Home Construction Arbitration Rules and Mediation PROCEDURES Rules Effective June 1, 2007 On June 1, 2007, the American Arbitration Association introduced the Home Construction Arbitration Rules and Mediation Procedures , which replaced the Supplementary Procedures for Residential Construction Disputes. Please reference the Home Construction Arbitration Rules and Mediation Procedures in any new agreements, contracts or warranties related to residential construction and remodeling. Case filings that reference the Supplementary Procedures for Residential Construction Disputes will be accepted until December 31, 2008. Thereafter, cases filed under the Supplementary Procedures for Residential Construction Disputes will be administered under the Home Construction Arbitration Rules and Mediation Procedures. Please also note that according to the Home Construction Arbitration Rules and Mediation Procedures (ARB-1), parties must have agreed to file cases under these Rules in order to utilize them. "Agreement" between the parties takes the form of a dispute resolution clause that names the AAA and its Home Construction Rules in a contract or a written consent between the parties to have the Home Construction Arbitration Rules and Mediation Procedures apply post-dispute. If the parties' agreement calls for AAA Rules such as the Construction Industry Arbitration Rules, please file your dispute resolution claim in accordance with the procedures named. If specific Rules are not named, please file your claim under the AAA's Commercial Arbitration Rules and Mediation Procedures . TABLE OF CONTENTS HIGHLIGHTS AND SPECIAL CONSIDERATION HOME CONSTRUCTION MEDIATION PROCEDURES M-1. Agreement of Parties
M-4. Appointment of the Mediator
M-7. Duties and Responsibilities of the Mediator HOME CONSTRUCTION ARBITRATION RULES ARB-1. Agreement of Parties ARB-8. Initiation under a Submission Agreement ARB-31. Conduct of Proceedings ARB-35. Interim Measures ARB-46. Modification of Award INTRODUCTION Why AAA Home Construction Arbitration Rules and Mediation Procedures? Each year, over a million new homes are built and sold in the United States. Occasionally, disagreements develop between the homeowner and homebuilder, and it is important to resolve them quickly and cost effectively. These Home Construction Arbitration Rules and Mediation Procedures are suggested for mediation and arbitration provisions in homebuilding contracts because they will provide both parties with fair and cost-effective mediation or arbitration of their dispute. The AAA recommends that parties continue to attempt direct negotiations to resolve their problem and recommends using mediation under these Rules whenever possible. But if negotiations fail, the AAA's Home Construction Rules provide the parties with a hearing by an impartial arbitrator who will make a ruling (award) that is binding. What is mediation? Mediation is a process in which parties submit their dispute to a neutral third party (the mediator) who works with the parties to reach a settlement of their dispute. Mediation is an extension of the negotiation process. Mediators do not have the authority to decide issues; they simply assist the parties in reaching an acceptable settlement by probing the motivations and concerns of the parties in an effort to find a basis for resolving the parties' dispute. It is the mediator's neutrality that frequently enables him or her to move beyond the posturing of the parties so that their true concerns can be addressed. Submitting your dispute to AAA mediation will not cause delay to any pending lawsuit or arbitration you may have unless agreed to by the parties. Mediators who serve on the AAA's Roster are experts in successful negotiation. Mediators receive a fee from the parties for their services. They are also rewarded by knowing that their efforts have resulted in an amicable settlement of a dispute that would have cost substantial time and money had it been litigated through the courts. What are the benefits of mediation? The benefits of successfully mediating a dispute to settlement vary, depending on the needs and interests of the parties. The most common advantages are:
The parties might wish to try mediation before submitting their dispute to arbitration. Whether mediation is required in the contract, or whether the parties agree to mediate, mediation should always be considered as an option. Who are the AAA's mediators? Mediators on the AAA's Roster include lawyers, former judges and business persons who have met the qualification criteria and who have been trained in mediation techniques. Qualification criteria include:
When a case is filed with the AAA, the AAA will appoint a mediator, unless the parties' agreement specifies a different method of appointment. The parties will be notified of the mediator's qualifications, including educational institutions attended, degrees earned, employment history, professional licenses or certifications, offices held in professional and trade associations, the individual's work experience and participation in neutral training programs. Mediators must disclose any relationship with the parties, their attorneys or others involved in the case, such as witnesses; those with disqualifying relationships will not be permitted to serve on the particular case. This assures the parties that the mediator is neutral. What is arbitration? Arbitration is the referral of a dispute to one or more impartial persons for final and binding decision or award. It is designed to be private, informal, quick, practical and economical. Parties frequently negotiate certain