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How to Win at Arbitration
By John P. Madden, ADR: A Practical Guide to Resolve Construction Disputes, 1994, at pages 157-175
To succeed at arbitration, three factors are most important: preparation; preparation; and preparation. There is simply no substitute for a well-organized, logical presentation. This can only be achieved with hard work. This chapter is designed to be a guide for anyone (with or without an attorney) who is preparing to arbitrate a construction contract dispute. It is intended to help the reader better focus his/her efforts on the most crucial elements of an arbitration proceeding.
The filing of a notice of intent to arbitrate with an arbitral institution triggers a number of events culminating in the actual arbitration hearings. Each event is important and must be addressed with diligence.
Selection of Arbitrator(s)
You must strive to select the arbitrator(s) who you believe, given the specific circumstances of your dispute, will best understand and be most sympathetic to your case.
Factors to be considered in the selection of the arbitrator(s) include: age; professional experience; education; affiliations; small vs. big company experience; precise technical and project experience; number of years as arbitrator; reputation; publications; the nature of the business and the relationship of the parties; and, sometimes most importantly, whether prevailing legal principles and/ or equity (fairness) are in your favor.
These factors will provide a basis for an educated prediction of whether your arbitrator would be comfortable in seeing your point of view and ultimately rendering an award in your favor.
For example, a contractor defending a claim by an owner may believe that a contractor arbitrator would be more sympathetic to his position, since they are in the same profession. At the same time, such a contractor would most certainly favor a lawyer arbitrator if the contractor has a very strong legal case (i.e.: favorable contract provision, such as owner's failure to give timely notice, or owner's waiver of a right).
A lawyer arbitrator might weigh such a defense to an owner's claim in arbitration very heavily while the contractor arbitrator may virtually ignore such a defense in considering the equitable aspects of an owner's claim. Consider the above factors carefully, apply common sense mixed with appreciation of human nature, and choose wisely!
An opportunity to accomplish a great deal in a matter of a couple of hours presents itself at a preliminary hearing. This is a pre-arbitration meeting among the arbitrator(s), parties' counsel, and usually the parties, during which the procedural methodology and format for the hearings can be established, as well as to establish the scope of any advance exchange of documents by the parties, which is generally routine in construction disputes.
This is your opportunity to ask the arbitrator(s) to direct the parties before the hearings begin to identify intended exhibits, list witnesses, identify experts, provide witness resumes, provide outlines of planned witness testimony, provide a summary of all claims and their bases, along with a schedule of damages including method of calculation and back-up documentation.
This is also your chance to have the arbitrator(s) direct your adversary to disclose the elements of" his case in advance of your presenting your actual case at arbitration. This usually can be achieved by requesting that each party" submit a written pre-arbitration statement outlining claims and/ or defenses.
While there is effort and expense involved in engaging in a preliminary hearing, there invariably are significant overall savings due to the efficient scheduling of hearings and advance marking and admission of evidence. Unless the amount in dispute is relatively small, this opportunity for efficient and inexpensive "discovery" of your opponent's case should be pursued with vigor.
Substantial and expensive hearing time will be spared if the parties consent to use a defined set of documents as the evidence for both parties during the arbitration proceedings, while leaving only a few documents for ruling by the arbitrators as to admissibility.
Scheduling of Hearings
Once a case administrator has been assigned by the arbitral institution, you will be working with your adversary and the case administrator assigned by the arbitral institution to schedule the actual hearings.
Consecutive day scheduling of hearings promotes continuity and permits the arbitrator to become focused on the dispute with minimal outside interference. For a short multiple day (2-5 days) arbitration, the ideal would be to schedule consecutive days of hearings, especially when you are presenting your case. With much larger arbitrations, it may not be possible to schedule more than several consecutive days of arbitration.
The scheduling of an arbitration hearing involves a significant cost feature. Typically, your arbitrators each receive compensation at a daily rate. Expert witnesses receive an hourly rate, plus travel expenses. The place of the hearing generally involves a cost. The attorney's and/or party's time to prepare and present the case involves significant expense. These costs all must be factored into the decision on how long you take to present your case.
A sufficient number of hearing days should be scheduled to permit continuity of the hearing without intermittent adjournments. Preparation of the same witnesses again and again for adjourned hearing dates can be very costly and generally is unproductive. The scheduling of one or more hearing days than you anticipate will avoid suspension of the hearings due to scheduling conflicts, minimize the need for costly postponements, and allow the hearings to proceed with an enviable degree of continuity. This approach also allows a "buffer" if testimony from witnesses either under direct or cross, extends longer than originally estimated.
