Alternative Dispute Resolution Practices in International Road Construction Contracts

Abstract

Disputes are unpleasant, resource consuming, and expensive, but they are inevitable in construction contracts. Dispute resolution practices in Nepal are different from the ones in developed countries. One distinct problem in the Nepalese context is that claims remain pending for a considerable amount of time. Two of the most common reasons for claims in Nepalese road construction contracts are owner-dominated contracts and a lack of knowledge about contractual rights. After the new Arbitration Act 1999 in Nepal, there were many changes in traditional and alternative dispute resolution (ADR). This paper discusses general practices of ADR in road construction contracts in Nepal. This research encompasses an extensive literature review, focus group studies, case studies, and surveys to investigate the causes, types, and frequencies of the disputes, along with their resolution practices in the Nepalese road construction industry. Relative importance index and rank analysis were performed to rank the causes of claims. The ADR practices in Nepal were also identified and ranked based on their frequencies. This research found that claims related to changes, site conditions, and delays are the most common types of disputes. Furthermore, this research identified that negotiation, adjudication, and arbitration are the most preferred ADR methods. Therefore, it is essential for project managers, owners, consultants, contractors, and legal professionals to understand frequencies and causes of claims and identify dispute resolution practices to settle them in a timely manner. The authors believe that this research adds to the body of knowledge in terms of offering best ADR practices for Nepalese road construction contracts.