Construction Claims and Disputes and the Business Culture of Construction in Japan

Abstract

Increasing attention is today being focused on the issue of dispute resolution in the Japanese construction sector. Disputes were infrequent under the traditional contract agreement system. However, against the background of a shrinking construction market, owners, contractors, builders, engineers, subcontractors, and suppliers are seeking higher profits and are increasingly asserting their rights, resulting in the creation of an adversarial environment in the industry. It is not generally known outside Japan that the term “claim” has traditionally been used in the nation’s construction industry with an entirely different meaning to its use in other countries. This paper discusses unique characteristics of the implementation of construction work in Japan that are representative of this different use of terminology. These unique characteristics are considered as the result of a business culture that has developed through a combination of historical circumstance and the specific characteristics of Japan’s construction market. The paper also examines the mechanism of dispute resolution, and considers specific details and changing trends in construction disputes using relevant statistical data.