The American Arbitration Association has given parties a new appellate option for arbitral awards. Effective November 1, the AAA's Optional Appellate Arbitration Rules permit parties to agree to an appeal within arbitration process itself.
Parties may appeal an arbitral award based on several grounds, including whether the award is based on material errors of law or clearly erroneous determinations of fact. Arbitral appeals are determined on the parties' written submissions, without oral argument.
For additional information, please refer to the AAA's website.
For some, a benefit of arbitration over litigation is the relatively low risk that an award will be challenged successfully during confirmation. Others have started avoiding arbitration in recent years due to this lack of appellate review.
As construction practitioners, is the option of an appeal in arbitration proceedings attractive?
It will depend on the case. It certainly would add expense and extend the length of the dispute but it is nice to have a chance for a review. Probably best to make a decision on this one way or the other when drafting contracts as there may not be agreement once the dispute forms. Agreement is necessary to trigger the new rules.
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