Construction Arbitration in Florida: What to Expect and How the Process Works

How does arbitration work in construction?

How does arbitration work in construction? In short, a neutral decision-maker hears a dispute that the parties agreed to arbitrate, then issues a final decision. No judge or jury is involved. This guide walks through the steps in order and points out where timing can matter.

What construction arbitration is

Some business contracts send disputes to arbitration instead of court, so it is worth reviewing the dispute resolution clause in your agreement. That agreement is usually a clause in a construction contract, subcontract or purchase agreement. A neutral arbitrator then hears both sides and decides the dispute.

Florida treats these agreements as enforceable. Fla. Stat. § 682.02 says a written agreement to arbitrate existing or future disputes is “valid, enforceable, and irrevocable.” The exception is a ground that exists to revoke any contract. Florida’s arbitration law is chapter 682 of the Florida Statutes.

Federal law sets a similar rule for many contracts. 9 U.S.C. § 2 says a written arbitration provision in a contract involving commerce is valid and enforceable, with the same contract-law exceptions.

They do not decide how your clause will work in your case. Knowing this helps you read the clause with the right questions in mind. Is there a written agreement to arbitrate? Does it cover this dispute?

Finding the arbitration clause in your contract

Start with the dispute section of your contract. Look for headings such as “dispute resolution,” “disputes,” or “governing law.”

Many contracts also pull in general conditions or standard forms. The arbitration language can sit in those attached documents, so check each one.

Clauses usually fall into three groups. Some require arbitration. Some require mediation or written notice first. Some send disputes to court. A single clause can combine these steps, so read them in order.

Pay close attention to timing. A clause may require notice within a set number of days, or a meeting before anyone files a demand. Missing a step can create problems later.

Florida also limits how a contract can shorten the time to sue. Fla. Stat. § 95.03 says a contract term that sets a shorter period than the statute of limitations is void.

Construction claims carry their own deadlines. Fla. Stat. § 95.11 sets the period for an action founded on the design, planning, or construction of an improvement to real property, with the time running from the date the authority having jurisdiction issues a temporary certificate of occupancy, a certificate of occupancy, or a certificate of completion, or the date of abandonment of construction if not completed, whichever date is earliest, and in any event the action must be commenced within 7 years after that date. When the action involves a latent defect, the time runs from when the defect is discovered or should have been discovered with the exercise of due diligence, but in any event the action must be commenced within 7 years after that earliest date. When the action involves a latent defect, the time runs from when the defect is discovered or should have been discovered with the exercise of due diligence. For a latent defect, the period runs from when the defect is discovered or should have been discovered with due diligence, and in any event the action must be commenced within seven years of that earliest date. The clock usually starts at the earliest certificate or abandonment date. Latent defects follow a discovery rule, and the action must be started within seven years after the date the authority having jurisdiction issues a temporary certificate of occupancy, a certificate of occupancy, or a certificate of completion, or the date of abandonment if not completed, whichever is earliest.

Whether arbitration applies to your claim depends on the facts and the exact wording.

Starting the arbitration: the demand and the response

A demand for arbitration starts the process. The other side then has a set time to respond.

The demand names the parties and describes the claims. It goes out the way the clause or chosen rules require. Follow that method exactly. A demand sent the wrong way can lead to a dispute about the process itself.

The response, often called an answer, may include counterclaims. Those are claims the other side brings against you. Response dates matter because the schedule moves forward from them.

Sometimes the other side refuses to arbitrate. Florida law lets a party ask a court to order arbitration. If the refusing party opposes, the court decides the issue summarily and orders arbitration unless no enforceable agreement exists. Fla. Stat. § 682.03 also says a court may not refuse to order arbitration because the claim lacks merit.

Early on, a party may argue that a claim falls outside the clause. Under Florida law, the court decides whether an agreement to arbitrate exists and whether a controversy is covered by it.

Arbitration rules shape many of these steps. The International Chamber of Commerce’s 2021 ICC Arbitration Rules set procedure for its international commercial arbitrations. Cross-border supply and construction contracts sometimes use them.

Choosing the arbitrator or arbitration panel

The contract or chosen rules usually set how many arbitrators hear the case and how they are picked.

Many construction clauses call for one arbitrator. Larger or more complex disputes may use a panel of three.

Parties usually pick arbitrators in one of three ways. They may agree on a name. An arbitration organization may send a list of candidates. If the parties cannot agree, the rules often provide for a neutral appointment. Follow the order your clause sets.

The choice matters. The arbitrator decides the case, so each side has a stake in who sits in that seat. Learning the options early helps you respond to a list on a deadline instead of under pressure. Keep notes on each candidate’s background, and raise questions in writing.

The decision-maker is one person or a small panel, not a jury. That person weighs the evidence and applies the contract. The case should be built for that audience from the start.

Preliminary hearing, document exchange and the hearing itself

At the preliminary hearing, the arbitrator sets dates and settles procedural questions. It is often a short conference, held by phone or in person.

The arbitrator may also set limits on document exchange. That exchange is usually narrower than court discovery, because the rules and the arbitrator control it.

Construction files often carry the most weight. Common examples include schedules, change orders, pay applications, inspection records and written correspondence. Gather them early and keep them in date order.

Gaps in a project timeline are hard to fill in once the hearing is set. Start that work now, not after the demand arrives.

At the evidentiary hearing, witnesses testify, exhibits are offered, and each side can question the other’s witnesses. Witnesses often include project managers, superintendents or accountants who know the job. There is no jury, and the setting is less formal than a courtroom trial. The procedure follows the clause and the rules.

The award, its limited review, and enforcement

An award is the arbitrator’s written final decision. It resolves the claims in the demand and any counterclaims.

The contract or rules usually set when the award must be issued.

Florida lists specific grounds for a court to vacate an award. These include an award procured by corruption, fraud or other undue means, evident partiality by a neutral arbitrator, and an arbitrator exceeding the arbitrator’s powers. Fla. Stat. § 682.13 sets out these grounds.

A motion to vacate generally must be filed within 90 days after the movant receives notice of the award. Fraud-based motions run from when the ground is known, or would have been known with reasonable care.

Court review is narrow, so an award is usually hard to undo. Where a contract includes arbitration, it can also cover contractor and subcontractor payment disputes.

Arbitration compared with court, and talking with a Tampa Bay business litigation lawyer

Arbitration is usually private, and the parties help choose the decision-maker. A court case is public, and a judge is assigned by the court.

Arbitration can offer privacy and a chosen decision-maker. Its review is narrow. Court cases follow court rules and public filings. Each path has tradeoffs to weigh against your contract and your goals.

Florida courts also test whether an arbitration term is fair. To refuse to enforce a term as unconscionable, a court must find both procedural unfairness and substantive unfairness. The Florida Supreme Court in Basulto v. Hialeah Automotive held that both the procedural and substantive aspects of unconscionability must be present, although not necessarily to the same degree, and that both should be evaluated interdependently rather than as independent elements.

Ayala Law PA focuses on business litigation, contract disputes, construction litigation, real estate litigation and international trade litigation in Florida courts and arbitration. The firm serves businesses in Tampa, Hillsborough County and the Tampa Bay area; its only office is at 1646 W Snow Ave, Tampa, Florida. Eduardo A. Maura is the responsible lawyer for this page.

Quick answers

If a construction payment dispute or an arbitration demand has just reached you, you don’t have to sort out the clause alone. Reach out through our contact page or call (305) 570-2208 to book a case evaluation. We discuss fees for a case evaluation with you directly.