You should also decide whether a stenographic record (transcript) of the hearing(s) will be beneficial. Typically, arbitrators rely heavily on their recollections or notes taken during the course of the hearings, as well as transcripts for occasional reference to exact words used by a witness. The cost of a hearing transcript can run as high as $400 to $800 per day, or more. With the concurrence of the arbitrator(s) the parties can agree to tape record the hearings to shrink the potential expense.
Once it is evident that your dispute will be arbitrated, you should start to prepare your case, i.e., what you need to prove. In the majority of construction disputes, one party has breached a portion of a written or oral contract. Thus, the place to begin is the contract itself.
The contract is invariably the best representation of what the parties intended and expected from each other. The most effective way to present your breach of contract case is to keep the case simple and to remember that generally you must show what the contract required, that you complied with its terms, and that the other party failed to meet the requirements of the contract, resulting in your entitlement to damages. Conversely, in defending a breach of contract claim, you want to prove that the claimant did not comply with the relevant requirements, was not entitled to full compliance from you and, as a result, is not entitled to damages.
Therefore, you should be intimately familiar with your contract, plans, specifications, addenda, requests for information (RFls), field sketches, change orders including back-up documentation, correspondence, daily work reports, daily log, and payrolls. You should formulate a list of witnesses who person- ally are familiar with the contract, your compliance with its terms, and the other party's non-compliance. Moreover, you should assemble the relevant exhibits (documents, drawings, correspondence) to use to support the testimony of your witnesses.
Showing that the other party has breached the contract may establish the liability of the other party. However, in order to recover any money, you must prove that you suffered money damages as a consequence of the breach. Thus, you should calculate any additional cost of contract performance, out- of-pocket costs, lost profits or other damages in support of your claim. The calculated money damages should be easily understandable and, if possible, should be reduced to a single page or two. Your goal in arbitration is to prove in a simple and straightforward manner that you are entitled to recover your damages from the party who breached the agreement.
After you have identified the basis of your claim (or defenses to your opponent's claim), the witnesses you intend to call, and the exhibits you plan to introduce at the hearings, you should begin to assemble the information in a format which will assist the arbitrator(s) in readily understanding your claims or defenses.. Remember, the validity of a claim can be diminished enormously if presented in a confusing, unorganized manner. Clarity is essential.
Assembly of three-ring binders (one for each arbitrator, your adversary, you, a "witness" copy and an extra copy) containing all of the exhibits you intend to introduce is a useful tool. If visual exhibits are to be used, reduced copies (11" x 17") should be included in the exhibit book.
Another valuable tool is your arbitration "claim book" which can be most effective when proffered to the arbitrator(s) during your opening statement at the commencement of the first evidentiary hearings. A copy must be provided to your adversary. Any objection raised by your adversary to use of such document because it is not really evidence usually is readily overcome by acknowledging that fact while offering to provide full support of the claim book during the presentation of evidence. Such a compact statement of your case quickly appeals to the inquisitive instincts of your arbitrator(s). The claim book should contain:
1. A summary (providing greater detail than the demand for arbitration, answer and/or counterclaim), in narrative form, of each and every claim/defense you intend to prove and the damages you have suffered, with the method of calculating the damages briefly described;
2. A statement of the facts, specifying those which are not in dispute;
3. A comprehensive list of your fact and expert witnesses (which may be subject to change) with outlines of the subject matter of their testimony; and
4. Biographies/resumes of your fact and expert witnesses which will attest to their competence.
Use tabs to separate each of the above classes of documents.
Aside from allowing you to present a well-organized, neat outline of your case, the exhibit book and arbitration claim book serve the greater purpose of forcing you to consider the relative strengths and weaknesses of your case. In most instances, you are best off presenting your strongest claims/defenses first. You can better decide which claims/defenses are not worth pursuing, if any, or at least which ones are unlikely to be successful.
After preparing the exhibit book and arbitration claim book, you are now prepared to arbitrate in a concise, clear manner.
You should arrive at the hearing room at least one hour before the scheduled start of the first hearing. During this hour, observe the layout of the room and identify where you and your witnesses, the opposing party and the arbitrators will be sitting. If you are an attorney, show your client where the witnesses will sit to testify. Becoming familiar with the layout of the hearing room and where each participant will be seated makes for a more organized flow of your presentation and more confident witnesses.
Before the start of the hearing, proceed to set up any graphic displays which you intend to use. Having the graphics prearranged in the hearing-room reduces the likelihood- of -disruption of your presentation at the point when you actually refer these graphics to the attention of the arbitrators. A graphic identifying the relationship of the parties and other relevant entities can be a useful tool during an opening statement in complex matters where many parties are involved.