aspects of the arbitration process to make for a more efficient process. The parties may also provide for expedited arbitration procedures, including expedited rendering of the award, if they anticipate a need for hearings to be scheduled on short notice. An important feature of arbitration is its informality. Under the standard AAA rules, the procedure is relatively simple: legal rules of evidence are not applicable; there is no motion practice or court conference; there is no requirement for transcripts of the proceedings or for written opinions of the arbitrators. Although there is no formal discovery process, the AAA's rules allow the arbitrator to require production of relevant documents, the deposition of factual witnesses and an exchange of reports of expert witnesses. The standard AAA rules are flexible and may be varied by mutual agreement of the parties. The fact that the arbitrators are trained and have professional expertise is also important. Arbitrators are selected for specific cases because of their knowledge of the subject matter. Based on that experience, arbitrators can render an award grounded on thoughtful and thorough analysis. Most parties provide for arbitration of disputes because they are seeking a final and binding resolution of their business conflicts. Court intervention and review are limited by applicable state or federal arbitration laws; award enforcement is facilitated by those same laws. Another important advantage of arbitration is that it is designed to be private, having no public record of the dispute or of the facts presented in resolving the dispute. The AAA has prepared a booklet, Drafting Dispute Resolution Clauses: A Practical Guide, which sets forth many examples of specific provisions that can be included in a mediation or an arbitration clause. In addition, the AAA has available A Guide to Mediation and Arbitration for Business People, which details how to initiate and prepare for the arbitration process. Copies of the guides are available from any of the AAA regional offices or by calling the AAA's customer service department at (800) 778-7879. The guides can also be downloaded from the AAA's website at www.adr.org. What are the benefits of arbitration?
Who are the AAA's arbitrators? Arbitrators on the AAA's Roster of Home Construction Arbitrators include lawyers and former judges who have met the qualification criteria and who have been trained by the AAA in arbitration techniques. Qualification criteria include:
When a case is filed with the AAA, the parties select the arbitrator from a list prepared by the AAA. The list contains the proposed arbitrators' credentials, including educational institutions attended, degrees earned, employment history, professional licenses or certifications, offices held in professional and trade associations, the individuals' work experience and participation in neutral training programs. Arbitrators must disclose any relationship with the parties, their attorneys or others involved in the case, such as witnesses; those with disqualifying relationships will not be permitted to serve on the particular case. This assures the parties that the arbitrator(s) is/are neutral. What is the role of the AAA? The AAA primarily serves as an arbitration and mediation administrator. To bring the matter to a prompt, fair conclusion, the AAA will provide administrative services that will include, but are not limited to:
AAA also conducts educational programs, prepares materials that explain alternative dispute resolution (ADR) processes, maintains current data on Roster members and provides related services to the parties, both domestically and internationally. HIGHLIGHTS OF THESE RULES AND SPECIAL CONSIDERATIONS
HOME CONSTRUCTION MEDIATION PROCEDURES M-1. Agreement of Parties Whenever, by stipulation or in their contract, the parties have provided for mediation or conciliation of existing or future disputes under the auspices of the American Arbitration Association (AAA) or under these procedural guidelines, the parties and their representatives, unless agreed otherwise in writing, shall be deemed to have made these procedures, as amended and in effect as of the date of filing of a request for mediation, a part of their agreement and designate the AAA as the administrator of their mediation. The parties by mutual agreement may vary any part of these procedures including, but not limited to, agreeing to conduct the mediation via telephone or other electronic or technical means. M-2. Initiation of Mediation Any party or parties to a dispute may initiate mediation under the AAA's auspices by making a request for mediation to any of the AAA's regional offices or case management centers via telephone, email, regular mail or fax. Requests for mediation may also be filed online via AAA WebFile at www.adr.org. The party initiating the mediation shall simultaneously notify the other party or parties of the request. The initiating party shall provide the following information to the AAA and the other party or parties as applicable:
Where there is no preexisting stipulation or contract by which the parties have provided for mediation of existing or future disputes under the auspices of the AAA, a party may request the AAA to invite another party to participate in "mediation by voluntary submission." Upon receipt of such a request, the AAA will contact the other party or parties involved in the dispute and attempt to obtain a submission to mediation. M-3. Representation Subject to any applicable law, any party may be represented by persons of the party's choice. The names and addresses of such persons shall be communicated in writing to all parties and to the AAA. M-4. Appointment of the Mediator Parties may search the online profiles of the AAA's Panel of Mediators at www.aaamediation.com in an effort to agree on a mediator. If the parties have not agreed to the appointment of a mediator and have not provided any other method of appointment, the mediator shall be appointed in the following manner:
