Resolving Construction Disputes: Review of State DOT Processes (2024)
Chapter: VI. OVERVIEW OF THE AAA AND UAA ARBITRATION PROCESSES
the scope of this digest to delve deeply into these subjects, parties should understand precisely what is required by applicable state law for these subjects.
VI. OVERVIEW OF THE AAA AND UAA ARBITRATION PROCESSES
As discussed in the previous section, the arbitration process for most DOTs is based upon either the AAA’s Construction Industry Arbitration Rules or the applicable arbitration statutes within the state. In the latter case, these arbitration statutes are based on the RUAA. The RUAA was discussed in Chapter III, together with the general arbitration process and some of the AAA’s processes. While it is beyond the scope of this digest to delve deeply into either the AAA or RUAA processes, several topics worthy of additional discussion will be addressed in this section. Note that some subjects, like selection of the arbitrators, will not be addressed, as most of the DOT arbitration processes have specific processes in place for doing that.
A. The RUAA
As mentioned in Chapter III, each state has its own arbitration statute. The majority of these statutes are based on either the 1955 UAA or its 2000 successor, the RUAA. The RUAA appears to have been adopted in each of the states that uses arbitration for its DOT disputes, as discussed in the preceding section, even though at times the state maintains the term “Uniform Arbitration Act” in its statute for the revised code. As expected, the RUAA made several major changes to the UAA, particularly in the area of arbitrability and acting upon the arbitration award. These are not relevant to this digest, although parties should note that reported court decisions prior to 2000 were based on the UAA, and those may no longer be relevant precedent under the RUAA.387
One key point to remember is that the RUAA does not serve the same purpose as the AAA or the AAA’s rules. The RUAA complements the FAA, and its importance is in addressing the front-end (i.e., how to get into arbitration) and back-end (i.e., post-arbitration award) processes. The AAA’s primary purpose is to administer arbitrations. Consequently, while the states’ RUAAs address some of the administrative processes for arbitrations, they are not as detailed as the AAA’s rules.
B. Applicable Rules
Statutes can be amended and the AAA sometimes modifies its rules. Therefore, it is important for the parties to know what specific rules are applicable when they agree to arbitrate. Some of the arbitration statutes discussed in Chapter V require the application of the “current AAA rules in effect” (i.e., the most recent). The most current version of the AAA Construction Industry Arbitration Rules is dated July 1, 2015.388 The natural question is what happens if the AAA rules change and there is nothing that says what version of the rules is to apply.
The AAA Rules also have specific procedures for different sized cases:
- Fast Track Procedures. These apply where no disclosed claim or counterclaim exceeds $100,000 (exclusive of interest, fees, and costs).
- Large, Complex Construction Disputes Procedures. These apply to arbitrations that involve a claim or counterclaim of $1 million or more (exclusive of claimed interest, attorneys’ fees, arbitration fees, and costs).
- Regular Track Procedures. These are the “typical” procedures set forth in the AAA Rules and apply when those above do not.
As noted in Chapter V, some DOT arbitration processes specifically call out which of these AAA procedures are to be used.
C. Prehearing Processes
The AAA Rules provide great discretion to the arbitrators relative to the prehearing process, particularly in terms of the exchange of information before the hearing. As discussed in Chapter III, all of this is expected to be addressed at the prehearing conference and may include orders from the arbitrator about production of documents, depositions, and identification of witnesses expected to be called at the hearing. The timing of what is to be done is discussed at the prehearing conference and ultimately included in a scheduling order. The AAA Rules authorize the arbitrators to resolve any disputes that may arise on these issues, and the AAA does not get involved in dealing with these issues. While each state RUAA is slightly different, the RUAA is likely less detailed about the prehearing process than the AAA Rules.
D. Site Visits
Because the AAA Rules are specific to construction disputes, they provide some rules that are not set forth in a broad RUAA statute. For example, the AAA Rules allow an arbitrator to make a site inspection or other investigation if the arbitrator finds it appropriate.389 The process for doing so is flexible, and it can happen before or during the hearing. While any party who so desires may be present at such an inspection or investigation, the arbitrator is not to undertake a site inspection unless all parties are present (unless the parties agree otherwise).
___________________
387 There are many articles about the changes from the UAA to the RUAA. One example is B.E. Meyerson, The Revised Uniform Arbitration Act: 15 Years Later, 71 DIS. RES. J. 1 (2016), available at https://brucemeyerson.com/wp-content/uploads/2021/01/The-Revised-Uniform-Arbitraton-Act-15-Years-Later.pdf (last visited October 27, 2023).
388 AAA CONSTRUCTION INDUSTRY ARBITRATION RULES AND MEDIATION PROCEDURES, INCLUDING PROCEDURES FOR LARGE, COMPLEX CONSTRUCTION DISPUTES (effective July 1, 2015), and available on the AAA’s website at https://www.adr.org/sites/default/files/ConstructionRules_Web_0.pdf (last visited November 30, 2023).
