Are you stuck in a dispute over a construction contract? If so, then it is crucial that you know how to protect your rights and your interests. You may be wondering: Can you be required to go to arbitration for a construction contract dispute? In North Carolina, the answer is “yes”—assuming that the agreement contains a legally enforceable arbitration clause.
In this article, our construction lawyers provide a comprehensive overview of the most important things to know about arbitration and mandatory arbitration provisions in North Carolina.
What is Commercial Arbitration?
As defined by the North Carolina Courts, arbitration “is an informal trial held before a neutral court official called an arbitrator.” Arbitration can offer some advantages. It may be faster and less expensive than a full trial. The arbitrator may also have more knowledge and experience specific to resolving construction disputes than a typical judge.
In North Carolina, arbitration may either be binding or non-binding. In some cases, parties voluntarily agree to arbitrate their dispute. In others, a contract mandates binding or non-binding arbitration. North Carolina law could also require non-binding arbitration in some circumstances. Below are some key differentiations between binding and non-binding arbitration:
- With binding arbitration, the arbitrator issues a legally enforceable decision. Parties have minimal appeal rights.
- With non-binding arbitration, the arbitrator renders a decision. There is no legally enforceable award/order, but the decision can often help to encourage settlement.
North Carolina Courts Will Generally Enforce a Mandatory Arbitration Clause
North Carolina courts typically uphold mandatory arbitration clauses in contracts, reflecting the general favorability of U.S. law towards such provisions. These clauses are generally favored by the courts because they reduce the caseload before them and are thought to streamline conflict management. North Carolina law also generally allows the parties to a contract to dictate its terms. The courts will enforce the contract so long as the terms do not otherwise violate North Carolina or Federal law, which means that courts will assume that the parties agreed to the arbitration clause. For these reasons, a court will generally enforce an arbitration clause if your construction contract includes one.
Note: Under North Carolina General Statute § 7A-37.1, non-binding arbitration may also be required by law for certain civil legal disputes. For example, all civil actions filed in North Carolina District Court may be subject to court-ordered non-binding arbitration by order of the court, with some exceptions.
Construction Contracts Should Be Carefully Reviewed
Construction contracts often contain complex provisions—and dispute resolution clauses are no exception. Where included, they control how disagreements regarding the contract are to be addressed. A thorough review of these contracts, particularly any applicable dispute resolution clause, is essential to understanding the agreed-upon process, associated costs, and potential impact to the project. With careful scrutiny, you can protect your rights and interests.
Three Tips to Prepare for Arbitration of a Construction Contract Dispute
Because arbitration is a common dispute resolution mechanism included in construction contracts, parties entering a construction project should be aware of what arbitration entails. Beginning the arbitration process itself is something that should always be done with full preparation and a comprehensive understanding of the process and its implications. Here are three tips that you can use to gain a better understanding of and in preparation for arbitration in North Carolina:
- Know Your Arbitration Clause: The arbitration clause in your construction contract outlines the framework for any dispute resolution. Be sure to review it thoroughly. Among other things, construction company owners/operators should understand the specifics, including things like the process for how the arbitrator will be selected. In addition, the contract should also indicate whether the arbitration process is binding or non-binding, as well as the specific state law that applies to the agreement.
- Gather and Prepare Your Evidence: Evidence matters. You need to be ready to support your side of the case. Similar to any other type of legal proceeding, arbitration requires clear, compelling evidence. Among other things, North Carolina construction companies should be sure to document all communications, decisions, changes, delays, and other pertinent aspects of the project. High-quality evidence including executed copies of contracts and change orders, invoices, purchase orders, photographs, notes, email correspondence, and daily reports can significantly influence the outcome.
- Secure Competent Legal Representation: Legal counsel that is well-versed in construction law and arbitration can be invaluable. Your North Carolina construction attorney can help you understand the arbitration clause, guide the evidence collection, assist in framing arguments, and represent you during proceedings. A lawyer with relevant experience and knowledge is crucial in navigating the arbitration process and protecting your rights and your interests.
Contact Our Construction Law Attorneys Today
At Anderson Jones, P.L.L.C., our construction law attorneys have the skills and experience to represent clients in arbitration proceedings. If you have any specific questions about arbitrating a dispute over a construction contract, we are here to help. Give us a phone call now or contact us online to set up your confidential consultation.