When is arbitration typically used in construction disputes?

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Arbitration is typically used in construction disputes as a method of alternative dispute resolution that can be more efficient and less formal than court proceedings. It is favored in the construction industry for various reasons, including the ability to resolve disputes quickly and the expertise of arbitrators in construction-related issues.

While many construction contracts may specify arbitration for any claim amount, it is most often utilized for larger disputes, such as those exceeding $1,000,000. This threshold recognizes the complexity and potential impact of significant claims on the parties involved. The higher stakes often justify the investment in arbitration, which can provide a more specialized and expedited resolution process.

In contrast, smaller claims might be resolved through other methods such as mediation or litigation, which can be more cost-effective for lower amounts. Thus, while arbitration can technically be used for any claim amount, it is particularly advantageous for larger disputes, making the choice that highlights claims over $1,000,000 the most accurate in this context.

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