Arbitration in construction – How Australia has started to reap the rewards

In comparison to most countries, it would be fair to say that arbitration in Australia is still very young. The fact that the Arbitration Act was formed in just 2010 highlights this although despite the short period of time it has been available, the country is most definitely starting to reap the rewards.

It was interesting to read the views of Lisa Dudzik regarding the integrity of international arbitration proceedings, in relation to the case between Sino Dragon Trading and Noble Resources. Dudzik confirmed in her write-up what a lot of the country has been thinking – arbitration is turning out to be hugely powerful and the authorities have implemented it very well.

Let’s now take a look at some of the benefits which arbitration brings to the construction industry in Australia.

The privacy factor

This first reason is lauded by many construction firms involved in arbitration. While court proceedings might bring a lot of publicity, the majority of which is unwanted, the same does not occur when a case heads for arbitration.

Instead, there’s no public recording. Sure, this doesn’t guarantee confidentiality and there are plenty of examples of some cases being reported on later down the line. However, in general, it’s a much “quieter” process and it means that both parties can continue to operate without being under the public eye.

The appointment of the arbitrator

This is another huge benefit, especially in relation to the construction industry. It would be fair to say that this differs substantially to most other commercial industries out there and considering the technical nature of a lot of cases, court proceedings just wouldn’t be regarded as fair by most parties.

In the case of arbitration, both parties are able to mutually agree on an arbitrator to govern proceedings. It means that someone with true expertise in the topic can make the final decision on the matter, meaning that the chances of the case being concluded inaccurately due to a misinterpretation or anything similar are diminished.

Additionally, as both parties are involved in the appointment process, it means that both are likely to be satisfied with the final outcome as it is being made by a respected individual.

It’s faster than any alternative process

We’ve mentioned that the previous two benefits are especially important and are why there are so many admirers of the arbitration process. This is another factor that falls into this group and considering how construction projects have the habit of being delayed a lot, it can save both time and money for both parties.

Court proceedings are anything but timely – they are drawn out processes which can take months, sometimes years, to reach a conclusion.

The same isn’t necessarily the same with arbitration. While there are some exceptions, on the whole cases will be heard much more quickly and it means that a result can be recorded in times that aren’t going to cause any delays if a project is unfinished.

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