Arbitration in Construction Cases: Process and Enforcement in Texas

Introduction

Construction projects are full of moving parts. From contractors, subcontractors, tight deadlines and detailed contracts. When disagreements arise, many construction contracts in Texas call for arbitration rather than going to court for a lawsuit. Understanding how arbitration works, and how arbitration awards are enforced, can help contractors, property owners, and project managers protect their interests when a dispute arises.

What is Arbitration?

Arbitration is a private dispute resolution process where the parties present their case to a neutral decision maker known as an arbitrator, rather than a judge or jury. The arbitrator reviews evidence, hears testimony from each side, and issues a written award, which functions much like a court judgment in a lawsuit. It is a common alternative to conventional litigation because the process is typically faster, more private, and handled by professionals with industry specific expertise.

Many construction contracts include mandatory arbitration provisions which require disputes to be resolved privately. These clauses often specify which arbitration rules apply (such as the American Arbitration Association’s Construction Industry Rules), how the arbitrator will be selected, and where the arbitration will take place.

Generally, a written agreement to arbitrate “is valid and enforceable if the agreement is to arbitrate a controversy that exists at the time of the agreement or arises between the parties after the date of the agreement.” Tex. Civ. Prac. & Rem. Code § 171.001(a). 

Texas law strongly favors arbitration. Once parties agree to arbitrate, courts in Texas will typically hold them to that promise. If a contract contains a valid arbitration clause, courts must compel arbitration if one party to the dispute refuses to participate. Tex. Civ. Prac. & Rem. Code § 171.021(a) (“A court shall order the parties to arbitration on application of a party showing… an agreement to arbitrate and… the opposing party’s refusal to arbitrate.”).

The Arbitration Process

The Texas Arbitration Act (TAA) controls the procedure for arbitration within the state. Tex. Civ. Prac. & Rem. Code §§ 171.001-.098. The process begins when one party files a written demand for arbitration, often through an organization like the American Arbitration Association (AAA). Organizations like the AAA have specific rules which govern things like deadlines, fees, discovery, and the conduct of hearings.

After the demand is filed, both sides then come together to select an arbitrator or a panel of arbitrators, who are commonly attorneys or industry experts familiar with construction law. The parties exchange documents and other evidence in a limited discovery phase. This discovery phase is narrower than in traditional court and is designed for efficiency and rapid dispute resolution.

Once discovery is completed, the arbitrator holds private hearing where each side is given the opportunity to present its case. After the hearing is completed, the arbitrator issues a written award that determines liability and any damages or other relief granted to the prevailing party. 

Enforcing the Award

Once an arbitrator issues an award, it is final and binding. If the losing party fails to comply, the prevailing party may file an application to confirm the award in a Texas court. Under the TAA, “unless grounds are offered for vacating, modifying, or correcting an award” the court shall confirm the award. Tex. Civ. Prac. & Rem. Code § 171.087.

The grounds for vacating an award are narrow. A court may vacate an award only if it was obtained by fraud, corruption, or undue means; if an arbitrator showed evident partiality or misconduct; or if the arbitrator exceeded their powers. Id. § 171.088(a). Mere legal or factual error by the arbitrator alone is not typically a basis for vacating an award.

Similarly, a court may modify or correct an award only for clerical or calculation errors, mistakes in describing property, or imperfections in form that do not affect the merits of the decision. Id. § 171.091.

After confirmation, the award has “the same force and effect as a judgment in a civil action” and may be enforced through normal collection methods, such as writs of execution, garnishment, or judgment liens. Id. § 171.092.

Contact Us

Whether you’re a homeowner dealing with a contractor dispute, a subcontractor seeking payment, or a builder trying to enforce an agreement, knowing your options under Texas arbitration law is invaluable. 

From the first notice of dispute through enforcement of the final award, if you need assistance with a current or potential arbitration matter, reach out to us at Allen Bryson Lamar, PLLC. We can walk you through your options, explain the process clearly, and advocate for your best outcome every step of the way.

The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.