Summary of Significant Changes

Construction Industry Arbitration Rules and Mediation Procedures

Summary of Significant Changes Construction Industry Arbitration Rules and Mediation Procedures

Amended and Effective October 1, 2009

Construction Industry Mediation Procedures

M-3 Fixing of Locale: Absent party agreement, the locale shall be the city nearest to the site of the project as determined by the AAA.

M-4 Representation (formerly M-3): Clarifies who may serve as a party representative.

M-8 Duties and Responsibilities of the Mediator (formerly M-7): Subsection (vii) was added stating that the mediator shall set the date, time and place for each mediation conference and the parties shall be cooperative with scheduling. The AAA shall provide notice of the conference when timing permits.

M-14 Exclusion of Liability (formerly M-13): Additional language was added that parties may not call the mediator, the AAA or AAA employees as witnesses in litigation or any other proceeding relating to the mediation. The mediator, the AAA and AAA employees are not competent to testify as witnesses in any such proceeding.

M-18 Cost of the Mediation (formerly M-17): Language has been added that a mediator may charge a daily compensation rate. The administrative fee charged when a mediation matter is withdrawn or cancelled or ends in settlement prior to the mediation session has been changed to $200 and shall be paid by the initiating party.

Regular Track Procedures

Time Period for Due Dates: Throughout the Rules any fifteen day response period was changed to fourteen calendar days.

R- 1 Agreement of Parties and Designation of Applicable AAA Rules: The Construction Rules may be applied to construction disputes arising from contracts which contain arbitration agreements naming the AAA without specifying the Construction Rules. In paragraphs (b) and (c) attorneys' fees are not included when calculating the total claim amount for the application of the Fast Track Procedures (hereinafter Fast Track) or the Procedures for Large Complex Construction Disputes (hereinafter LCC). Paragraph (d) states that parties may agree to use the Fast Track, LCC or the Procedures for the Resolution of Disputes Through Document Submission on any size dispute.

R-2 AAA and Delegation of Duties: Arbitrations using these Rules may only be administered by the AAA or an organization or person so authorized by the AAA.

R-3 National Panel of Construction Neutrals: "Roster" has been changed to "Panel."

R-4 Filing Requirements Under an Arbitration Agreement in a Contract: The title of this section has been changed. Paragraph (b) states when the AAA will acknowledge receipt of a filing and how the filing date is established. Additionally, a process for handling deficient filings is now included in this section. Paragraph (c) contains separate subparagraphs for the filing of Answers and Counterclaims and states that the administrative filing fee for counterclaims must be paid at the time of filing. Language regarding deficient counterclaim filings is also included.

R-5 Filing Requirements Under a Submission Agreement: The title was changed and paragraph (d) states that the filing fee for each claim or counterclaim filed in a Submission must be paid at the time of filing.

R-6 Changes of Claim or Counterclaim: A requirement for parties to provide written notice to the AAA and all parties of any change of claim amount was added. The time frame for a response to a new or different counterclaim was changed from ten days to fourteen calendar days.

R-7 Consolidation or Joinder: Subparagraphs (a)(i) and (a)(ii) were added to include the process for the filing of a request to consolidate arbitrations or a request to join parties. The role of an R-7 arbitrator appointed under this section for the limited purpose of deciding whether related arbitrations should be consolidated or parties joined has been further defined.

R-8 Interpretation and Application of Rules (formerly R-54): No change was made to this section.

R-10 Mediation (formerly R-9): Paragraph (a) "[u]nless requested by all parties" and "the arbitrator's consent to do so is also required" was added to the statement that the mediator shall not be an arbitrator appointed to the case. Paragraph (b) was added stating that, unless the parties agree otherwise or by decision of the arbitrator, the arbitration shall not be stayed while the mediation is pending.

R-11 Administrative Conference (formerly R-10) : The purpose of the administrative conference was expanded and the administrative conference may be convened at any point during the case.

R-12 Fixing of Locale (the city, county, state, territory and, if applicable, country of the Arbitration) (formerly R-11): A new deadline for filing a locale dispute was added. The process for resolving a locale dispute is set forth in paragraphs (a), (b) and (c) and the processes are guided by the extent to which locale is addressed by the parties' arbitration agreement. The section also clarifies that an arbitrator may determine the locale for special hearings, such as hearings established for the production of documents.

R-13 Date, Time and Place Of Hearing (formerly R- 23): The period of time for the AAA to send notice of the hearing date has been changed from ten calendar days to at least seven calendar days in advance of the hearing date, unless otherwise agreed by the parties or directed by the arbitrator.

