15th May 2015
When the complex relationships often involved in a hotel development deal become entangled and conflicting, it can spell disaster for all involved, even long after the actual development and construction phase is over and everything is firmly in the management phase. When disputes and disagreements over any aspect of the hotel’s development, design, construction, or management come up, most investors and consultants recognize the potential for catastrophic damage to the underlying business relationships, and often turn to an experienced hotel and real estate arbitrator as the ideal way of resolving these conflicts as efficiently and quickly as possible.
The real trouble can begin when an arbitration decision is perceived as unfair by one of the parties, who then turn to the courts in an attempt to overturn the decision. While this might seem to go against the whole purpose of an arbitration agreement, there are many examples of the courts being sensitive and sympathetic to such actions, which can take the fast solutions offered by arbitration and stretch them out over years and even decades.
The only way to try to inure yourself against such problems is to be very particular in your choice of arbitrator. Hotel development is a very distinct beast, and it requires someone with experience and a deep understanding of the laws, codes, and relationships between investors, designers, architects, contractors, brands, developers and operators that become involved in the project over the years.
It is important to note that no matter how carefully an arbitrator is selected, there is always a chance that the fast and efficient work of an arbitration will be negated by a decision to challenge the final decision rendered in an arbitration proceeding, which makes planning for all contingencies essential. But certainly, selecting a hotel development expert who is also trained and experienced in the arbitration process can reduce the risk of such an unfortunate outcome.