Culture-Risk-Trust Model for Dispute-Resolution Method Selection in International Construction Contracts

Abstract

Despite the attractive opportunities that international construction offers, companies need to account for risks of moving into international markets, including major contractual and cultural risks. This paper focuses on the selection of the dispute-resolution method (DRM) clause in the contract. The objective is to develop a DRM culture-risk-trust (DRM-CRT) model to assist international contractors from English-speaking countries planning to operate in the Middle East or Asia in the choice of the appropriate DRMs, given an identified culture, trust, and risk levels, and their interactions. A Delphi technique is used to obtain experts’ views on the effects of these factors. Results show that both culture and risk do not have a statistically significant effect on DRMs’ choice, whereas trust does. Arbitration is most recommended in all project conditions except in projects with high trust, where negotiation is recommended. Nonamicable DRMs are least recommended. The model developed could aid companies venturing internationally to decide on the most suitable DRM to use given different project aspects, especially social aspects, which that are mostly overlooked in construction contracts.