R-14 Arbitrator Appointment from National Construction Panel (formerly R-12): The parties are not to exchange their arbitrator selection lists, and if a party fails to return its own list, all names on the list will be deemed acceptable to that party. Paragraph (e) states that the parties shall attempt to agree on the professional composition of the panel. If they are unable to agree, the section authorizes the AAA to make the determination, taking into account the preferences expressed by the parties. The section also states that the AAA has the discretion to provide the parties with multiple lists, separated by profession.

R-18 Number of Arbitrators (formerly R-16): Paragraph (b) states that a party has seven calendar days after receiving notice of the change in claim or counterclaim to request a change in the number of arbitrators serving on the case. If the parties are unable to agree on the number of arbitrators, the AAA shall make the determination.

R-19 Disclosure (formerly R-17): The parties and their representatives shall disclose any circumstance likely to give rise to justifiable doubt as to the arbitrator's impartiality or independence.

R-21 Communication with Arbitrator and the AAA (formerly R-19): Paragraph (a) outlines the limited circumstances where ex-parte communication between a party and an arbitrator may be permissible. Paragraph (c) states that in the course of case administration, the AAA may communicate with the parties or anyone acting on a party's behalf either jointly or individually. Paragraph (d) states that unless the AAA or arbitrator instructs otherwise, any documents submitted by a party to the AAA or the arbitrator must be simultaneously provided to the other party or parties to the arbitration.

R-23 Preliminary Management Hearing (formerly R-21): Paragraphs (a) -- (i) outline the issues to be considered at the preliminary hearing . The section states that it will be presumed that the preliminary hearing will be conducted by telephone unless the parties agree otherwise or if the arbitrator specifically directs otherwise. The arbitrator shall promptly issue written orders reflecting the arbitrator's decisions on the matters discussed during the preliminary hearing.

R-24 Exchange of Information (formerly R-22): The due date for exchanging exhibits was changed from five business days prior to the hearing to seven calendars days. Paragraph (d) states that there should be no other discovery except as ordered by the arbitrator in "exceptional cases."

R-26 Representation (formerly R-25): Clarifies who may serve as party representative. The timeframe for providing notice of representation was changed to seven calendar days prior to the date set for hearing.

R-28 Stenographic Record (formerly R-27): Paragraph (b) prohibits any other means of recording the hearing absent party agreement or order of the arbitrator. Paragraph (d) establishes the arbitrator's authority for resolving disputes regarding apportionment of cost for recording the hearing.

R-32 Conduct of Proceedings (formerly R-31): Paragraph (b) provides that the arbitrator may allow for alternate means of evidence presentation. The arbitrator's authority to entertain motions was moved to paragraph (c).

R-35 Inspection or Investigation (formerly R-34): Unless the parties so agree, the arbitrator may not undertake a site inspection without all parties present. An exception was established to address the situation where a case is proceeding in the absence of a party pursuant to R-31.

R-36 Interim Measures (formerly R-35): Paragraph (d) was added to allow the arbitrator to apportion costs, in either the interim award or the final award, associated with the application for any interim relief.

R-37 Closing of Hearing (formerly R-36): Paragraph (b) establishes the due date for the receipt of the final submission of documents as the close of hearings when post-hearing filings have been ordered. Paragraph (c) allows the AAA to extend the time limit for the rendering of the award in unusual and extreme circumstances.

R-40 Extensions of Time (formerly R-39): Paragraph (a) makes extensions of time agreed upon by the parties, which adversely affect the efficient resolution of the dispute, subject to arbitrator review and approval.

R-41 Serving of Notice (formerly R40): Paragraph (b) added email as a method of giving notice required by these rules.

R- 42 Majority Decision (formerly R-41): In a multi-arbitrator case, if all parties and all arbitrators agree, the chair of the panel may make procedural decisions.

R-44 Form of Award (formerlyR-43): Paragraph (b) states that the arbitrator shall provide a "concise written financial breakdown" and that the award shall address any non-monetary components of the claims or counterclaims. Paragraph (c) addresses the form of the award.

R-46 Award Upon Settlement (formerly R-45): Paragraph (b) requires that all administrative fees and arbitrator compensation be paid prior to the release of a consent award.

R-49 Release of Documents (formerly R-48): The title has been changed. The AAA shall provide, upon the written request of a party, papers in the AAA's possession except those the AAA deems to be privileged or confidential. The reference to the release of documents for judicial proceedings was removed.

