AAA Revises Construction Industry Arbitration Rules and Mediation Procedures

The American Arbitration Association (AAA) recently revised its Construction Industry Arbitration Rules and Mediation Procedures (“the Rules”). Several notable changes went into effect March 1, 2024, involving the scope of confidentiality, regular and fast track procedures, and updates to certain monetary thresholds.

I.  Revisions to Regular Track Procedures

Rule 45: Confidentiality

For the first time, confidentiality is now the default standard. Under Rule 45(a), arbitrators must keep all matters confidential unless otherwise required by law, court order or the agreement of the parties. Rule 45(b) allows a mediator to issue confidentiality orders and “take measures for protecting trade secrets and confidential information.”

Rule 7: Consolidation and Joinder

Under the new provisions, consolidation and joinder requests must be filed before confirmation of the Merits Arbitrator’s appointment. This language eliminates a previous option that allowed confirmation up to 90 days after filing of such requests. A failure to timely respond to a joinder request will result in a waiver of objections. Now, a party must establish both good cause and prejudice for a successful joinder request after confirmation of the arbitrator.

Rule 34: Dispositive Motions

For this first time, arbitrators must consider the cost of a dispositive motion in determining whether to grant leave for a party to file such a motion. According to Rule 34(b), the goal of this change is “achieving an efficient and economical resolution of the dispute[.]”

Other Changes to Regular Track Procedures

In total, fifteen Regular Track Rules have been revised under the 2024 amendments. Some of the significant changes include, but are not limited to:

Rules 14-15. Arbitrator Appointments: Rule 14 now provides the AAA with authority to limit the parties’ strikes. Rule 15 is revised to specify that, unless the parties agree otherwise, party appointed arbitrators must be selected from the AAA National Construction Panel. 

Rule 52. Modifications of Awards: Arbitrators may “clarify” their awards, but the merits of the award cannot be reconsidered. Under the old Rule 51, an arbitrator could only revisit issues pertaining to clerical, typographical, technical, or computational errors in awards. 

Rule 60. Sanctions: Arbitrators may now impose sanctions on their own initiative, but the recipient must be given an opportunity to be heard before any such order is issued.

II. Revisions to Fast Track Procedures

Many Fast Track Procedures have undergone renumbering under the 2024 amendments. Substantive revisions include:

F-1. Fast Track Applicability: Fast Track Procedures now apply in any case where no disclosed claim or counterclaim exceeds $150,000. This is an increase from the prior $100,000 threshold.

F-8. Exchange of Information and Discovery: Two previous procedures, F-8 and F-9, have been combined into one Rule. Under the new rules, motions are not permitted absent a showing of good cause. A case may be removed from the Fast Track if discovery is permitted.

F-13. Form of Award: If the parties request a reasoned award, an abbreviated opinion or findings of facts and conclusions of law, the case will be removed from the Fast Track. In such a scenario, the arbitrator is permitted to charge their regular rates.

III. Procedures for Large, Complex Construction Disputes

L-3. Arbitrators: The 2024 amendments raise the threshold for appointment of a three-arbitrator panel from $1 million to $3 million.

Conclusion

These 2024 amendments are the first updates to the AAA Construction Rules since 2015. Accordingly, the AAA website contains a helpful summary of changes and announcement documents providing additional details beyond the highlights discussed above.

The recent revisions change important details and monetary thresholds, so understanding these changes is critical for evaluating their applicability to a given project or dispute. Because many widely used form construction contracts designate the AAA as the preferred arbitration administrator, these revisions may have significant implications for construction-related dispute resolution for years into the future.

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Patrick McKnight is a member of Fox Rothschild’s national Construction Practice Group. For more information, please contact him at pmcknight@foxrothschild.com. 

This article is provided for informational purposes only—it does not constitute legal advice. Readers should consult legal counsel before taking action relating to the subject matter of this article.