Consider whether or not you will be more comfortable presenting your opening statement in a sitting or standing position. Either is acceptable. At this point, the important thing is for you and your witnesses to be comfortable with the surroundings, thereby serving to reduce the normal tension experienced when participating in an adversarial proceeding.
Keep in mind that arbitration, although informal, should-be carried out in a completely professional manner. Arbitrators expect, and usually insist, that the parties, though adversaries, are cordial and respectful, not only to each other but to the arbitration process as well. You also should be sure to exchange greetings with your adversary. It makes everyone's day considerably more pleasant knowing that the parties, while adversaries, are not at each other's throat.
At the opening of the first day, you should introduce yourself to all of the arbitrators by shaking their hands and providing each of them with your business card. You also should introduce your client, or, if you are not an attorney and are representing your company, proceed to introduce the representatives of your company to the arbitrators. Before the actual start of the opening statement, it is good practice to request the arbitrators to direct each party to designate a single party representative who, whether testifying or not, will be entitled (and expected) to remain in the hearing room during the course of the entire proceeding. It also may be prudent to request that the arbitrator(s) exclude all other witnesses from the room except when they actually, testify. This avoids a witness "parroting" prior testimony. Now you are ready to begin.
Opening Briefs and Statements
A common question is whether a written opening statement should be pre- pared and submitted in support of your case. A short, concise statement of the elements of your claims, in an easy-to-read format, containing a minimum amount of legal theories, if any, is helpful to the arbitrators who, for possibly the first time, will attempt to grasp and evaluate the merits of your case.
Such a statement would contain the factual background of the project, its problems, the relief which you seek and, most importantly, the damages sought. All too often, parties, for whatever reasons, fail to inform the arbitrators of exactly what they seek in terms of damages and, specifically, why they seek such damages. If you have prepared an arbitration claim book, you already have your written opening statement.
Having this information at the start of the hearings will greatly assist the arbitrators in evaluating the testimony of each witness. The absence of this information at the very start of the hearing is not only a disservice to your case, but also will result in keeping the arbitrators in the dark as to what relief is being sought and why you are entitled to it. This frustrates the accomplishment of your ultimate objective - an award of damages or defeating your opponent's claims.
Remember, clarity is paramount. Any confusion in the presentation of your case is self-defeating. Further, since the arbitrators are the people empowered to provide you with the relief you seek, it clearly is advisable to let them in on this information as early as possible.
Remember, your written statement should be a well thought out, readable digest of your case. To maximize impact, the theory of damages and their justification should remain basically unchanged throughout the course of the hearings, so plan well in advance of the first hearing. As indicated above, the presentation of your written statement should be made at the start of the first day of hearings. The content of your written' statement should be expanded upon during your oral opening statement.
Your opening statement should draw the arbitrators into your story. You should identify the parties and their relationship, the project, the types and cause of the problems encountered by your client during the course of the project, the steps you took to deal with the problems and the relief sought in the arbitration proceeding. It is important to remember that the arbitrators are there to resolve the dispute, not effect a compromise. Therefore, always present your case in a manner which will allow the arbitrators to formulate a fair resolution to the dispute.
The opening statement is not a substitute for sworn testimony. It is merely a presentation as to what you intend to prove. If there is 'a failure of proof, all the golden words in the opening statement will be for naught.
Again, the use of visual aids in a construction arbitration is highly recommended. The arbitrators are accustomed to operating in the "visual world" of construction, and they are more likely to recall what they actually can see. The use of a chart with "bells and whistles" highlighting the strengths of your case, especially when left to sit on an easel during the course of the arbitration hearings will serve to reinforce the merits of your case to the members of the panel. A seasoned adversary likely will object to such continuing "testimony" in your favor, but it is well worth a try.
The oral opening statement is your first real opportunity to clearly and persuasively present your story by addressing the contract obligations and non- conformance by the other party. Your opening statement should provide, in general terms, the causal relationship between the failure by the other party to comply with the contract and the money or other relief sought by your client. Employ legal jargon only when necessary and then only sparingly. More often than not, the arbitrators are more interested in what happened on the project and why, not the intricate rules of law which may, or may not apply.
A basic tenet to remember when planning your oral presentation is to keep it short and simple. Generally, an opening statement should not last more than one hour. Remember, even the most acute listener will get bored with long-winded orations containing a multitude of facts. Explain your case in the manner in which you would explain it to a friend or your spouse. Establish the strengths of your case and eliminate any misunderstanding about them. Simple concepts and simple words will bring about an effective result.