M-5. Mediator's Impartiality and Duty to Disclose AAA mediators are required to abide by the Model Standards of Conduct for Mediators in effect at the time a mediator is appointed to a case. Where there is a conflict between the Model Standards and any provision of these Mediation Procedures, these Mediation Procedures shall govern. The Standards require mediators to (i) decline a mediation if the mediator cannot conduct it in an impartial manner, and (ii) disclose, as soon as practicable, all actual and potential conflicts of interest that are reasonably known to the mediator and could reasonably be seen as raising a question about the mediator's impartiality. Prior to accepting an appointment, AAA mediators are required to make a reasonable inquiry to determine whether there are any facts that a reasonable individual would consider likely to create a potential or actual conflict of interest for the mediator. AAA mediators are required to disclose any circumstance likely to create a presumption of bias or prevent a resolution of the parties' dispute within the time-frame desired by the parties. Upon receipt of such disclosures, the AAA shall immediately communicate the disclosures to the parties for their comments. The parties may, upon receiving disclosure of actual or potential conflicts of interest of the mediator, waive such conflicts and proceed with the mediation. In the event that a party disagrees as to whether the mediator shall serve, or in the event that the mediator's conflict of interest might reasonably be viewed as undermining the integrity of the mediation, the mediator shall be replaced. M-6. Vacancies If any mediator shall become unwilling or unable to serve, the AAA will appoint another mediator, unless the parties agree otherwise, in accordance with section M-4. M-7. Duties and Responsibilities of the Mediator
M-8. Responsibilities of the Parties The parties shall ensure that appropriate representatives of each party, having authority to consummate a settlement, attend the mediation conference. Prior to and during the scheduled mediation conference session(s) the parties and their representatives shall, as appropriate to each party's circumstances, exercise their best efforts to prepare for and engage in a meaningful and productive mediation. M-9. Privacy Mediation sessions and related mediation communications are private proceedings. The parties and their representatives may attend mediation sessions. Other persons may attend only with the permission of the parties and with the consent of the mediator. M-10. Confidentiality Subject to applicable law or the parties' agreement, confidential information disclosed to a mediator by the parties or by other participants (witnesses) in the course of the mediation shall not be divulged by the mediator. The mediator shall maintain the confidentiality of all information obtained in the mediation, and all records, reports or other documents received by a mediator while serving in that capacity shall be confidential. The mediator shall not be compelled to divulge such records or to testify in regard to the mediation in any adversary proceeding or judicial forum. The parties shall maintain the confidentiality of the mediation and shall not rely on, or introduce as evidence in any arbitral, judicial or other proceeding the following, unless agreed to by the parties or required by applicable law:
M-11. No Stenographic Record There shall be no stenographic record of the mediation process. M-12. Termination of Mediation The mediation shall be terminated:
M-13. Exclusion of Liability Neither the AAA nor any mediator is a necessary party in judicial proceedings relating to the mediation. Neither the AAA nor any mediator shall be liable to any party for any error, act or omission in connection with any mediation conducted under these procedures. M-14. Interpretation and Application of Procedures The mediator shall interpret and apply these procedures insofar as they relate to the mediator's duties and responsibilities. All other procedures shall be interpreted and applied by the AAA. M-15. Deposits Unless otherwise directed by the mediator, the AAA will require the parties to deposit in advance of the mediation conference such sums of money as it, in consultation with the mediator, deems necessary to cover the costs and expenses of the mediation and shall render an accounting to the parties and return any unexpended balance at the conclusion of the mediation. M-16. Expenses All expenses of the mediation, including required traveling and other expenses or charges of the mediator, shall be borne equally by the parties unless they agree otherwise. The expenses of participants for either side shall be paid by the party requesting the attendance of such participants. M-17. Cost of the Mediation There is no filing fee to initiate a mediation or a fee to request the AAA to invite parties to mediate. The cost of mediation is based on the hourly mediation rate published on the mediator's AAA profile. This rate covers both mediator compensation and an allocated portion for the AAA's services. There is a four-hour minimum charge for a mediation conference. Expenses referenced in Section M-16 may also apply. If a matter submitted for mediation is withdrawn or cancelled or results in a settlement after the agreement to mediate is filed but prior to the mediation conference, the cost is $250 plus any mediator time and charges incurred. The parties will be billed equally for all costs unless they agree otherwise. If you have questions about mediation costs or services visit our website at www.adr.org or contact your local AAA office. Conference Room Rental The costs described above do not include the use of AAA conference rooms. Conference rooms are available on a rental bases. Please contact your local AAA office for availability and rates. Mediation Tips for Parties
