An Analysis of How Culture Influences the Arbitration Process Used to Resolve Disputes on Construction Projects in Saudi Arabia

Abstract

Abstract This study aimed to investigate links between contractual disputes and project cultures in the construction industry of Saudi Arabia. Contractual disputes are those that arise from the contractual relationships binding parties to a particular project, which may broadly be categorised as being between an employer/client and a contractor or between a main contractor and a subcontractor/supplier. Project cultures describe the values, principles, beliefs and behaviours that parties bring into a contractual agreement. For this thesis, the author explored the extent to which the local culture of Saudi Arabia shaped and influenced contractual construction project disputes. The idea was to deepen the current understanding of the role that culture plays in the evolution of project disputes and that the study would explore the role that arbitration plays in the resolution of disputes on construction projects. Specific objectives provided a framework for the investigation, which included a systematic review of academic literature to assess current levels of understanding about construction industry culture and how it is linked to the evolution of disputes on construction projects. That review also assessed systems used to resolve construction disputes, focusing on arbitration and the arbitration system used in Saudi Arabia. In Saudi Arabia, there was a gap in research investigating links between the local construction industry culture, disputes and the arbitration process to resolve disputes. This research aimed to fill that gap and reveal the extent to which the local culture facilitated either amicable or litigious dispute resolution methods. The author compiled data about construction industry disputes in Saudi Arabia to draw lessons linked to the overall project aim using case studies, observation, a questionnaire survey and face-to-face interviews. Analysis of the data followed a grounded theory-based critical post-positivist approach, which enabled the author to reveal new insights about disputes, arbitration and cultures in the construction industry of Saudi Arabia. vi The research was able to add insights about common causes of disputes, with time overruns and awards to the lowest tender often being cited as a main cause of local disputes. One important and previously under-reported issue discovered by this research was that, in Saudi Arabia, the good-faith principle between the parties at the beginning of the project was a cultural issue that often led to disputes. That cultural issue often resulted in contracts being made with insufficient or inadequate contractual documentation. The poor development of contract documents then creating the seed from which disputes grew. The research was also able to reveal that people who work in the Saudi construction industry and who had little or no experience supported the view that disputes will be resolved amicably. However, as more significant experience is gained, so that early optimism diminished. That finding reveals how the local construction culture is less open to amicable means of dispute resolution. To counter the hardening of attitudes towards amicable dispute resolution methods within experienced construction industry practitioners, the author questioned if the arbitration process could be a tool to affect a cultural change. In that regard, the research revealed that the transparency of the process, the high level of cooperation between parties, and heightened communication levels between the disputants were found to be strong points about arbitration in Saudi Arabia. However, those benefits are realised if the parties to construction projects in Saudi Arabia actively engage with the arbitration process. The latter point is a real problem, as this research also discovered that low levels of awareness and understanding of th