Litigation and Arbitration

Under both federal and Louisiana law, construction disputes are commonly resolved in alternative dispute resolution procedures like arbitration. The Federal Arbitration Act (FAA) governs the federal arena, and the Louisiana Binding Arbitration Law (La. Rev. Stat. 9:4201, et seq.) governs the parallel state court ADR method.

Generally, if a dispute should be resolved in arbitration, then the contract at issue will require that. This is commonly known as the arbitration clause. Both Louisiana and federal jurisprudence favor arbitration and will uphold an arbitration clause except in limited circumstances. The arbitration clause should not only identify arbitration as the ADR method, but it should also identify what disputes may be arbitrable between the contracting parties. For example, “any claims between Contractor and Subcontractor arising out of the Subcontract” demonstrates that breach of contract claims may be arbitrable, but that extra-contractual claims (e.g. tort claims) may fall outside of the realm of the arbitration clause. Arbitration clauses may be challenged in limited circumstances.

Arbitration procedures can be more relaxed than litigation, but generally, the disputes are resolved by similar methods. Arbitration allows for discovery, sometimes with limits, and motion practice, unless the arbitration clause states differently. The parties in arbitration may also later agree to these limitations. Additionally, the arbitration clause may identify whether parties outside of the contract may be joined in the arbitration.

A large part of Shields | Mott practice involves arbitration because of the integral part that arbitration plays in resolving construction disputes.