Either during the opening statement or early on, if you believe a site visit would be appropriate, you should request the arbitrators make such an inspection. This visit usually should take place well into but prior to the close of the evidentiary hearings. A site visit helps the arbitrators to obtain a clear picture of what the project actually looks like after construction. If flaws in construction, brought out during the testimony, are visible, the site visit will reinforce that testimony. The site inspection enhances the ability of the arbitrator(s) to assess diverse features of the construction performance, including compliance with the plans, specifications and other contract documents, the quality of the workmanship, and the degree of completion of the project.
Sometimes more can be learned from a site visit than through days of testimony. Of course, it is important to choose the right escort for the arbitrators. For example, the owner's maintenance man who actually performs the maintenance work at the newly constructed facility might be best suited to escort arbitrators, directing attention to the flaws in workmanship or malfunctioning systems or equipment.
A hallmark of arbitration is the presentation of evidence (testimony and exhibits) free from complicated and legalistic rules of evidence. In arbitration, practically anything even remotely relevant to the dispute usually will be admitted into evidence. The arbitrators prefer to accept any such document or other exhibit ”for what it’s worth,” the presumption being that seasoned arbitrators, unlike a juror at trial, will assess the exhibit’s value and relevance to the dispute and give such evidence the weight to which it is entitled with little risk of undue prejudice resulting from an inflammatory exhibit.
Customarily, construction project records are admitted and relied upon by the arbitrators without the supporting testimony of the author. On the other hand, a detailed newspaper article about the project may be excluded (as hearsay) or possibly admitted but ultimately deemed by the arbitrator to be unreliable evidence of the actual events. In most jurisdictions, improper exclusion of evidence constitutes a basis to overturn an arbitration award, so a strong push for admission into evidence is usually heeded by the arbitrators.
On the other hand, where testimonial evidence is repetitious, rambling or irrelevant to the dispute, a direction by the arbitrators to move to a new topic of examination is inevitable. Arbitration will limit such evidence.
The presentation of your case should proceed like a good story, without distractions or interruptions.
Documentary evidence. If possible, try to avoid disruptions regarding documents during the testimony by having the exhibits identified, and hopefully admitted, before the hearing begins. For example, when questioning a wit- ness on Claimant's Exhibit B, you want to avoid any break in the flow of the hearing for exhibit identification, idle discussion, or objection by your opponent. Construction contract disputes involve hundreds or thousands of exhibits - business records of the project - which were distributed to all concerned during the course of performance of the construction work. Each of the parties has virtually all of the records before the arbitration proceeding was initiated. Often, arbitrators will accept all exhibits into evidence en masse at the beginning of the first hearing in a construction project dispute.
Some cases will require admission of exhibits one at a time. When there are less than 50 exhibits, mark them for identification before examining the first witness. If there are more than 50 exhibits and many days of hearings, then have the exhibits to be used on a particular day marked before examining the first witness of the day. However, if there are other exhibits that come to mind, even if not previously identified, they should be introduced as well.
Some voir dire is inevitable. This is the label for the age old legal procedure given to your opponent's right to question a witness as to the authenticity of the proffered exhibits before the witness testifies using the exhibits. Brief questioning of your witness by your adversary is customarily allowed by the arbitrators before you may continue with your presentation. Advise your witness in advance of the likelihood of the allowance of some voir dire.
Be sure to make a copy for your adversary, for each arbitrator, and a “witness" copy. Occasionally, arbitrators want an official copy for the record as well.
Testimonial evidence. As with the introduction of documentary evidence, arbitration generally permits wide latitude in testimonial evidence. Typically, the testimony of a witness should be based solely on personal knowledge. However, even hearsay (that which someone supposedly has told the witness) usually will be admissible "for what it's worth."
There are two types of witnesses: fact witnesses and expert witnesses. Fact witnesses have personal knowledge of information relevant to the dispute between the parties. Generally speaking, fact witnesses come to possess such information through their own personal observation of conductor things. For example, an excavator may have knowledge of sub-surface conditions experienced at the job site.
A person with specialized education, training or experience, resulting in. a high degree of knowledge or expertise in a particular discipline or work activity may be accepted as an expert and be allowed to provide expert opinion evidence in the proceeding. Experts generally are called to testify as to what went wrong at the project, why it went wrong, what caused the problem(s), what could have been done to correct the problem(s), and what effect the problem(s) had on the project and these parties.
In construction disputes both types of witnesses are frequently used. As they have personal knowledge of the job facts, lay witnesses such as the project superintendent, generally will compose the majority of your witnesses. While opinion evidence usually is accepted only from experts, fact witnesses may be asked for an opinion where the arbitrators deem it helpful to under- standing the case.
