Amendment to AAA Arbitrator Disclosure Rule Imposes Duties on both Arbitrator and Parties
With an increase in the use of arbitration as the preferred method for resolving construction industry disputes has come an increase in concerns with assuring fairness in the process. To this end, one of the recent changes the American Arbitration Association made to the Construction Industry Dispute Resolution Procedures (Including Mediation and Arbitration Rules), was to modify the disclosure requirements in the arbitrator selection process.
Prior Rule 17 of the AAA Rules imposed on proposed arbitrators an obligation to make certain disclosures. That rule has now been replaced with Rule 19(a), which imposes the disclosure obligation, not only on the proposed arbitrators, but also on the parties themselves. Specifically, Rule 19(a) provides as follows:
“Any person appointed or to be appointed as an arbitrator as well as the parties and their representatives shall disclose to the AAA, as promptly as practicable, any circumstance likely to give rise to justifiable doubt as to the arbitrator’s impartiality or independence, including nay bias or any financial or personal interest in the result of the arbitration or any past or present relationship with the parties or their representatives. Such obligation shall remain in effect throughout the arbitration.”
The amended rule will help to improve the process, since it will help to avoid, not just the potential partiality of arbitrators, but also the appearance of partiality. Parties who have been accustomed to the disclosure requirement being solely the duty of the proposed arbitrators, need to be aware that the duties have been expanded.
Below is a link to the amended AAA Rule.
www.adr.org/sp.asp
Default on Skyscraper Punctuates Dreary Outlook for Commercial Construction in Seattle
It is no secret that the commercial real estate market has been one of the biggest losers of the great recession. Seattle is no exception and as if to belabor the point, it has been reported this week that Beacon Capital Partners, the owner of Seattle’s icon skyscraper, the Columbia Center, missed its $1.65 million loan payment this month.
At 285 meters high the 76-story building formerly known as Bank of America Tower and Columbia-Seafirst Center (but long referred to by locals as Columbia Tower) not only looms large over the Seattle skyline but also carries the distinction of being the tallest building West of the Mississippi River by number of floors. However, bigger is not always better, as the Seattle Times reports that the tower is nearly forty percent vacant and Puget Sound Business Journal points out that the situation will only get worse as Amazon recently announced that it is taking its sizable ball (230,000 Square feet of leased office space in the tower) and going home, that is, to its new digs in South Lake Union courtesy of landlord Paul Allan. This comes on the heels of Columbia Center’s loss of one of its largest and oldest tenants a couple of years back, mega-firm K&L Gates (formerly Preston Gates and Ellis).
Although speculation is that the loan servicer will likely try to restructure Beacon’s loan, there appears to be little hope on the horizon in the near term for Seattle’s commercial real estate market, which of course means no new commercial construction is in the cards for the immediate future. (A brief look out this author’s window at the Seattle skyline confirms this assessment, revealing but one lonely crane on the horizon).
On the other hand, at least one brave developer is looking on the bright side, as Ed Hewson of HB Capital was quoted today in the Seattle Times saying: "Right now I can get great people to work on all the aspects of the project" in response to a report that HB Capital has filed a preliminary application for city approval of a 200 unit 17-story apartment building at Third Avenue and Cedar in Belltown. (Given the location of the proposed building, the developers should be further encouraged by the Seattle Police Department’s announcement last week that it will be increasing foot patrols in the area).
Be careful what you ask for Idaho
In the last two decades, the Idaho State Legislature has authorized design-build contracting for many different types of public projects. It appears that the Legislature will continue this trend for highway projects. In February, a House committee voted to print a bill that would allow the Idaho Transportation Department (IDT) to award design-build contracts for highway projects. A similar measure nearly became law last year.
For the most part, the Legislature’s acceptance of the design-build process is good thing. Several years ago, I worked for a commercial contractor. In 2001, I visited our largest project at that time -- a $500 M design-build facility in California. When I asked the project lead whether he liked design-build projects, he was quick to praise the process. He believed that design-build projects equated to fast results, decreased change orders, and less litigation. To him, it was a no-brainer. Many of my colleagues agree.
Since then, I have been involved with several design-build and design-bid-build projects. Although some design-build projects have been successful, that’s not always the case. The moment an owner enters into a design-build contract, it loses something that can be very important to a successful construction project: control. This lack of control – which is caused in large part by undefined design requirements – can lead to significant cost overruns and delays.
To avoid such results, owners should focus on two important actions: careful planning and diligent execution. On the topic of planning, design-build owners should spend significant time defining the project requirements. The design-build contract documents must include, among other things, detailed project design criteria, program requirements, performance specifications, and deliverables. Absent such defined requirements, design-builders are free to run wild.
Professional execution of the plan is equally important. Owners must prudently monitor the design-builder’s work. Too often, owners in design-build projects overlook this task, believing that such role is limited in design-build projects. In fact, the opposite is true. Because the design-builder has more flexibility in design-build projects, owners must arduously monitor the budget and schedule.
Design-build projects present many benefits. IDT, however, should know that it will not be less work for them. The key is for IDT to clearly define the project programs and performance requirements before the contracts are signed, and to monitor the design-builder’s compliance with these requirements throughout the project.
