By Stephen A. Hilger, Esq.

This is Part 3 in a 20-part series of articles dealing with issues of arbitration, mediation and alternate dispute resolution in the construction industry.

Over the last decade, a requirement has slipped into the dispute resolution clauses of many construction contracts requiring the CEOs of the various parties to meet as a condition precedent to any arbitration. If something is a “condition precedent” and the contract uses those specific terms, then the meeting must occur before a party can either demand arbitration or file litigation.

Since the parties negotiate their contract, the question becomes whether this is a prudent requirement to place in the contract. The answer is, in most instances, yes. Often times, the parties’ representatives who are involved in the dispute are not the CEOs of the companies. The CEOs, generally speaking, have cooler heads when it comes to resolving heated disputes. They may be one step removed. Forcing the CEOs to meet and discuss the claim has a general influence on either resolving the disputes or substantially narrowing them.

In general, I recommend such a clause as a condition precedent to arbitration, mediation or litigation.

If you found this article interesting, you might also like “Language You Need for an Enforceable Arbitration Clause.”