Litigation versus Judicial Arbitration as Binding Dispute Settlement Techniques in Public Construction Projects

AbstractDispute resolution is employed to assist project parties in overcoming situational friction and to help them move ahead with project execution. Understanding available binding dispute resolution methods and selecting a proper resolution method can reduce the negative impact of disputes on construction duration and cost. In many countries, dispute resolution is limited and is channeled through official agencies; litigation and judicial arbitration are adopted as binding settlement techniques. This study compared litigation and judicial arbitration in Kuwait by analyzing a sample of 98 real cases collected through convenience sampling from a population of around 1,000 cases that took place between 1995 and 2018. The collected cases consisted of 48 litigation cases and 50 cases of judicial arbitration and represented all the cases available to the research team from Kuwait’s Ministry of Justice. The study’s main objectives were to (1) characterize the time and cost effectiveness of the two techniques and investigate their influencing factors; (2) collect and analyze real data on litigation and judicial arbitration; and (3) compare the two techniques in order to identify their value to owners and contractors. Data on litigation and judicial arbitration cases were categorized according to claim values. It was found that the litigation process consumed more time than judicial arbitration due to multiple legal levels of courts. When claim values exceeded $1.6 million, the results showed that judicial arbitration was more cost effective, but it was not always legally applicable. In contrast, when claim values were below $1.5 million, contrary to existing beliefs, the results showed that judicial arbitration can be more costly than litigation. These findings will help stakeholders better understand both methods and their suitability for settling disputes.