389 AAA RULES R-37 - INSPECTION OR INVESTIGATION.
E. Hearing Process
The AAA Rules also give the arbitrator(s) broad discretion in conducting the hearings.390 Absent any agreements by the parties to the contrary, the arbitrators are basically only limited by the due process requirement that each party is treated equally, has the right to be heard, and is given a fair opportunity to make its case. This discretion gives the arbitrator(s) authority to manage the proceedings as efficiently as possible. Sometimes this may result in: (a) the bifurcation of proceedings; (b) a change in the order of proof, such as having a major counterclaim heard before the claim; (c) a direction to the parties to focus on specific issues; and (d) presentation of evidence by alternative means such as video conferencing (as long as any adverse parties can fully cross-examine the witness). The AAA Rules also give the arbitrator the power to hear and decide dispositive motions.391
In terms of evidence, and as noted earlier in Chapter III, the AAA Rules allow the parties to offer evidence that is relevant and material to the dispute. The parties also must produce such evidence as the arbitrator deems necessary to obtain an understanding and determination of the dispute. The submission of evidence in arbitration does not need to conform to state or federal rules governing the submission of evidence (again, unless the arbitration agreement says otherwise). The arbitrator(s) are required to take into account applicable legal privileges, such as attorney-client communications.392 Evidence can include witness affidavits, although the AAA Rules specifically note that the arbitrator may give this the weight the arbitrator deems it is entitled.393
The RUAA arbitration processes among the states typically give arbitrators discretion as to how to run the arbitration. For example, the North Dakota RUAA states that an arbitrator may conduct an arbitration in such manner as the arbitrator considers appropriate for a fair and expeditious disposition of the proceeding.394 This includes the power to hold conferences with the parties and determine the admissibility, relevance, materiality, and weight of any evidence. It also allows the arbitrator to decide a request for summary disposition of a claim.
F. Award
The AAA Rules require that the award be in writing and signed by a majority of the arbitrators.395 The award consists of a written financial breakdown of any monetary awards. If there are non-monetary components of the claims or counterclaims, then the award includes a line item disposition of each of these. The parties may request a specific form of award, including an opinion, an abbreviated opinion, findings of fact, or conclusions of law. If the parties disagree regarding the form of the award, then the arbitrator determines the form. However, under the AAA Large, Complex Construction Disputes Procedures, the award will be a reasoned award unless the parties otherwise agree.
Importantly, the AAA Rules require that the award include an assessment of fees, expenses, and compensation of the AAA and the arbitrators. The award may apportion those amounts as the arbitrators determine is appropriate. Additionally, the AAA Rules state that the award of the arbitrators may include: (a) interest at such rate and from such date as the arbitrator may deem appropriate; and (b) an award of attorneys’ fees if all parties have requested such an award or it is authorized by law or their arbitration agreement.396
Unless the parties agree to a time limit or a time limit is specified by law, the AAA Rules require the arbitrators to make the award no later than 30 calendar days from the closing date of the hearing.397 The parties may mutually agree to extend this time period but the AAA or arbitrators may not extend except in “unusual and extreme circumstances.”398 If an oral hearing has been waived, the time period for issuing the award begins to run from the due date set for receipt of the parties’ final statements and proofs.399
Under the Nebraska NUAA, which appears typical of other state statutes, the award is to be made within the time specified by the agreement to arbitrate or, if not specified therein, within the time ordered by the court.400 This provides less certainty as to when an award will be made by the arbitrator.
G. Fast Track Procedures
The RUAA does not differentiate between arbitrations of different monetary values. Because many of the DOT arbitrations are for matters under $100,000, the AAA’s Fast Track Procedures may be called upon for dispute resolution. While it is beyond the scope of this digest to provide substantial detail about AAA’s Fast Track Procedures, a few of their more important attributes include the following:
- Claims under $25,000 can be resolved based on documents.
- There is only one arbitrator.
- There is no discovery.
- The hearing should not exceed one day and is to take place within 45 days of the preliminary conference.
- The award is to be rendered in 14 calendar days rather than the 30 calendar days for the regular arbitration process.
While these processes can be changed by the parties, and the arbitrator does have some discretion to modify the prehearing and hearing procedures, the intent of this process is to make the arbitration fast and cost-effective.
___________________
390 AAA RULES R-33 - CONDUCT OF THE CASE.
391 AAA RULES R-34 - DISPOSITIVE MOTIONS.
392 AAA RULES R-35 - EVIDENCE.
393 AAA RULES R-36 - EVIDENCE BY AFFIDAVIT AND POST-HEARING FILING OF DOCUMENTS OR OTHER EVIDENCE.
394 N.D. CENT. CODE § 32-29.3-15 (2022).
395 AAA RULES R-47 - FORM OF AWARD.
396 AAA RULES R-48 - SCOPE OF AWARD.
397 AAA RULES R-46 - TIME OF AWARD.
398 AAA RULES R-40 - CLOSING OF HEARING.
399 AAA RULES R-46 - TIME OF AWARD.
400 N.D. CENT. CODE § 32-29.3-19 (2022). Alaska, which similarly uses the RUAA process for its DOT arbitrations, has an identical provision in its statute. ALASKA STAT. § 09.43.460 (2019).
