Most people familiar with the construction industry are aware that Mediation and Arbitration provisions are ubiquitous in construction contracts. Industry standard contract forms – for example, those published by the AIA (American Institute of Architects) – very often contain Mediation and binding Arbitration provisions which provide that all disputes arising under the contract must be submitted to Mediation and or Arbitration for final adjudication. The vast majority of these provisions reference the American Arbitration Association and the AAA’s Construction Industry Arbitration Rules and Mediation Procedures, making the AAA the most common forum for the filing of Arbitration demands in construction disputes.
The AAA’s dominance in Arbitration, particularly in the construction industry, led to what many considered exorbitant filing fees required at the time of an Arbitration Demand. These fees were considered particularly high when viewed in comparison with the filing fees of Courts, and the fees increase in steps with the amount of the claim demand. Many considered these fees contrary to the stated purpose of Mediation and Arbitration – to lower the costs involved in resolving claims and disputes.
In response to the grumbling over AAA filing fees, and likely in view of the economic climate, the AAA has implemented a pilot program providing a “Flexible Fee Schedule” effective June 1, 2009 through May 30, 2010. In sum, the Arbitration Demand is made, and deemed filed, upon payment of an “initial fee,” which is comparatively low – about $1,000.00 for most cases, at which time a ninety (90) day period begins to run during which the parties can confer and chose an Arbitrator or Arbitrators by agreement. If the parties are successful in conferring and choosing an Arbitrator before the ninety days expires and before AAA circulates a list of Arbitrators, the parties receive a 50% discount applied against the “proceed fee,” (also progressively more expensive as the amount of the claim increases) which is due at the expiration of the ninety days.