HOME CONSTRUCTION ARBITRATION RULES ARB-1. Agreement of Parties
ARB-2. Applicability These Rules shall apply whenever the dispute relates to home construction and the parties' arbitration agreement refers to arbitration specifically under these Rules, or where the parties mutually agree to utilize these Rules to resolve a dispute relating to home construction. The Glossary defines "home" as used in these Rules. ARB-3. Dispute Levels
ARB-4. Expedited Hearing Procedures
ARB-5. AAA and Delegation of Duties When parties agree to arbitrate under these Rules, or when they provide for arbitration by the AAA and arbitration is initiated under these Rules, they thereby authorize the AAA to administer the arbitration. The authority and duties of the AAA are prescribed in the agreement of the parties and in these Rules, and may be carried out through such of the AAA's representatives as it may direct. The AAA may, in its discretion, assign the administration of an arbitration to any of its offices. ARB-6. National Panel of Arbitrators The AAA shall establish and maintain a Panel of Home Construction Arbitrators ("Roster") and shall appoint arbitrators as provided in these Rules. The term "arbitrator" in these Rules refers to the arbitration panel, constituted for a particular case, whether composed of one or more arbitrators, or to an individual arbitrator, as the context requires. ARB-7. Initiation under an Arbitration Provision in a Contract
ARB-8. Initiation under a Submission Agreement Parties to any existing dispute may commence an arbitration under these Rules by filing at any office of the AAA two copies of a written submission to arbitrate under these rules, signed by the parties. It shall contain a statement of the nature of the dispute, the names and addresses of all parties, any claims and counterclaims, the amount involved, if any, the remedy sought and the hearing locale requested, together with the appropriate filing fee as provided in the schedule included with these Rules. Unless the parties state otherwise in the submission, all claims and counterclaims will be deemed to be denied by the other party. ARB-9. Changes of Claim
ARB-10. Jurisdiction
ARB-11. Consolidation If the parties' contractual agreement or the law provides for consolidation or joinder of related arbitrations, all involved parties will endeavor to agree on a process to effectuate the consolidation or joinder. If they are unable to agree on the process to effectuate the consolidation or joinder, the Association shall directly appoint a single arbitrator for the limited purpose of establishing a fair and appropriate process for consolidation or joinder. The AAA may take reasonable administrative action to accomplish the consolidation or joinder as directed by the arbitrator. ARB-12. Mediation At any stage of the proceedings, the parties may agree to conduct a mediation conference under the Home Construction Mediation Procedures in order to facilitate settlement. The mediator shall not be an arbitrator appointed to the case. Where the parties to a pending arbitration agree to mediate under the AAA's rules, no additional administrative fee is required to initiate the mediation. ARB-13. Administrative Conference At the request of any party or upon the AAA's own initiative, the AAA may conduct an administrative conference, in person or by telephone, with the parties and/or their representatives. The conference may address such issues as arbitrator selection, potential mediation of the dispute, potential exchange of information, a timetable for hearings, whether the parties desire a reasoned award and any other administrative matters. ARB-14. Fixing of Locale If the parties have not provided a method for determining the locale of the arbitration in the arbitration agreement, the parties may mutually agree on the locale where the arbitration is to be held. If any party (who has not previously agreed to a locale by contract) requests the hearing be held in a specific locale, and the other party files no objection thereto within 15 calendar days after notice of the request has been sent to it by the AAA, the locale shall be the one requested. If a party objects to the locale requested by the other party, the AAA shall have the power to determine the locale, and its decision shall be final and binding. ARB-15. Appointment from National Roster If the parties have not appointed an arbitrator and have not provided any other method of appointment, the arbitrator shall be appointed in the following manner: Immediately after the filing of the submission or the answering statement or the expiration of the time within which the answering statement is to be filed, the AAA shall send simultaneously to each party to the dispute an identical list of names of persons chosen from the Roster. The parties are encouraged to agree to an arbitrator from the submitted list and to advise the AAA of their agreement.