Affidavits. Although often overlooked by attorneys and parties alike, the use of affidavits can be an effective and inexpensive means of bringing evidence before an arbitration panel.
Generally, the affidavit should frame what you want said in a manner which leaves no room for second guessing.
A prudent arbitrator will require the offering party to justify the use of an affidavit. Some of the factors to be considered are whether the information in the affidavit is controversial or essential to the outcome of the case. For example, an arbitrator may be reluctant to accept an affidavit expressing a key fact upon which the ultimate decision hinges. Nonetheless, the affidavit of a nonparty design engineer maybe perfectly suitable for use in describing the procedure employed by his office in processing shop drawing approval.
Other factors usually considered are the unavailability of a particular witness for live testimony due to health, employment, or geographical problems.
Your use of an affidavit may present a serious problem for your opponent as, quite obviously, this "witness" cannot be cross-examined readily. This results in an affidavit being highly effective in a subversive sense, and since it is not subject to cross-examination, it may be accepted by the panel as unopposed evidence. However, the sound practitioner should beware, for if the panel is not vigilant, affidavits can be abused and often receive more credit than they should by the arbitrators.
Evidence from third parties. Situations invariably will arise where testimony, documents, or other information is sought from third parties (i.e., a person or company not a party to the arbitration) for use before or at the arbitration hearings.
The use of a subpoena to obtain such information is generally' effective for this purpose. In many jurisdictions, both attorneys and arbitrators have the power to subpoena third parties found within the jurisdiction to appear at a hearing to testify or produce documents. It is the better practice to have the subpoena signed by an arbitrator because a court upon an application to quash by the subpoena’s recipient, may regard a subpoena signed by an arbitrator as an implied assertion by such arbitrator that the documents or witnesses sought by the subpoena are essential to the proceeding.
In some jurisdictions, extraordinary circumstances will allow a party to obtain court-ordered discovery (deposition 'or production of documents) in advance of a hearing from a source not a party to the arbitration. This usually will be allowed only where the information sought is available solely from the third party and undoubtedly is essential to the arbitration proceeding. Invariably, such applications to the court are denied on the theory that arbitration is the private dispute resolution mechanism agreed upon by the parties to be utilized independently from the judicial process in resolving the parties' dispute.
Since arbitration is a private process, it keeps the parties and, more importantly, the nature of the dispute and its resolution, confidential.
A higher degree of privacy may be warranted where confidential information, e.g., a customer list, is sought during routine exchange of documents before the start of hearings. A written confidentiality agreement signed by the parties can solve such problems over important corporate information.
Effective Direct and Cross-Examination
The testimony of the witnesses at the arbitration proceeding will make or break your case. Unlike documentary and physical evidence, the parties have wide latitude in developing the nature and substance of this type of proof to suit the needs of the case.
In presenting your claims or defenses, you must select which witnesses will testify and what subjects should be covered to best support your case. This is accomplished by questioning, i.e., direct examination, of your witness. Upon completion of each direct examination, your adversary has the opportunity to question or cross-examine your witness. The focus and methods of each type of examination differ considerably.
During direct examination you are presenting testimony to support your claim. In essence, you want to elicit testimony from the Witness which demonstrates why your client should prevail. Out of the witness' mouth should come the story you want told to the arbitrators.
The key ingredient to successful direct examination is a well-prepared, confident, and knowledgeable witness. The credibility of a witness is constantly being assessed. A witness who appears natural and sure of his testimony is clearly more persuasive than an ill-prepared or nervous one.
One of your roles is to assist the witness to be as confident as possible during testimony. The first and most effective means of increasing that confidence is to adequately prepare the witness. Review well in advance with each witness every exhibit about which you intend to ask him questions. Conduct several practice examinations the day or two before testimony. Counsel your witness to listen carefully to each question and wait until the question has been completely asked before answering. In examining a skittish witness, it is advisable to suggest that, after the question has been asked, the witness should pause briefly to completely formulate a response before responding to the question. Counsel the witness not to anticipate any questions; you may need to change the order or wording of some questions as the testimony progresses. This should not create any problems if the witness listens to the question being asked and answers truthfully. For greater impact, the witness should face the arbitrators when answering key questions.
Remember, the goal in direct examination is to tell a good story. Every good story has a good narrator and, in direct examination, the witness is the narrator. Thus, the witness narrates the facts of the case and explains documents which prove to the arbitrators that the party is entitled to the relief.
