Introducing a Quasi-judicial Party to Dispute Resolution in Construction Contracts

Abstract

In this paper, a model is proposed to analyze how a dispute resolution process can be controlled by third parties’ adjudications in construction projects. We analyze the effects of introducting two alternatives, Dispute Adjudication Board (DAB) and Dispute Review Board (DRB) into the dispute resolution process under the FIDIC standard conditions of construction contract. The model explains how the differences between DAB and DRB affect the efficiency of the dispute resolution process. Differences between dispute resolution processes in FIDIC and GCW, the standard conditions of construction contract in Japan, are also analyzed. The following conclusions are obtained. 1) DAB and DRB are efficient in settling disputes by agreement if the possibility of their errors is sufficiently small. 2) DAB is more likely to cause arbitration than DRB. 3) The GCW does not provide less efficient dispute resolution procedure than the old FIDIC. When the Japanese construction market becomes completely open to foreign contractors disputes may be followed by arbitration more often under the GCW model than under the FIDIC with no third parties’ adjudication.