R-50 Withdrawal of Claims or Counterclaims: This is a new rule stating that no claim or counterclaim may be withdrawn unless the parties agree or the arbitrator consents and that the arbitrator decides whether or not a claim or counterclaim is withdrawn with or without prejudice.

R-51 Application to Court and Exclusion of Liability (formerly R-49): Paragraph (e) has been added, stating that the AAA, its employees and the arbitrator are not competent to testify as witnesses.

R-54 Neutral Arbitrator's Compensation (formerly R-52): A reference was added to the R-7 arbitrator. Paragraph (b) states that for the purposes of allocating arbitrator compensation, the AAA may consider multiple parties being represented by the same representative as one party. Paragraph (e) states that the arbitrator's requests for payment shall be made available to the parties upon request.

R-55 Deposits (formerly R-53): Paragraph (b) explains how deposit amounts are calculated. Paragraph (c) provides that upon the request of any party, the AAA shall request from the arbitrator an explanation or itemization of the arbitrator's request for deposit.

R-56 Remedies for Nonpayment (formerly R-55):  Paragraph (b) expands the range of options available when one or more parties has not paid its share of administrative charges or deposits for arbitrator compensation.   Paragraph (d) the arbitrator has the authority to terminate a proceeding for non-payment after the issuance of an order suspending a matter for non-payment.

Procedures for the Resolution of Disputes through Documents Submission

These new procedures, based on party agreement, outline a process for arbitration where there is no in-person hearing.

Fast Track Procedures

F-1 Fast Track Applicability: Adds circumstances in which the AAA may remove a case from the Fast Track. Language from the prior rule F-8 is also included.

F-2 Answers and Counterclaims: An answer or counterclaim must be filed within seven calendar days after notice of the filing of the demand is sent by the AAA.

F-3 Limitations on Extensions (formerly F-1): In the absence of extraordinary circumstances, the AAA may grant no more than one seven calendar day extension of the time in which to respond to a demand for arbitration. All other extensions are governed by R-40 and F-12.

F-4 Changes of Claim or Counterclaim (formerly F-2): The timeframe for changing the amount of a claim or counterclaim is seven calendar days prior to the first scheduled hearing. Parties have seven calendar days to respond to the notice of any new or different claim.

F-5 Appointment and Qualification of Arbitrator (formerly F-4): Parties may strike two names each from the list if they cannot agree upon an arbitrator.

F-6 Serving of Notice for Hearing (formerly F-3): Notice for hearings may be sent by email.

F-7 Preliminary Telephone Management Hearing (formerly F-5): The title has been changed. The conference must be held within ten calendar days of the confirmation of the arbitrator's appointment. The arbitrator shall organize the hearing to keep to the time standards established by the rules.

F-8 Exchange of Information (formerly F-6): The title has been changed. The deadline for exchanging copies of exhibits and any other information to be presented at hearing is now five business days before the hearing.

F-9 Discovery (formerly F-7): Except as provided in F-8, there shall be no other discovery except as ordered by the arbitrator in "exceptional cases."

F-10 Date, Time, and Place of Hearing (formerly F-9): Hearing shall be set so as to meet the requirements of F-12.

F-11 The Hearing (formerly F-10): Language provides for flexibility in completing the presentation of the parties' cases.

F-12 Time Standards: The hearing shall be closed no later than 45 calendar days after the date of the preliminary telephone conference. If the time is to be extended, the arbitrator shall memorialize the reasons in writing. The AAA may extend the time standards if the parties agree to AAA mediation.

F-14 Arbitrator's Compensation (formerly F-13): The reference to the "regional office" was removed and replaced with "AAA."

Procedures for Large, Complex Construction Disputes

L-1 Applicability: A new section was added to state when these procedures are directly applied. The threshold for direct application was raised from $500,000 to $1,000,000.

L-2 Administrative Conference (formerly L-1): The purpose of the administrative conference has been expanded to include a discussion of cost effective case management and any other items which may facilitate management of the complex case.

L-3 Arbitrators (formerly L-2): Paragraph (a) states that if the parties are unable to agree on the number of arbitrators, three arbitrators shall hear the case.

L-4 Preliminary Management Hearing (formerly L-3): The title was changed. A reference to R-23 was added. Paragraphs (a) -- (k) outline items which may facilitate the efficient and cost effective management of the case. The arbitrator may issue an agenda in advance of the preliminary management hearing.

L-6 Form of Award: This section requires a reasoned award unless the parties agree otherwise.