejudice will result if not granted. Additionally, if a party fails to object to a request for a joinder, that party waives any objection to the request.
R-23: Preliminary hearings may now, by Rule, be held via videoconference, telephone, or in person.
R-34: Arbitrators are now required to consider the cost of preparing and opposing a dispositive motion in determining whether to allow a party to file such a motion. The arbitrator may now assess fees and costs associated with such motion’s practice.
R-39: Requests for an emergency arbitrator will now be fulfilled no later than three days after the request is made.
R-44: Parties may now serve notice and communicate via electronic means and platforms.
R-45: Codifies AAA’s policy and practice that AAA and arbitrators must keep all arbitration matters confidential.
R-52: This rule modifies a previous rule that only allowed arbitrators to address clerical, typographical, technical, or computational errors in their awards. Arbitrators are now permitted to clarify their awards, although the merits of an award may not be reconsidered.
Large Complex Disputes
L-3: The threshold for appointment of a three-arbitrator panel has been increased from $1 million to $3 million.
As the construction industry and legal professionals continue to embrace ADR and technological innovation, these rules promise to deliver a more efficient and effective arbitration process. Additionally, parties electing to arbitrate contractual disputes can always negotiate alternate procedures by contract. AAA Rule R-2(a) recognizes that “[t]he authority and duties of the AAA are prescribed in the agreement of the parties and in these Rules…”
[View source.]
