The pros and cons of arbitration in construction disputes
Produced in partnership with Mayer Brown International LLP
The pros and cons of arbitration in construction disputes

The following Construction guidance note Produced in partnership with Mayer Brown International LLP provides comprehensive and up to date legal information covering:

  • The pros and cons of arbitration in construction disputes
  • Time and cost
  • Multi-party disputes
  • Neutrality
  • Confidentiality
  • Party autonomy and flexibility
  • Evidence
  • The award
  • Conclusion

It is often said that arbitration is a more effective and efficient method for resolving a dispute than litigation but is this actually the case? This Practice Note considers the pros and cons of selecting arbitration as an alternative means of dispute resolution to litigation. In particular, it seeks to dispel the myths surrounding arbitration and examines the real benefits it provides in practice.

It is important to note that selecting arbitration as the forum for dispute resolution does not affect the existing statutory right in the UK to refer construction disputes to adjudication. If a contract contains an arbitration agreement and a dispute is referred to adjudication, then the right to seek to overturn the adjudicator's award remains but this will be by way of arbitration rather than litigation.

Time and cost

Arbitration is commonly perceived as being quicker and cheaper than litigation. However, arbitrations may in certain cases actually be more protracted and more expensive than litigation. There are numerous reasons for this, including:

  1. the additional costs payable in arbitration which are not applicable in court proceedings, for example, the requirement to pay the arbitrators' fees, any institutional administrative fees and to pay to hire the hearing venue

  2. poorly drafted contracts with arbitration agreements which fail to provide an adequate and practical framework for the conduct of the arbitration