Begin direct examination with questions regarding the witness' background (no matter how nervous, people usually feel comfortable talking on a topic about which they are familiar: themselves! While questioning the witness, observe whether he is visibly nervous and struggling. If so, ask for a five- minute break to relax .and reassure him that he possesses all the knowledge necessary to answer the questions he will be asked.
If your witness is stumbling through documents due to nervousness, the arbitrators generally will allow the witness to be guided to facilitate the progress of the hearing. Along the same vein, leading questions as to background and routine subject matter usually will generally be permitted by arbitrators to enable the testimony to proceed expeditiously. Be careful, however, not to abuse this courtesy, or you may detract from the credibility of your witness.
Direct Examination of Expert Witnesses
Expert witnesses are commonly used in construction contract disputes. The cause and effect of such job site problems as suspension of the work, defective performance, and delayed completion of the project are frequently key issues to be decided by the arbitrators in deciding the merits of your claims. Assisting the arbitrators to decide in your favor by your use of competent expert testimony is a premier stratagem. However, before the arbitrators will consider, or even listen to, the opinion of your expert, you first must establish your witness' expertise in his subject matter. The recognition of an expert's expertise is based solely upon the judgment and discretion of the arbitrators.
Start by eliciting testimony which portrays the professional background and experience of your witness. Possession of a relevant academic degree, state license, or other certification is customary - but not essential. A well-educated, licensed professional with a solid reputation who currently engages in the profession which will be the subject of his testimony generally makes the most reliable and believable expert. On the other hand, an individual who possesses superior understanding of paint applications and defects by virtue of many years of working in the painting trade may possess a degree of expertise sufficient to be recognized by the arbitrators as reliable and competent for the purpose of the arbitration proceeding.
After you feel confident that you have established the expertise of your wit- ness and before you begin questioning about the matters in dispute, ask the panel to recognize your witness as an expert. At this point your adversary may ask the arbitrators for the opportunity to voir dire, that is, to probe the proffered expertise. A brief inquiry of your witness usually is allowed before the consideration and: decision by the arbitrators on your request for recognition of your witness as an expert. Any objection to your request by your adversary will be addressed by the arbitrators at that time.
While many arbitrators themselves possess varied degrees of expertise in construction project technology, almost all welcome the capable assistance of a competent expert to aid in the understanding of the technical, engineering and architectural issues that need to be resolved at the close of the hearing. At the same time, possession of a professional engineer's license by a witness does not, by itself, command the recognition of the witness as an expert in, for instance, steam turbine installation. A thinking arbitrator will require expertise in the very area about which he will testify. If your witness is lacking in the opinion of the arbitrators, they may limit or refuse to allow the use of such a witness.
It also should be pointed out that a party adequately experienced in the construction industry may be his own expert. This is particularly apt where the party possesses adequate expertise and the amount in dispute and the budget are small.
Upon acceptance of your witness, the expert should: provide clarifications and information as to relevant standard practices and procedures in the construction industry; analyze the evidence and the actions of the parties involved; and provide an opinion, based upon his experience, as to the cause and effect of the actions and inactions of the parties.
Remember that panels frequently will consist of at least one, if not two, arbitrators who have construction expertise similar to that of the testifying expert. An expert should not show any resentment whatsoever if the arbitrators question him on any phase of his work, experience, or testimony. The expert witness, or any witness for that matter, never should show offense by the arbitrators' questions. Be cautious to avoid the expert who was not involved with the disputed construction project during its performance, yet arrives at the hearing with a superior air, glossy charts, etc., for he maybe viewed with skepticism by the arbitrators.
Effective cross-examination of either lay or expert witnesses should consist of simple questions requiring one word or brief answers. The goal of cross- examination is to impair the credibility of the witness and to impeach his testimony. In the case of experts, occasionally, you can use his prior published writings or testimony to achieve this goal. Impeachment should not be attempted by badgering the witness, which will alienate the arbitrators "from you and create sympathy for the witness (exactly the opposite of your goal). Cross-examination mayor may not be limited to the subjects covered during direct testimony; Usually it is so limited but the discretion of the arbitrators always will control.
As you prepare to cross-examine your opponent's witnesses, bear in mind that your own witnesses need to prepare for their cross-examination. Much of your witness' anxiety over testifying may arise from the thought of cross- examination. He may fear that the other attorney or party will attempt to coerce him into saying or admitting something injurious to the case. Since you have thoroughly reviewed the contract and project documents, you have assessed your vulnerabilities and can prepare the witness for cross-examination through a series of dry runs. Engage in mock cross-examination of each witness utilizing whatever exhibits may be employed by your adversary. Familiarity with the topics upon which he will be cross-examined will usually ease his mind.
