Arbitration or Litigation for a Construction Dispute: What to Compare

Reviewed September 7, 2026.

An arbitration clause can be useful, but it is a business and legal choice. Neither arbitration nor litigation is always faster, cheaper or better. Evaluate the likely dispute, the parties needed to resolve it, and the terms of the proposed agreement.

Compare the total cost

Arbitration may involve administrative filing and case fees, arbitrator compensation, hearing expenses, attorneys and experts. Litigation involves court fees, service, discovery, motions, trial preparation, attorneys and experts. A court filing fee is not the total cost of a lawsuit. The old dollar examples in this article are obsolete; consult the AAA’s current construction rules and fee schedules, including any applicable home construction schedule, when budgeting.

Consider procedure and proof

Arbitration can offer a neutral with construction experience and a tailored hearing schedule. The agreement and applicable rules influence document exchange, depositions, expert evidence and available procedures. Limited discovery may reduce expense but can hinder a party that needs evidence held by others. Multiple parties and inconsistent dispute clauses can lead to separate proceedings.

Understand review and enforcement

Judicial review of an arbitration award is narrow. CPLR 7511 provides specified grounds and deadlines for vacating or modifying an award; it is not a routine appeal of the merits. Court litigation has its own appeal rules, timing and costs. Neither forum guarantees a quick recovery.

Before signing, address mediation, location, number of arbitrators, joinder, discovery, fees and preservation of lien and bond rights. Residential consumer contracts also require analysis of New York consumer law and any applicable Federal Arbitration Act preemption. Match the clause to the project rather than adopting it automatically.

Kushnick Pallaci PLLC assists clients throughout New York with construction arbitration and dispute-resolution planning. Contact 631-752-7100 or vtp@kushnicklaw.com.

Attorney Advertising. General information, not legal advice.