There has been much recent discussion about mandatory arbitration since a series of New York Times articles earlier this month describing how, “.. clauses buried in tens of millions of contracts have deprived Americans of one of their most fundamental constitutional rights: their day in court.”
The U.S Chamber of Commerce even responded, the “New York Times continued its deceptive caricature of arbitration” arguing arbitration works as well or better than litigation.
There is little question that a properly drafted provision in a contract requiring arbitration is enforceable. The Supreme Court, in American Express v. Italian Colors Restaurant decided in 2013, “the overarching principle that arbitration is a matter of contract. .. Courts must “rigorously enforce” arbitration agreements according to their terms.”
And while much of the recent discourse has been about contracts with consumers, alternative dispute resolution provisions, including those requiring arbitration are common in construction industry contracts. With over a million contract documents licensed on an annual basis, the AIA’s form construction documents are likely the most widely used contract documents in the industry. And while the AIA documents mandated arbitration as the exclusive form of binding dispute resolution for well over 100 years, the current form of documents including the new Sustainable Projects documents, contain a ‘check the box’ where the parties choose between arbitration, litigation or other agreed process.
Arbitration is particularly wide spread in green building and has had the impact of so few green building disputes ever reaching a courtroom. Even the LEED Green Building Certification Inc. Certification Agreement has a mandatory arbitration provision.
Many green building materials suppliers have provisions in their purchase contract requiring arbitration. A quick online review of 25 suppliers registered as exhibiters at Greenbuild 2015 (arbitrarily selected from a single aisle on the expo show floor) found 16 had contracts requiring arbitration.
Maybe more surprising are contracts requiring religious arbitration, like that required by bamboo floor supplier Higuera Hardwoods, that provides,
Arbitration shall be by a single arbitrator experienced in the matters at issue and selected by principal and agent in accordance with the Rules of Procedure for Christian Conciliation of the Institute for Christian Conciliation, a division of Peacemaker Ministries.
While it is a court enforcing an arbitration provision involving a Church of Scientology agreement that makes headlines and concern over a court enforcing an alternative dispute resolution applying sharia law is publicly debated, courts have been enforcing these provisions both under the edict of the Supreme Court in the American Express decision and out deference to the First Amendment rights of the religious group. Anecdotally, it appears most of these cases are Christion conciliation.
Arbitration can be useful in some matters of green building for a variety of reasons including that experienced green building construction arbitrators are better suited to rule on complex construction disputes rather than layperson judges and juries, and that arbitration is a faster and more cost effective dispute resolution process.
The take away from all of this may be to pay particular attention to and negotiate the dispute resolution provisions in contracts. And always consult your attorney before signing.
The annual Greenbuild International Conference and Expo is happening this week in Washington DC. As a reader of this blog, if you email me before Greenbuild, I will gladly buy you a drink or a cup of coffee at a DC watering hole. (I made a similar offer last year and had a great time meeting a lot of very fun people for coffee and beignet at Café Du Monde.) I hope to see you in DC this week.