Redirect or recross-examination should be used only to clarify statements already made, or to elicit new testimony if it will help your case and the arbitrators will tolerate it. However, you will want to minimize the risk of having your witness testify differently the second time.
Redirect normally should be confined to issues covered on cross-examination. Recross-examination should normally be restricted to issues discussed on redirect examination. Even if the arbitrators allow you to introduce new testimony on redirect of your witness this should be done cautiously because it opens the witness up for further cross-examination, which could develop contradictions in the initial testimony.
The essence of the arbitration process consists of the use of evidentiary hearings to adduce reliable testimony and present trustworthy documentary and physical evidence in an orderly fashion so that the arbitrators can understand and assess the positions of the parties and render a fair award. Whenever an event transpires which seems to undermine the process, that is usually grounds to bring an objection to the attention of the arbitrators for a ruling. Likewise, when your adversary raises an objection, you should be prepared to demonstrate that you are within the bounds of fair arbitration process.
Attempts to introduce exhibits frequently draw an objection. Presentation of arguments by the parties on the issue of admissibility of the exhibit can be very disruptive to the testimony being offered by your witness. To avoid such objection, either attempt to agree in advance to all exhibits, or, at least, present the exhibit in advance to your adversary, advising him of your intent to introduce it.
If no advance consent is readily available, ask your witness questions which provide the factual context out of which the exhibit arose. For example, if you want to introduce a concrete test cylinder lab report without calling a representative of the independent testing agency which conducted the test, ask your project manager witness to explain the concrete testing procedure employed during the project and then have him identify the reports received in overseeing the project testing procedure. This type of foundation for your test report exhibit serves well to promptly dispose of the disruptive objection.
Questions which are confusing or ambiguous invite objection. Ask simple questions. There is no jury to impress. Everyone expects your witness to have rehearsed beforehand. Ask your questions and let your witness carry the narrative to the extent he is capable. If your question raises an objection, with- drawing it and rephrasing it into another question, if possible, is less disruptive to your witness' testimony.
Unfortunately, however, repeated unfounded objections by your adversary sometimes are tolerated by arbitrators for what seems like an eternity. Most arbitrators are not former judges, so many wait until there is no doubt to any- one in the hearing room that the objections raised are intentional disruptions. If you sense such a situation, ask the arbitrators to clear the hearing room except for the arbitrators and parties' counsel and present a compelling argument demonstrating the need for continuity of testimony to preserve fairness and, in particular, the witness' ability to relate his view in a readily understandable manner to the arbitrators. Even if there is no immediate favorable reaction by the arbitrators, there inevitably will be a greater awareness of your need.
Fairness is the guiding principle here. If a surprise witness, document, or gambit is sprung, the arbitrators are obligated to allow the disadvantaged party the opportunity to take steps to present a more balanced view. For example, the surprise witness may be allowed to testify only if he is subject to recall for cross-examination on another day, after there is opportunity to prepare.
Scheduling of Witnesses
The scheduling of witness testimony is an important factor in determining the manner and sequence in which your story will be told. Normally, the first witness sets the stage and should provide testimony describing the project and identifying the parties and the nature of the dispute. While your first witness is frequently your strongest, he need not be. He must, however, have the ability to set the stage for the story which will be more fully developed by the later witnesses. Your last witness should be capable of summarizing the project's problems in terms of dollars and cents. In determining whom your witnesses will be, make sure you have at least one strong witness, that is, one who is knowledgeable, well-prepared, credible, and concise.
Selection of Witnesses
Frequently, the most effective witness is the person who worked the project in the field and can explain with knowing recollections the problems encountered and the effect of those problems in terms of such issues as redeployment of manpower, materials and the like.
The following is a short list of the types of witnesses typically available in a construction dispute along with the areas upon which each may best be able to offer effective testimony.
Principal. Knowledge of the company, its philosophy and project approach, pre-bid decisions and concepts, general knowledge or project overview, problems, planned/actual construction sequencing, procedures, contract documents, performance, payments, losses and damages.
Estimator. Knowledge of how the job was bid, planned sequencing and scheduling of work, bid work-outs and anticipated means and methods of performance.
Purchasing agents. Knowledge of planned/actual project construction, vendor selection and performance, delays, resource management and changes to contract specifications and plans.
Project engineer. Knowledge of plans and specifications, planned/actual method of construction, effect of any extra work performed and design deficiencies.
Project manager. Overall knowledge of project requirements and performance, negotiations, rationale for major decisions, options considered to deal with problems, accelerations, suspension of work, extra work performed, manpower scheduling, subcontractor performance, payments, and, most importantly, knowledge of the other party's conduct during the course of the project.