If the parties fail to agree on any of the persons named, or if acceptable arbitrators are unable to act, or if for any other reason the appointment cannot be made from the submitted lists, the AAA shall have the power to make the appointment from among other members of the Roster without the submission of additional lists.
ARB-16. Number of Arbitrators If the arbitration agreement does not specify the number of arbitrators, the dispute shall be heard and determined by one arbitrator, unless the AAA, in its discretion, directs three arbitrators be appointed. A party may request three arbitrators in the demand or answer, which request the AAA will consider in exercising its discretion regarding the number of arbitrators appointed to the dispute. ARB-17. Disclosure
ARB-18. Disqualification of Arbitrator
ARB-19. Communication with Arbitrator No party and no one acting on behalf of any party shall communicate ex parte with an arbitrator or a candidate for arbitrator concerning the arbitration. ARB-20. Vacancies
ARB-21. Preliminary Hearing
ARB-22. Exchange of Information
At least five business days prior to the hearing, the parties shall (a) exchange directly between themselves copies of all exhibits, affidavits and any other information they intend to submit at the hearing, and (b) identify all witnesses they intend to call at the hearing. The arbitrator is authorized to resolve any disputes concerning the exchange of exhibits. If one or more issues directly or indirectly relate to alleged deficiencies in design, materials or construction, the arbitrator shall direct all parties and their experts be allowed to inspect, document (by photographs, videotape or otherwise) and test the alleged deficiencies at least five business days prior to the arbitration hearing. The arbitrator shall have the authority to resolve any disputes relating to the inspection, documentation and testing of the alleged deficiencies.
If one or more issues directly or indirectly relate to alleged deficiencies in design, materials or construction, the arbitrator shall direct that all parties and their experts be allowed to inspect, document (by photograph, videotape or otherwise) and test the alleged deficiencies. The arbitrator shall have the authority to resolve any disputes relating to the inspection, documentation and testing of the alleged deficiencies. Consistent with the expedited nature of arbitration, the arbitrator shall direct (i) the production of relevant documents and other information to be used in the arbitration (including expert reports and information relied upon by the experts), and (ii) the name and address of any witnesses to be called, and (iii) a brief summary of the testimony expected from each witness. At least five business days prior to the hearing, the parties shall exchange copies of all exhibits, affidavits and any other information they intend to submit at the hearing. The arbitrator is authorized to resolve any disputes concerning the exchange of information or objections to such information. There shall be no other discovery, except as indicated below or as ordered by the arbitrator in extraordinary cases when the demands of justice require it. Documents (applicable only to Level 3 disputes)
Interviews (applicable only to Level 3 disputes)
ARB-23. Date, Time and Place of Hearing For Level 1 and Level 2 disputes in which a hearing is to be held, the arbitrator will set the date, time and place of the hearing, to be scheduled to take place within 30 days of the arbitrator's appointment. The AAA will notify the parties in advance of the hearing date. When a hearing is scheduled for Level 3 disputes, the parties shall respond to requests for hearing dates in a timely manner, be cooperative in scheduling the earliest practicable date and adhere to the established hearing schedule. The AAA shall send a notice of hearing to the parties at least 10 days in advance of the hearing date, unless otherwise agreed by the parties. ARB-24. Attendance at Hearings The arbitrator and the AAA shall maintain the privacy of the hearings unless the law provides to the contrary. Any person having a direct interest in the arbitration is entitled to attend hearings. The arbitrator shall otherwise have the power to require the exclusion of any witness, other than a party or other essential person, during the testimony of any other witness. It shall be discretionary with the arbitrator to determine the propriety of the attendance of any other person other than a party and its representatives. ARB-25. Representation Any party may be represented by counsel or other authorized representative. A party intending to be so represented shall notify the other party and the AAA of the name and address of the representative at least five business days prior to the date set for the hearing at which that person is first to appear. When such a representative initiates an arbitration or responds for a party, notice is deemed to have been given. ARB-26. Oaths Before making any ruling or decisions, proceeding with the first hearing, or, where no hearing is held, before reviewing any evidence, each arbitrator may take an oath of office and, if required by law, shall do so. The arbitrator may require witnesses to testify under oath administered by any duly qualified person and, if it is required by law or requested by any party, shall do so. ARB-27. Stenographic Record Any party desiring a stenographic record shall make arrangements directly with a stenographer and shall notify the other parties of these arrangements at least three days in advance of the hearing. The requesting party or parties shall pay the cost of the record. If the transcript is agreed by the parties, or determined by the arbitrator to be the official record of the proceeding, it must be provided to the arbitrator and made available to the other parties for inspection, at a date, time and place determined by the arbitrator. ARB-28. Interpreters Any party wishing an interpreter shall make all arrangements directly with the interpreter and shall assume the costs of the service. ARB-29. Postponements The arbitrator may postpone any hearing upon agreement of the parties, upon request of a party for good cause shown or upon the arbitrator's own initiative. ARB-30. Arbitration in the Absence of a Party or Representative Unless the law provides to the contrary, the arbitration may proceed in the absence of any party or representative who, after due notice, fails to be present or fails to obtain a postponement. An award shall not be made solely on the default of a party. The arbitrator shall require the party who is present to submit such evidence as the arbitrator may require for the making of an award. ARB-31. Conduct of Proceedings
For Level 1 and Level 2 disputes in which a hearing is scheduled, the hearing generally shall not exceed one day. For good cause shown, the arbitrator may schedule additional hearings within seven business days after the initial day of hearings.
