Disputes are always a risk in construction, and you may make decisions about how to resolve them years before any conflict arises. These decisions can significantly affect cost, timeline, and outcome. Pull out your current form contract or a recent project agreement and ask yourself these questions before you continue reading:

• Does your dispute resolution clause call for arbitration, litigation, or something else?
• Do your downstream or design contract dispute resolution provisions mirror those in the document?
• If a dispute arose tomorrow involving an owner, contractor, designer, subcontractor, and/or surety, could you bring everyone into a single proceeding?
• Do you know the difference in cost and time for claims in court versus claims in arbitration?

If you hesitated before answering any of those questions, you are not alone. Over the past decade, arbitration has been the go-to choice in construction contracts, but contractors and owners increasingly are choosing litigation, and the gap is closing. Let’s break down the key factors you should weigh when making this critical decision.

When Does the Decision Get Made?

The choice of litigation or arbitration comes up at several points before and during a project’s lifecycle, not just when a dispute occurs.

Contract drafting is the most common decision point. If you are working from a form contract, you likely already have a default provision in it. But do you have a preference that holds regardless of the project, parties, location, or issue type?

Contract negotiation is another critical moment. Leverage matters, so if you are working from another party’s form, your ability to shape the clause may be limited. You also need alignment across your project contracts. Contractors want downstream parties bound by the same provision they have with the owner, and owners want consistent provisions with both design and construction teams.

During a project if an issue arises, you may have the opportunity to agree on a dispute resolution process that differs from the contract. This can be accomplished through voluntary partnering sessions, tolling agreements, in-project mediation, or other mutual consent.

Who Decides Your Dispute?

In arbitration, you get one or three arbitrators, depending on the dispute’s monetary value; these individuals often have a construction background. They may be lawyers and former judges or they may be contractors or designers with little to no formal legal training. All parties have meaningful input in selection through credential review, ranking, and strikes. With their relevant construction and legal experience, arbitrators focus on technical issues and fairness.

In litigation, you are randomly assigned a judge and have little say in jury selection beyond limited questioning and strikes permitted by the applicable civil rules. While judges bring legal expertise, they oftentimes lack technical construction knowledge. Juries tend to be less knowledgeable of the industry, and regularly reduce complex issues to black-and-white decisions, which could benefit a party that has a straightforward legal defense such as lack of notice.

The desired decision-maker is largely dependent on the dispute particulars and the parties involved, but arbitration is the choice to make if you want your dispute heard by someone familiar with the industry and the nuances of construction law.

How Long Will It Take?

Arbitration typically takes 12 to 24 months. Early disposition by motion is rare, and you may wait months for a final written decision after a hearing.

Litigation generally takes 15 to 30 months. The advantage is there may be multiple off-ramps—dispositive motions are more typically employed to narrow or resolve a case before trial. Even if you go all the way through to a jury trial, the verdict is immediate.

On balance, arbitration has a slight edge on overall timeline, but the difference may not be as significant as many assume, unless there is an appeal (more on that below).

What Will It Cost?

There is a common misconception that arbitration is cheaper than litigation. While that may have been true years ago, today, arbitration comes with added costs, Certain costs, such as expert testimony, document collection and review, depositions, and business interruption, are present and consistent in either setting.

Where costs diverge is in the added expenses unique to each forum. Arbitration carries significant filing fees, administrative fees, and arbitrator compensation that can easily exceed $1,000 per hour with a three-arbitrator panel. Judicial Arbitration and Mediation Services (JAMS) charges a case management premium on top of arbitrator fees, and American Arbitration Association (AAA) filing fees are significant for claims above $1 million.

Litigation often involves more discovery and a longer timeline, both of which increase legal fees. There is also the potential for added costs associated with an appeal. Still, judges do not charge for their time, and court filing fees are more predictable and significantly lower than arbitration costs.

Litigation will generally come out on top when it comes to cost.

What Rules Apply?

In arbitration, the rules are minimal with significant gray area. The parties have flexibility to agree on discovery limitations and procedural exceptions, but the lack of a clear rulebook can make the process feel like a free-for-all.

In litigation, the applicable state or federal rules of civil procedure and rules of evidence provide a clear, predictable framework. The trade-off is minimal flexibility. You cannot change the rules, and only by agreement of all parties and with the judge’s permission can you modify some deadlines or discovery limitations.

