Enforceability Status
Mandatory arbitration clauses in Hawaii new construction contracts are likely enforceable. Hawaii has adopted the Hawaii Revised Uniform Arbitration Act (HRS sections 658A-1 to 658A-29) and courts generally uphold arbitration agreements. The Federal Arbitration Act provides additional preemptive support for contracts involving interstate commerce.
Legal Analysis
The Federal Arbitration Act (FAA), 9 U.S.C. sections 1-16, applies to arbitration agreements in contracts involving interstate commerce. Despite Hawaii's geographic separation from the mainland, national homebuilders operating in Hawaii engage in interstate commerce, bringing their contracts within the FAA's scope.
Hawaii adopted the Revised Uniform Arbitration Act, codified at HRS sections 658A-1 to 658A-29. The statute provides that an agreement to arbitrate is valid, enforceable, and irrevocable except upon a ground that exists at law or in equity for the revocation of a contract. Hawaii courts have applied this framework to uphold arbitration provisions.
Hawaii has specific statutory provisions governing residential construction. HRS Chapter 444 regulates contractors, and HRS section 672E establishes a design claim conciliation panel process. While these statutory frameworks address construction-related disputes, they do not prohibit contractual arbitration. Arbitration clauses in builder contracts operate alongside these statutory provisions.
Hawaii courts have addressed unconscionability as a defense to arbitration enforcement. The Hawaii Supreme Court has applied both procedural and substantive unconscionability analysis. Given Hawaii's unique market conditions and the limited number of builders, the adhesive nature of builder contracts may receive scrutiny, though outright invalidation of arbitration clauses remains uncommon.
Relevant Hawaii Law
Establishes a national policy favoring arbitration and preempts conflicting state laws.
Provides the statutory framework for enforcement of arbitration agreements in Hawaii.
Regulates contractors in Hawaii and provides a framework for addressing contractor-related disputes.
Builders in Hawaii Using This Clause
What Hawaii Buyers Should Know
- Review the Arbitration Clause Terms Examine the scope, designated provider, fee allocation, and any limitations on remedies. Given the limited number of builders in Hawaii, understanding the terms before signing is particularly important.
- Understand the Impact on Statutory Remedies Hawaii has various statutory protections for homebuyers. Review whether the arbitration clause limits or modifies these statutory rights.
- Consider the Practical Implications Arbitration in Hawaii may involve logistical considerations, including the availability of arbitrators with construction expertise. Review whether the contract specifies the location and selection process for arbitration.
- Document All Construction Issues Maintain thorough records of defects, communications, and repair requests. Limited discovery in arbitration makes existing documentation critical to supporting claims.