Explaining the Effectiveness of Construction Arbitration: An Organizational Justice Perspective

Abstract

Arbitration has been touted as one of the best methods of resolving construction disputes, largely due to its perceived speed, cost-effectiveness, and finality of the award. However, studies have shown that arbitration has fallen into disrepute, with several complaints raised regarding its effectiveness in terms of delays, huge expenses, and the high number of challenged awards, leaving many users frustrated. Despite much having been written about the effectiveness of arbitration, little effort has been made toward explaining why construction arbitration tends to be more effective in some cases than in others, leaving a weak conceptual understanding of the interactions among the various factors in influencing such effectiveness. Drawing on the various theories and models of organizational justice, the aim of this multiple case study is to explain the interactions among the factors influencing the effectiveness of construction arbitration. Based on rich qualitative data from documentary analysis and 13 semistructured interviews involving arbitrators, parties, and their representatives in five arbitration cases, findings indicate that out of the 10 factors identified in the literature, favorability of the awards negatively influenced the effectiveness of construction arbitration by interacting with distribution of process control, approaches to the presentation of evidence, competence of the tribunals, and complexity of the dispute. The research is significant because it developed a structural model that has helped in understanding how these factors may collectively interact in influencing the effectiveness of construction arbitration, based on multiple accounts of case participants with first-hand experience, rather than relying on mere opinions of practitioners.