ARB-32. Evidence
ARB-33. Evidence by Affidavit and Post-hearing Filing of Documents or Other Evidence
ARB-34. Inspection or Investigation An arbitrator finding it necessary to make an inspection or investigation in connection with the arbitration shall direct the AAA to so advise the parties. The arbitrator shall set the date and time and the AAA shall notify the parties. Any party who so desires may be present at such an inspection or investigation. In the event one or all parties are not present at the inspection or investigation, the arbitrator shall make an oral or written report to the parties simultaneously and afford them an opportunity to comment. ARB-35. Interim Measures
ARB-36. Closing of Hearing The arbitrator shall specifically inquire of all parties whether they have any further proofs to offer or witnesses to be heard. Upon receiving negative replies or if satisfied that the record is complete, the arbitrator shall declare the hearing closed. If briefs are to be filed, the hearing shall be declared closed as of the final date set by the arbitrator for the receipt of briefs. If documents are to be filed as provided in section ARB-33 and the date set for their receipt is later than that set for the receipt of briefs, the later date shall be the closing date of the hearing. The time limit within which the arbitrator is required to make the award shall commence, in the absence of other agreements by the parties, upon the closing of the hearing. ARB-37. Reopening of Hearing The hearing may be reopened on the arbitrator's initiative, or upon application of a party, at any time before the award is made. If reopening the hearing would prevent the making of the award within the specific time agreed on by the parties in the contract(s) out of which the controversy has arisen, the matter may not be reopened unless the parties agree on an extension of time. ARB-38. Waiver of Rules Any party who proceeds with the arbitration after knowledge that any provision or requirement of these Rules has not been complied with and who fails to state an objection in writing shall be deemed to have waived the right to object. ARB-39. Extensions of Time For Level 1 and Level 2 disputes, except in extraordinary circumstances, the AAA or the arbitrator may grant a party no more than one seven-day extension of time to respond to the demand for arbitration or counterclaim. The parties may modify any period of time by mutual agreement. The AAA or the arbitrator may for good cause extend any period of time established by these Rules, except the time for making the award. The AAA shall notify the parties of any extension. ARB-40. Serving of Notice
For Level 1 and Level 2 disputes the parties shall also accept notice by telephone, e-mail or AAA WebFile process, if applicable. Telephonic notices by the AAA shall subsequently be confirmed in writing to the parties. Should there be a failure to confirm in writing any such oral notice, the proceeding shall nevertheless be valid if notice has, in fact, been given by telephone.