If knowing the rules of the game matters to you, litigation has the advantage over arbitration.

Can You Join All the Parties?

This is a critical and often overlooked consideration in construction disputes, where multiple parties are almost always involved.

In arbitration, there is a higher risk of multiple proceedings. Each party must agree to be subject to arbitration, either through contract or by consent. If you are a contractor in a dispute with an owner, you may not be able to include your subcontractors, sureties, or other parties in the arbitration unless they are contractually bound to an arbitration provision and your contract with the owner permits joining other parties. And notably, lien foreclosure and insurance coverage claims are typically handled separately in court.

In litigation, the court can exercise jurisdiction over any party or claim that falls within its jurisdictional authority. However, if even one threshold dispute in a multi-party case is subject to an arbitration provision, the entire case may be stayed while that arbitration proceeds, which can create significant delays.

Litigation has the edge when it comes to consolidating claims and parties in one proceeding.

How Much Control Do You Have?

Arbitration gives the parties more control from start to finish. You have input on arbitrator selection, flexibility in discovery, and the ability to shape procedural rules. Perhaps most importantly, arbitration is confidential and private, which can protect proprietary business information and reputations.

Litigation largely takes control out of your hands once the process begins. A judge is randomly assigned, the schedule is automatically governed by the court’s rules and the judge’s calendar, there are strict guidelines on civil and evidentiary processes, and you have limited input on the timing of trial and your jury. Court proceedings and filings are generally open to the public, and judges are increasingly reluctant to seal documents or restrict attendance at hearings and trials.

If control and confidentiality matter to you, arbitration is the clear winner.

When Is It Really Over?

In arbitration, the arbitrator’s decision is largely final. Appeals are extremely limited under the Federal Arbitration Act, which lists only four grounds for vacating an award — all of which set a very high bar. Those grounds are (1) corruption, fraud, or undue means; (2) evident partiality or corruption of the arbitrator; (3) serious arbitrator misconduct; and (4) the arbitrator(s) exceeding the scope of their authority. This finality can be a significant advantage if you are on the winning side, but a difficult pill to swallow if you believe the arbitrator got it wrong.

In litigation, a judgment or verdict carries full appellate rights, provided you have properly preserved your grounds for appeal in the trial court. While the possibility of appeal extends the overall timeline and cost, it also provides a meaningful check on the decision of the judge or jury.

If you value finality and a quicker end to the process, arbitration is your best choice.

What Remedies Are Available?

In arbitration, arbitrators generally have broad authority to award damages, but certain remedies can be more complicated. Punitive damages may be restricted under some institutional rules or state laws. Mechanic’s lien foreclosure typically requires court involvement regardless of your arbitration clause, meaning you may end up in two forums anyway. Prejudgment attachment and other provisional remedies often require court action, though most major arbitration providers now offer emergency arbitrator procedures for urgent interim relief.

In litigation, courts have full authority to grant the complete range of legal and equitable remedies, including injunctions, specific performance, declaratory relief, prejudgment attachment, and mechanic’s lien foreclosure. If your dispute requires emergency injunctive relief or involves lien rights, litigation will keep all your remedies in one forum.

If your potential claims may require provisional remedies, lien foreclosure, or other court-dependent relief, litigation offers a more streamlined path.

The Bottom Line

There is no universally correct answer, but concrete scenarios can help clarify the choice. If you are a general contractor on a technically complex project and your primary risk is a dispute with the owner over change orders, arbitration is likely the better bet. You get a decisionmaker who understands construction, you keep the details confidential, and you avoid the risk of a jury reducing weeks of expert testimony to a coin flip.

Conversely, if you are a contractor facing a multi-party dispute with an owner, architect, multiple subcontractors, and a surety or a dispute requiring emergency relief or enforcement of lien rights, then litigation is often the smarter path. Courts can pull all parties into a single proceeding, apply consistent rules, and give you procedural tools to narrow claims before trial. Trying to arbitrate that same dispute could mean parallel proceedings, inconsistent outcomes, and higher overall costs.

The key takeaway: Do not treat the dispute resolution clause in your contracts as boilerplate. Think carefully about what matters most to you and your business, and make an intentional choice.