Project scheduler. Planned/actual construction of project, delays, disruptions, acceleration efforts, loss of productivity, and extra work.
Project accountant/bookkeeper. Dates and payment dates and amounts, wage rates, fringe benefits, equipment costs, material costs, and vendor and subcontractor payments.
Superintendent. Planned/actual construction of project, work force, acceleration, loss of productivity, inspection, unworkable designs, unforeseen conditions, interferences, site problems, and overinspection.
Expert witness. Overall knowledge of project, schedules, delays, inefficiencies, costs or particular knowledge in a specific technical area.
In addition, the following is a list of typical construction project disputes, along with the person best suited to testify about the particular problem:
Always make an oral closing statement. This is your last chance to have the arbitrators hear your side of the story as you want it told. It is also good practice to provide a written closing statement, specifically illustrating any money damages sought.
The very purpose of the closing statement is to provide you with the opportunity to demonstrate that the evidence adduced during the hearing(s) proves your right to prevail. Use it for that purpose. As to each of your claims or defenses, refer to the particular documents and testimony which lend support to your position.
Your closing statement should provide a narrative synopsis which is compelling, comprehensive and well-organized. Highlight the important information heard during the hearing, recount who testified and the highlights of their testimony, and define your claim and precisely what relief is sought.
Use this opportunity to point out the failures of proof by the other side. Likewise, be sure to note during the hearings which arbitrators found certain elements of your case interesting and emphasize those in their most favorable light.
The closing written statement should contain, aside from the above, an updated schedule of damages. Touch upon all dollar changes and their reasons: mathematical error; duplicated costs removed; etc. It is also during this time that you should invite questions from the arbitrators, thereby identifying and clearing up any questions which the arbitrators may still have.
Your closing statement should also include a proposed form of award. This is an opportunity to create a "mindset" for the arbitrators. If you can get the panel to accept your proposed form of award, you may enhance an arbitrator's existing view of your right to prevail. You also may learn on which issues you were successful and on which you were not, which may be useful for future reference.
Always submit a written legal brief if requested to do so by the panel. When do you volunteer to submit such a brief? You do so when you want to rein- force your position using a principle of law, such as an expired notice requirement, or a statute of limitations. When citing a case decision, always attach a copy of the case with the important language highlighted. The nonlawyers on the panel probably will not have easy access to a law library, hence the need to attach the case, nor will they be interested in those parts of the case not relevant to your case, hence the desirability of highlighting.
As in all writings submitted to the panel, the brief should be readable and understandable with the minimal amount of legalese. If the law is clearly in your favor, a brief can be an important tool and may affect the ultimate decision made by the arbitrators. If the hearing transcript is available, cite the record wherever it is beneficial to reinforce your legal argument. The length of the brief is normally fixed by the arbitrators.
Oftentimes, panels do not favor the submission of closing legal briefs. Moreover, even if a brief citing a principle of law is submitted, arbitrators are not bound to apply the strict rules of law in determining the award.
In short, closing statements and/or legal briefs should be used to clarify testimony, highlight important factual and legal points and illuminate the opposing side's failure to prove its case. They should, in essence, help the panel decide in your favor.
Finally, there also are certain intangible elements which can add "bonus points" to your position and affect the outcome of the award. Being well pre- pared, organized, somewhat impartial, knowledgeable of the facts and documents to be presented, always early or on time (at the start of the hearings or after breaks), neat, well-groomed, concise, and non-hostile toward the opposing party will enhance your chances of success. Also, being reasonable and firm in your requests can only help the arbitrators to believe in you and, hence, your position. Dawdling and lack of organization, no matter how strong your position is, will provide your opponents with the opportunity to think of additional defenses and serve to create an air of uncertainty and incompetence in the minds of the arbitrators.
*The author wishes to gratefully acknowledge the assistance of Kathleen M.J. Harmon in the preparation of this chapter.
JOHN P. MADDEN is a partner at Canfield, Madden & Ruggiero in New York City. He received his B.S.C.E. from Manhattan College and his M.S.C.E. from New York University. Mr. Madden taught engineering courses, served as an engineering consultant and engaged in construction project management with the U.S. Corps of Engineers for several years prior to receiving his J.D. from St. John’s University. For the last 20 years, his legal practice has been devoted primarily to litigation and arbitration of commercial and construction law disputes representing owners, developers, architects, engineers, contractors and subcontractors. Mr. Madden has also been involved extensively in ADR. He has served frequently as an arbitrator and a mediator for the AAA in resolving complex multi-party construction disputes. He is also a frequent guest lecturer for the Association in the training of arbitrators and case administrators.