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Arbitration award is ‘irrational’ because it disregards contract’s plain text

March 8, 2019 By Andrew Smith

Aspic Engineering and Construction Company (Aspic), a local Afghan subcontractor, entered into multiple subcontracts with ECC Centcom Constructors and ECC International (ECC), the prime contractor, to construct buildings and facilities in Afghanistan.  The subcontracts contained terms and conditions “applicable to all U.S. Government subcontracts,” and mandated that Aspic owed ECC the same obligations that ECC owed to the federal government.  The subcontracts also incorporated multiple Federal Acquisition Regulation (FAR) clauses, including FAR 49.2 through 49.6, which govern the recovery of expenses in the event a contractor is terminated for convenience, i.e., required documentation and procedures.

In 2014, ECC was terminated for convenience, so ECC notified Aspic that it also intended to terminate Aspic’s subcontracts for convenience.  Aspic, in turn, submitted multiple settlement proposals to get paid for its work under the subcontracts.  When ECC denied most of Aspic’s proposals, Aspic filed for arbitration, seeking payment for its costs of partially performing under the subcontracts.  Despite Aspic’s failure to comply with the FAR requirements governing payment for partial work in the event of a termination for convenience, the arbitrator awarded Aspic over $1 million.  The arbitrator concluded that Aspic was not required to strictly comply with the FAR requirements based on several factors, including: (i) the subcontracts were drafted to give every advantage to ECC; (ii) it was not reasonable to expect that Afghan subcontractors would be able to conform to the strict and detailed requirements of general contractors on U.S. Federal projects; (iii) it was not reasonable that the parties had the same expectations; and (iv) there was not a true meeting of the minds.

Keep reading this article at: https://www.jdsupra.com/legalnews/ninth-circuit-finds-arbitration-award-25846/

To view the full text of the court’s decision, courtesy of Bloomberg, click here.

Filed Under: Contracting News Tagged With: arbitration, contract clauses, FAR, flow down clause, meeting of the minds, subcontracting, termination for convenience

What contractors need to know about arbitration

May 25, 2018 By Andrew Smith

Many construction firms have never had a legal dispute that couldn’t be resolved quickly and amicably without a lawyer. But for those who aren’t so lucky, it can sometimes be surprising to take a good look at a construction agreement to see what legal remedies are available and find that a traditional jury trial is not even an option.

In those cases, the last legal stop could be arbitration.

Contractors sometimes conflate arbitration with mediation, which is another form of alternative dispute resolution in which contractors try to work out their differences with the assistance of a neutral third party well versed in construction law who is only there to be a sounding board.

Keep reading this article at: https://www.constructiondive.com/news/the-dotted-line-what-contractors-need-to-know-about-arbitration/523167/

Filed Under: Contracting Tips Tagged With: arbitration, construction, contract dispute, disputes, mediation

Industry group wants President to rescind contractor crackdown order

March 6, 2015 By ei2admin

President Obama should rescind an executive order that attempts to crack down on federal contractors who violate labor laws, according to a contracting group,

Stan Soloway, president of the Professional Services Council, called The Fair Pay and Safe Workplaces executive order “unworkable” and detrimental to law-abiding companies while requiring contractors to fulfill an expensive and burdensome new regulatory requirement.

“Companies with pervasive, willful, and repeated violations of law should not be awarded federal contracts,” said Soloway. “However, as constructed, this E.O. is fundamentally unfair, vague, complex and in-executable. It will be costly, burdensome and is simply unnecessary.”

President Obama signed the executive order July 31, which requires federal contractors to disclose any labor law violations made over the last three years and for agencies to take that into account when awarding contracts.

Keep reading this article at: 

Filed Under: Contracting News Tagged With: arbitration, Executive Order, Labor Dept., labor laws, labor violations, PSC

The 4 stages of a construction dispute

February 17, 2015 By ei2admin

In this posting, construction attorney Christopher G. Hill of Richmond, VA discuses the four stages of a construction dispute.  He writes:

What started as a kernel of thought in my mind turned into what has seemed to be a popular set of four posts that I hope were both informative and interesting.  Because of the great feedback I’ve gotten, I thought that I’d consolidate the posts into one so that my readers (thank you, by the way) will have them all in one place.  Here they are:

The Anatomy of a Construction Dispute- The Claim– This post discussed the steps for setting out a claim under your construction contract and the steps to lay the groundwork should you need to move forward with a more formal means of collection.

The Anatomy of a Construction Dispute Stage 2- Increase the Heat– This post discussed various methods to increase the heat on the party with whom you have a claim prior to litigation or arbitration.

The Anatomy of a Construction Dispute Stage 3- The Last Straw–  This post discussed what to do when your construction claim is not resolved in either of the first two stages and the steps in either litigation or arbitration.

Anatomy of a Construction Dispute- An Alternative– This post discussed my favorite form of dispute resolution, mediation, as an alternative to the cost and uncertainty of construction litigation or arbitration.

Each of these posts provides a brief overview of the construction dispute process.  Your particular construction issues and necessary actions will depend on your state’s laws and the contract between you and the other party.  I always recommend that you consult a local construction attorney to help advise you through this process.

Source: http://constructionlawva.com/anatomy-of-construction-dispute-wrap-up

Filed Under: Contracting Tips Tagged With: arbitration, claim, construction, contract dispute, litigation, mediation, negotiation

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