Assessing Effectiveness of Arbitration in Resolving Construction Contract Dipsutes in Nepal

Abstract

Contractual dispute is ever raising and growing in developing countries. The complex modern construction industry involves complex contractual arrangement that may result to complex disputes. Due to its simplicity and flexibility, demand of arbitration is growing worldwide as an alternative to the court. The existing Public Procurement Act of Nepal has made mandatory provision of using arbitration to resolve contractual disputes. This study aims to assess the effectiveness of arbitration in Nepal in resolving construction contract disputes and the influence of dispute factors over it. A sequential explanatory mixed-method was used as methodology where quantitative research was followed by qualitative for deductive reasoning. Questionnaires, written and unstructured face-to-face interviews were primary data collection instruments. Secondary data have also been used. Given the arbitration is a highly specialized field having limited reliable informants, the target population and samples were carefully estimated. The thematic analysis was performed for the qualitative data. Complexity of the dispute has inverse influence. Competence of the tribunal, adequacy of size of the tribunal and approaches to the presentation of evidence have significant positive influence. There was mixed perception on the influence of claim value. Since, the triple constraints, cost, time and quality, were not effective, the study failed to accept the effectiveness of arbitration. Avoidance of parties’ consent to accept the award, a principal criteria set under epistemological stance to exist an arbitration, has raised questions on its existence. Therefore, a serious thought on the implementation of award is recommended.