A construction law dispute typically occurs when stakeholders such as property owners, contractors, subcontractors, suppliers, or developers have unresolved claims for compensation. To address these challenges, Bangladeshi law provides a legal framework governing dispute resolution in construction contracts, ensuring fairness, enforceability, and alignment with international best practices.

 

Construction projects can be highly complex, and disagreements often arise among the parties involved. A construction law dispute typically occurs when stakeholders such as property owners, contractors, subcontractors, suppliers, or developers have unresolved claims for compensation. These claims may stem from a variety of issues, including project delays, payment disputes, changes in the project scope, safety concerns, design-related problems, or quality issues.

 

Variation of Construction Disputes

Disputes surrounding time management and scheduling are frequently encountered in construction projects. These conflicts often arise from unforeseen onsite conditions, resource shortages, or external factors that may lead to delays. Additionally, payment disputes are becoming increasingly common due to rising material costs, often linked to issues regarding payment terms, including delays and disagreements over amounts owed. It is imperative to address financial interactions with great care.[1]

 

Safety remains a paramount concern in the construction industry. Conflicts may also emerge when modifications to the original project scope occur, resulting in differing opinions on the necessity and associated costs of these changes.[2] Furthermore, design conflicts can arise from discrepancies between the intended and executed designs, underscoring the importance of clearly defined roles and responsibilities related to design duties.[3]

 

The construction sector often witnesses disputes between contractors and budget managers, particularly concerning defects and the quality of work. Breaches of the contractual scope can lead to significant disputes, especially when cost adjustments are not communicated to relevant stakeholders. Delays and disruptions can stem from unauthorized changes or other factors affecting project timelines. Most contracts contain provisions designed to address these issues, notably concerning payment disputes arising from unpaid invoices or additional costs.[4]

 

To mitigate potential conflicts, it is essential to establish comprehensive, well-defined contracts with effective dispute resolution procedures that align with commercial objectives. A solid understanding of standard form contracts can provide valuable advantages. Furthermore, meticulous planning and documentation, guided by project managers, can enhance overall efficiency and minimize costs. Proactive communication, characterized by regular updates, serves to improve collaboration among team members and ensures that all parties remain well-informed, thereby reducing the likelihood of conflicts related to scheduling, budgets, and resources.

 

How to Resolve Construction Law Dispute

The construction industry is fast-paced, and resolving conflicts is critical to a successful project to avoid setbacks and costs. Some. exciting approaches have been created to help deal with disputes, and these approaches have their benefits and drawbacks.[5]

 

The first approach is negotiation, a basic method that enables parties to engage in open communication. The approach favours respectful communication, whereby all parties seek solutions to problems collectively and accomplish their needs. It is a culture brought about by negotiation that enables positive interactions. In most cases, an immediate result is brought about before disputes culminate in new and more intense conflicts. Then we can observe “mediation” that brings collaboration to another level as a third-party mediator is involved in the discussion. This facilitator facilitates the debate, allowing the two parties to express their problems and wants in a conducive setup. Mediation is confidential, cost-effective, and centred on preserving professional relationships, but it is also an excellent solution for the construction industry. This dramatically affects its ever-increasing popularity, as is shown in the research by Harmon, who identifies it as a win-win solution, especially to those with future collaborations in mind.

 

The term, arbitration, is a dependable alternative to negotiation and mediation when the latter fail. In this process, a neutral arbitrator or a panel carefully examines evidence before making a binding decision. Despite its efficiency and privacy, which usually make it an increasingly common element of a construction contract, arbitration may take considerable time and be excessively expensive, particularly when applied to a complicated case. Nevertheless, it provides a friendlier process compared to the standard litigation system in that it assists the parties in resolving issues without the media glare of case-related litigation.[6]

 

Finally, litigation may be deemed necessary in case of severe disputes or a significant contract breach. Although structured and formal, litigation has been perceived as expensive, time-consuming, and open to the world. This tends to clog relationships and resources. Due to the disadvantages, construction professionals are shifting toward alternative dispute resolution mechanisms and using the approach where the result may be faster and less controversial to save their projects and maintain good relationships with their partners.[7]

 

Construction Dispute Resolution Situation in Bangladesh

The construction industry in Bangladesh is a dynamic and rapidly growing sector that plays a vital role in the nation’s economic development. However, the complexity of construction projects often leads to disputes among stakeholders, necessitating an efficient and well-structured dispute resolution mechanism. To address these challenges, Bangladeshi law provides a legal framework governing dispute resolution in construction contracts, ensuring fairness, enforceability, and alignment with international best practices. Under Bangladeshi law, construction contracts typically include dispute resolution clauses specifying whether conflicts will be resolved through litigation, arbitration, or alternative dispute resolution (ADR). In the absence of such a clause, disputes default to litigation in Bangladeshi courts as per the Code of Civil Procedure, 1908. Arbitration has become the preferred method for resolving construction disputes in Bangladesh due to its efficiency and enforceability. The Arbitration Act, 2001, modelled after the UNCITRAL Model Law, governs both domestic and international arbitration, ensuring procedural fairness.

 

Conclusion

The nature of construction projects is a highly complicated affair, comprised of many stakeholders, elaborate schedules that must be followed, and the rigid budget factors that make financial choices. All these are often the causes of several disputes, like disagreement on the delay on the project, concerns about payment, quality defects, or a change of the agreed scope of work. When these conflicts are left unresolved, they cannot only stop the project’s development but also create a tense mood among the professionals who cooperate towards a specific goal, which also threatens the common development of the project. Nevertheless, risks and their attendant outcomes can also be reduced with proactive steps: by using well-written contracts, sound planning of the project, clear due diligence, and effective communication, they can reduce the risks and bring about a mood of collaboration. When controversies are bound to arise, a range of solution mechanisms, such as negotiation, mediation, arbitration, and, as a last resort, litigation, provide well-organized ways to reach just solutions.

 

 

 

Disclaimer:

The articles published on The Society of Construction Law Bangladesh (SCLBD) website are intended for research and educational purposes only. They are written in good faith to promote knowledge and understanding of construction law. No part of these articles may be reproduced, distributed, or used for any commercial purpose without prior written permission from SCLBD. While every effort has been made to ensure the accuracy of the information, Readers are advised to consult legal professionals for advice on particular matters.

[1] Jeremy Pollack, “Construction Disputes: Common Types & Resolution Tips | Pollack Peacebuilding Systems” (Pollack Peacebuilding Systems, May 8, 2025) <https://pollackpeacebuilding.com/blog/construction-dispute-resolution/>.

[2] “Types of Construction Disputes | LEXLAW Solicitors & Barristers” (LEXLAW Solicitors & Barristers) <https://lexlaw.co.uk/types-of-construction-disputes/>.

[3] ibid.

[4] “6 Types of Disputes That May Lead to Construction Litigation | CT” (6 Types of Disputes That May Lead to Construction Litigation | CT) <https://www.ibolaw.com/connecticut-new-york-attorneys/6-types-of-disputes-that-may-lead-to-construction-litigation>.

[5] “Types of Construction Disputes & How to Avoid Them – Raken” (Raken) <https://www.rakenapp.com/blog/types-construction-disputes-avoid>.

[6] Amr Hossam, “Comprehensive Guide to Construction Dispute Resolution Methods” (El Laithy & Associates Lawyers, October 31, 2024) <https://ellaithylawyers.com/construction-dispute-resolution/>.

[7] “Construction Litigation: Common Disputes and How to Navigate Them” <https://www.buildingradar.com/construction-blog/construction-litigation-common-disputes-and-how-to-navigate-them>.