ARB-41. Majority Decision When the panel consists of more than one arbitrator, unless required by law or by the arbitration agreement, a majority of the arbitrators must make all decisions. ARB-42. Time of Award For Level 1 and Level 2 disputes, unless otherwise agreed by the parties, the award shall be rendered no later than 14 calendar days from the date of the closing of the hearing, or, if oral hearings have been waived, from the date of the AAA's transmittal of the final statements and proofs to the arbitrator. For Level 3 disputes, the award shall be made promptly by the arbitrator and, unless otherwise agreed by the parties or specified by law, no later than 30 calendar days from the date of closing the original or reopened hearing, or, if oral hearings have been waived, from the date of the AAA's transmittal of the final statements and proofs to the arbitrator. ARB-43. Form and Scope of Award
ARB-44. Award upon Settlement If the parties settle their dispute during the course of the arbitration and if the parties so request, the arbitrator may set forth the terms of the settlement in a "consent award." A consent award must include an allocation of arbitration costs, including administrative fees and expenses as well as arbitrator fees and expenses. ARB-45. Delivery of Award to Parties Parties shall accept as notice and delivery of the award the placing of the award or a true copy thereof in the mail addressed to the parties or their representatives at the last known addresses, personal or electronic service of the award or the filing of the award in any other manner that is permitted by law. ARB-46. Modification of Award Within 20 calendar days after the transmittal of an award, any party, upon notice to the other parties, may request the arbitrator, through the AAA, to correct any clerical, typographical or computational errors in the award. The arbitrator is not empowered to redetermine the merits of any claim already decided. The other parties shall be given 10 days to respond to the request. The arbitrator shall dispose of the request within 20 calendar days after transmittal by the AAA to the arbitrator of the request and any response thereto. ARB-47. Release of Documents for Judicial Proceedings The AAA shall, upon the written request of a party, furnish to the party, at the party's expense, certified copies of any papers in the AAA's possession that may be required in judicial proceedings relating to the arbitration. ARB-48. Applications to Court and Exclusions of Liability
ARB-49. Interpretation and Application of Rules The arbitrator shall interpret and apply these Rules insofar as they relate to the arbitrator's powers and duties. When there is more than one arbitrator and a difference arises among them concerning the meaning or application of these Rules, it shall be decided by a majority vote. If that is not possible, either an arbitrator or a party may refer the question to the AAA for final decision. All other rules shall be interpreted and applied by the AAA. ARB-50. Administrative Fees, Arbitrator Fees and Expenses and Suspension for Non-Payment The administrative fee charged by the AAA is for its administration, handling and processing of the arbitration claim. The amount of the administrative fee is based upon the size of the claim and counterclaim and is based only on the actual damages. Any additional damages such as punitive damages and attorneys' fees which may be claimed, are not included in the calculation of the administrative fee. The parties' share of the administrative fee is indicated in the chart that follows. These amounts must be paid at the time of filing. The case service fee indicated in the chart that follows, is part of the administrative fee, but is only due if a hearing is scheduled. If the claim is settled, the case service fee is not owed. A case service fee will be incurred for all cases that proceed to their first hearing. This fee will be payable in advance at the time that the first hearing is scheduled. This fee will be refunded at the conclusion of the case if no hearings have occurred. The AAA may, in the event of extreme hardship on the part of any party, defer or reduce the administrative fees. Arbitrator Fees The chart that follows indicates the amount due for arbitrator compensation based upon the size of the claim. These fees are paid in advance of the arbitration hearing. Any unused deposits are returned at the end of the case. Expenses The expenses of witnesses and experts for either side shall be paid by the party producing such witnesses. All other expenses of the arbitration, including required travel and other expenses of the arbitrator, AAA representatives and any witness and the cost of any proof produced at the direct request of the arbitrator, shall be borne equally by the parties, unless they agree otherwise or unless the arbitrator in the award assesses such expenses or any part thereof against any specified party or parties. Suspension for Nonpayment If arbitrator compensation or administrative fees have not been paid-in-full five business days prior to commencement of the hearing, the AAA may so inform the parties in order that one of them may advance the required payment. The arbitrator may assess these costs in the final award. If such payments are not made, the arbitrator may order the suspension or termination of the proceedings. If no arbitrator has yet been appointed, the AAA may suspend the proceedings. ADMINISTRATIVE FEES AND ARBITRATOR COMPENSATION Fee Schedule Level 1 Disputes -- $0 to $10,000
Level 2 Disputes -- Above $10,000 to $75,000
*This contemplates a one-day hearing. If additional days of hearing are needed, the parties will be responsible for sharing in the additional cost. Level 3 Disputes -- Above $75,000 and Non-monetary
