The AIA A201 General Conditions posit the architect’s decision on a claim as a condition precedent to arbitration of that claim. A recent New York appellate decision demonstrates why this clause, employed as a roadblock many years after the dispute arose, should be modified by the AIA. In 2013, a party has been told by the appellate court that it must submit its 2005 dispute to the architect before it can proceed to arbitration. Common sense has flown out the window!
If not modified by the parties, here’s how the A201 provides for resolution of disputes. First, the ‘Initial Decision Maker” (which normally defaults to the project architect) must render a decision. This decision is a condition precedent to mediation, and mediation is a condition precedent to arbitration. Thus, arbitration cannot go forward, except for certain specified exceptions, unless the architect has issued a decision on the dispute or has failed to do so for 30 days.
So a landscape contractor whose dispute arose in 2005, and who sought arbitration in 2011 (there is no explanation for that delay in the record) has been told in 2013 that arbitration is stayed, as the claim was never submitted to the architect for a decision. One can argue that an architect’s decision during the project will help the change order and claim process flow more smoothly, but there is no logic – other than strict adherence to a clause that no longer serves a useful purpose – to extend this requirement to disputes that continue long after the project has been completed. It would appear that this condition has been insisted upon by one party mostly to obtain leverage over the other party.
This case arose under the 1997 version of the AIA documents. Although the 2007 version modified the dispute resolution provisions, and relocated those provisions within the document, the condition precedent terms remain. The current version provides that "an initial decision shall be required as a condition precedent to mediation of any Claim arising prior to the date final payment is due, . . ." Unfortunately for the landscape contractor, the dispute presented to arbitration in 2011 surfaced in 2005 prior to final payment, so the same situation could have arisen under the current language. Many attorneys and parties choose to modify this clause during contract negotiations, and some courts have adopted a more common-sense approach to this situation for a post-project dispute. But the AIA should drop the never-ending condition on its own. Disputes should be made easier, and not more protracted, to resolve.