Catch-22?

“No arbitration arising out of or relating to the Contract Documents shall include, by consolidation, joinder or in any other manner, the Architect, his employees or consultants except by written consent containing a specific reference to the Owner-Contractor Agreement and signed by the Architect, the Owner, the Contractor and any other person sought to be joined.”

That language appears in the latest edition (1976) of the American Institute of Architects (AIA) general conditions frequently used in owner contractor building construction contracts. It means that the project architect cannot be joined as a party, without his consent, to an arbitration between the owner and the contractor. This appears to apply even though owner-architect AIA agreements likewise provide for arbitration of disputes. That provision may be the source of considerable difficulty for an owner faced with problems in the construction if, in a not unusual situation, the contractor claims that the problem is one of design, but the architect insists that it is a deficiency in construction. The owner may thus be faced with having to arbitrate separately with the contractor and the architect. In separate arbitrations it is possible that the arbitrators in the owner-contractor arbitration may determine that the problem is one of design, but in the other (owner-architect arbitration) different arbitrators might rule that the problem is one of construction and therefore the fault of the contractor.

Under this “Catch-22” possibility, the owner would be left without any remedy and be required to pay for correction of the deficiency involved himself-even though he was both injured and blameless.

Why that particular clause was inserted in the AIA general conditions is uncertain. 1976 was the first edition in which it appeared. Prior to that time it was not unusual for courts to order the consolidation of arbitration proceedings where common issues were involved.

1 Update Note: The 1987 edition of AIA A201-1987 contains the same limitation.

Efficiency and fairness would require that arbitration proceedings be consolidated where there might be a likelihood of inconsistent awards if the same problems were arbitrated separately between the owner-contractor and owner-architect.

Even contractors (and perhaps architects) might benefit from consolidated arbitrations in instances where the dispute may involve either construction or design deficiencies, or possibly a combination of the two. The contractor forced to arbitrate separately with the owner might otherwise find that the arbitrators would give different weight to the architect’s testimony than if claims were also asserted against the architect.

Also, time efficiencies would commend consolidated arbitrations be cause of the likelihood that architect and contractor personnel would be required to be witnesses at both arbitration hearings. Consolidation would avoid the necessity of witnesses appearing at two separate arbitration proceedings. The time and monetary savings would probably be substantial.

If a contract does contain the consolidation joinder ban, the interested parties should endeavor to persuade all other parties to voluntarily consolidate. Otherwise, parties might consider elimination of the prohibition before signing the contract.