*This contemplates a one-day hearing. If additional days of hearing are needed, the parties will be responsible for sharing in the additional cost. Refund Schedule The AAA offers a refund schedule on filing fees over and above a $350 minimum AAA fee. No refund will be issued to the homeowner for claims less than $75,000. Subject to the minimum fee requirements, refunds will be calculated as follows:
No refund will be made once an arbitrator has been appointed (this includes one arbitrator on a three-arbitrator panel). No refunds will be granted on awarded cases. Note: the date of receipt of the demand for arbitration with the AAA will be used to calculate refunds of filing fees for both claims and counterclaims. Hearing Room Rental The fees described above do not cover the rental of hearing rooms, which are available on a rental basis. Check with the AAA for availability and rates. Arbitration Checklist Before you file for arbitration:
Arbitration Tips for Parties
For further information on construction arbitration and mediation, visit our website at www.adr.org. GLOSSARY OF TERMS AAA WebFile The AAA offers fast, convenient online claim filing through our AAA WebFile service. In addition to filing claims, clients can make payments, perform online case management, access rules and procedures, electronically transfer documents, select Neutrals, use a case-customized message board and check the status of their case. Answering Statement This is a written response, by the respondent, to the initial claim. Typically, the answering statement will be a denial of the claim. Arbitration In arbitration, the parties submit disputes to an impartial person (the arbitrator) for a decision. Each party can present evidence to the arbitrator. Arbitrators decide cases with written decisions or "awards." An award is binding on the parties. A court may enforce an arbitration award, but the court's review of arbitration awards is limited. Arbitrator The arbitrator, not a party to the dispute, hears and reviews evidence and testimony from the parties either in person or by document submission and also telephonic hearings. The arbitrator then renders an award, deciding the disputed issues. Award This is the final decision or ruling by the arbitrator on a claim and/or counterclaim submitted to arbitration, sometimes called a "Decision." Case Manager The Case Manager is the AAA's employee assigned to handle the administrative aspects of the case. He or she does not decide the case. He or she only manages the case's administrative steps, such as exchanging documents, matching schedules and setting up hearings. The Case Manager is the parties' contact point for almost all aspects of the case outside of any hearings. Claim This is the underlying basis for arbitration or mediation. The claim can be either for monetary or non-monetary damages. Claimant A Claimant is the party who files the claim or starts the arbitration. Either the homeowner or homebuilder may be the Claimant. Counterclaim More than just an answering statement, a counterclaim is an assertion that damages are owed to the Respondent by the Claimant. Desk Arbitration In a desk arbitration, the parties submit their arguments and evidence to the arbitrator in writing. The arbitrator then makes an award based only on the documents. No hearing is held. Home A home is a single family, duplex, triplex, quadplex, townhome, modular or manufactured home or a unit in a multi-unit residential structure in which title to the individual units is transferred to the owners under a condominium or cooperative system. In-Person Hearing During an in-person hearing, the parties and the arbitrator meet in a conference room or office and the parties present their evidence in a process that is similar to going to court. An in-person hearing, however, is not as formal as going to court. Level 1 Disputes No claim or counterclaim exceeds $10,000. For Level 1 disputes, either party can opt to file their claim in Small Claims Court if the claim or counterclaim is within the jurisdictional limits of such court. Level 2 Disputes Claims or counterclaims are greater than $10,000 but not more than $75,000. Level 3 Disputes Claims or counterclaims are greater than $75,000 or are non-monetary. Mediation In mediation, an impartial person (the mediator) helps the parties try to settle their dispute by facilitating an equitable solution to the problem between them. Mediation should not be confused with arbitration or litigation, in which the parties or their lawyers present their case to a third party (the arbitrator or judge) who makes a decision for them. In mediation, the mediator facilitates the dialogue between the parties, but it is the parties who decide whether there will be an agreement and what the agreement will be. Owner An owner means a homeowner, including a subsequent purchaser, tenant, or association or a subrogee or assignee of the homeowner. Respondent A Respondent is the party against whom the claim is filed. A Respondent may, in response to the Claimant's demand, state a claim in arbitration against the Claimant. Such a claim is called a counterclaim. Either the homeowner or the homebuilder may be the Respondent. Telephone Hearing In a telephone hearing, the parties have the opportunity to tell the arbitrator about their case during a conference call. Often this is done after the parties have sent in documents for the arbitrator to review. A telephone hearing can be less expensive and easier than an in-person hearing. The American Arbitration Association wishes to recognize the contributions of the advisory committee members who assisted in the development of the Home Construction Arbitration Rules and Mediation Procedures. Frank Brown Weissman Nowack Curry & Wilco Atlanta, GA Steven E. Lane Robert C. Prather, Sr. Jordan, Dunlap, Prather & Harris, LLP Dallas, TX Danny Shaw Baker Donelson Mandeville, LA Henry ("Corky") Strickland Associate Dean and Professor of Law Cumberland School of Law Samford University Birmingham, AL Carol Young Assistant Attorney General State of Connecticut New Canaan, CT
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