Arbitration of Disputes in the Construction Industry

Abstract

The construction industry is one of the main economic sectors in Iran, significantly impacting the country’s growth and prosperity. The dynamism, complexity, and conflict of interest in the construction industry lead to increasing conflicts and disputes in construction projects. Disputes usually arise due to ambiguity in contract documents, changes in quantities and specifications, contradictions in contract documents, and delays in fulfilling financial and contractual obligations. These disputes must be resolved promptly to avoid any negative impact on the project’s time and cost and the viability of its economic relationships in the future. Arbitration has been used as a dispute resolution method as it is a faster and more cost-effective method of dispute resolution than litigation. Furthermore, contractors prefer arbitration for dispute resolution in international construction contracts because it saves time and money and avoids litigation in local courts. The article examines the concept of arbitration as an alternative dispute resolution method and its application in the construction industry of Iran, with a specific focus on the country’s arbitration law. In this research, in addition to examining the structure, rules, and regulations governing dispute arbitration in Iran, 12 semistructured interviews were used to review and criticize dispute resolution by arbitration method in Iran’s construction industry. Surveys indicate that Iran’s domestic and international arbitration laws are harmonized with international laws partly. The legislator in Iran has considered appropriate powers for the arbitrator, and according to the existing laws, arbitration awards are recognized and implemented in domestic courts. The current procedures under the arbitration law and the reasons for the minimal use of arbitration compared to the number of lawsuits filed in Iran’s judicial courts have been examined, and the effective factors in this matter have been identified. Finally, some recommendations have been provided for the development and progress of arbitration in Iran.