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Empirical Study on the Validity of Construction Bond-related Litigations  

Kim, Jong-Seo (건설공제조합 경영전략팀)
Choi, Jong-Soo (동국대학교 건축공학과)
Lee, Jae-Seob (동국대학교 건축공학과)
Publication Information
Korean Journal of Construction Engineering and Management / v.7, no.6, 2006 , pp. 99-111 More about this Journal
Abstract
Of the numerious dispute resolution methods, Alternative Dispute Resolution(ADR) is the most highly recommended approach for the guarantee bond-related dispute. In reality, however, claims were not resolved satisfactorily through ADR because of the lack of reference materials for negotiation, thus those were frequently had to be resolved through litigation. The above fact implies that, it is required to seek an efficient way to resolve the bond-related claims prior to they progress to litigation. This research paper intensively investigated judicial precedents of 232 cases with regard to construction bond-related disputes that observed during the analysis period(2000-2004). According to the summary statistics, it turned out that litigation were time consuming and potential economic loss was tremendous; on average, it takes 1067 days(the longest case was 1965 days) for dispute resolution. It suggests that litigations should be discouraged considering the magnitude of potential loss of stake holders. Research results revealed that there are some significant differences between categories in some variables affecting to the rate of winning; i) the number of lawsuit deputies of a plaintiff (in the 1st trial), ii) dispute locations (in the 1st and 3rd trials), iii) contract price (in the 1st trial), iv) contractors' operating capability (in the 1st and 2nd trials). For the rest of variables, significance level between categories was too low for preparing efficient improvement plan. Despite the important implications drawn from the analysis, this research has limitation due to the several reasons such as data structure, the depth of Information, etc. Therefore, more systematic research should be followed in the future.
Keywords
Construction Claim; Construction Dispute; Construction Bond; Litigation; Negotiation; ADR;
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