Arbitration May Be One Stop on the Road to Litigation
Generally speaking, the term “alternative dispute resolution,” or ADR, refers to a host of methods of resolving legal disagreements that do not involve resorting to actual court proceedings. One of the most popular forms of ADR is arbitration, which can be used when both parties agree to permit a third-party, or a tribunal of third-parties, to review evidence and impose a decision. Ostensibly, the process permits parties to avoid the costs associated with full-blown litigation and reach a decision in an expedited manner, saving money and time in the process.
Buyer’s remorse in the face of a bad result
Not infrequently, one or both parties to arbitration are unhappy with the results. Depending on the terms to which the parties agree, this often means that the litigation the parties had hoped to avoid may be inevitable. In such situations, despite parties’ best efforts, a full trial with all of the procedural protections may be the optimal forum in which to resolve a dispute. In other words, while arbitration may be capable of eliminating the need to go to court in some disputes, in other cases it may simply be an added step on the way to litigation.
Construction costs lead to arbitration, then litigation
In of the most recent high-profile examples of arbitration failing to eliminate the need to litigate, the Denver International Airport and the Regional Transportation District ended up in court to resolve a multi-million dispute related to costs associated with a rail line currently under construction. The dispute involved the cost of doubling the length of a rail platform at the airport, in addition to other costs associated with bridge work, excavation, and retaining wall construction. In short, the two sides disagreed over who was contractually bound to pick up a $53 million construction tab.
Final destination: court
As is often the case in high stakes disputes, a highly skilled arbitrator presided over the arbitration. In this case, the arbitrator issued a ruling that the Regional Transportation District should pay for most of the disputed work. In response, the City of Denver filed a lawsuit challenging the ruling of the arbitrator, a former Colorado Court of Appeals judge. According to the airport, the arbitrator issued erroneous rulings and let its opponent’s witnesses testify in areas that were outside of their expertise. In the end, a Denver district judge ruled that Denver International Airport is in fact responsible for $43.2 million of $53 million in disputed construction costs.