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CHAPTER 1
INTRODUCTION
1.1
Background of study
The Association of Southeast Asian Nations or usually known as ASEAN
was recognized on 8 August 19671. At that time, ASEAN countries were in state of
trouble with many problems occurred among them. In Indonesia, there are total
changes when communist failed to coup it and in the end, they brought to undeclared
confrontation between Indonesia and Malaysia and this situation also known as
„Konfrontasi‟2.
The first Association of Southeast Asian Nations Declaration was signed on
1967 in Bangkok, Thailand. It is also known as Bangkok Declaration. It consists of
five original members of ASEAN which are Indonesia, Malaysia, Philippines,
Singapore and Thailand. During that time, one of the aims of ASEAN was:
“To promote regional peace and stability through abiding respect for justice and the
rule of law in the relationship among countries of the region and adherence to the
principles of the United Nations Charter.”
On 7 January 1984, Brunei Darussalam united with the other five members of
ASEAN which have been mentioned earlier and it was then, followed by Vietnam on
28 July 1995. The eighth and ninth countries that joined ASEAN are Laos and
Myanmar on 23 July 1997 and the last country which became ASEAN member was
Cambodia on 30 April 1999.
1
2
Rodolfo C.Severino, ASEAN – “Southeast Asia Background Series No. 10”, Singapore, 2008, p. 1-9
Walter Woon, “Dispute Settlement in ASEAN”, Singapore, 2011.
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In the context of the construction industry, ASEAN have their Vision 2020 to
be accomplished and has been mentioned as follow:
“a concert of Southeast Asian nations, outward looking, living in peace, stability and
prosperity, bonded together in partnership in dynamic development and in a
community of caring societies”.
With reference to the Vision 2020 above, ASEAN countries tried to be more
organized in the development of the countries together with the cooperation from the
planning department, programme implementation for the whole ASEAN countries.
From this Vision 2020, we know that the construction industry is one of the key
factors in achieving sustainable development in ASEAN.
For example, Vietnam‟s economic sector has grown to seven percent every
year. It means that Vietnam has the fastest growth rate in terms of gross domestic
product (GDP)3. It happened in terms due to infrastructure development and new
construction projects such as airport and ports. This development makes construction
industry in Vietnam become more advanced and popular, nonetheless the contractual
disputes in the projects can also be increased.
Furthermore, according to Stephen4, he found a set of statistics which showed
the economic growth experience of ASEAN. In the year of 1967, ASEAN‟s overall
trade was worth US$10 billion and three years later, it grew up to US$13.703 billion.
In 1980 it became US$134.115 billion and after ten years (1990), it quickly reached
US$ 301.706 billion. In year 1995, the total trade reached US$ 620.202 billion.
According to the statistic above, the total ASEAN trade increased year by year with
encouraging value.
In the rapid development of ASEAN, conflicts may occur among the
countries. There are many legal traditions and not all countries use the same legal
principles especially in the ASEAN countries which consist of ten countries with
different background. For example, Malaysia, Singapore and Brunei Darussalam
they are following the common legal tradition while Philippines, Thailand, Indonesia
and Laos follow the civil law tradition. On the other hand, Vietnam is the only one
3
Neuyen Duy Long, Stephen Ogunlana, Truong Quang, Ka Chi Lam, Large Construction Projects in
Developing Countries: AA case study from Vietnam, Elsevier Ltd, 2004.
4
Stephen Leong, ASEAN Towards 2020 – Strategic Goals and Future Directions, ISIS Malaysia,
1998.
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that uses the different tradition which is Socialist tradition of law 5. It is very essential
to the ASEAN countries to use the legal tradition because it can be more consensual
and less confrontational approach in dispute resolution.
Besides that, ASEAN countries also use dispute resolution in the construction
industry. It is used to solve disputes in and among the countries. The term dispute
resolution can be defined as procedures for settling by means other than litigation 6
while by Brown and Marriot (1999) defined it as a process of resolving a dispute
„susceptible to common legal process by agreement rather than by commanding a
binding decision‟7. The dispute resolution processes are alternative to traditional
court proceeding which frequently referred to as alternative dispute resolution 8.
On the other hand, according to the National Alternative Dispute Resolution
Advisory Council, dispute resolution definition is “all processes that are used to
resolve disputes, whether within or outside court proceedings. Dispute resolution
processes may be facilitative, advisory or determinative. Dispute resolution processes
other than judicial determination are often referred to as Alternative Dispute
Resolution (ADR)”9. The uses of ADR methods outside the court system are created
to solve complex problems. It is better to meet the needs of disputants and their
communities with the same time to reduce reliance on the legal system and others.
1.2
Problem statement
It is important to develop the dispute resolutions method profiling adopted in
the construction industry in the ASEAN countries in order to know and get
information on the various elements. Many construction disputes occur in the
industry and there are many ways to resolve it. With reference to Oon Chee Kheng,
there are ten mechanisms of dispute resolution in construction industry which are
5
RICS, The construction and building research conference of the Royal Institution of Chartered
Surveyors (COBRA 2008), Dublin Institute, 2008.
6
Dispute resolution definition - Available at http://legal-dictionary.thefreedictionary.com [Accessed
on 11 March 2012]
7
Henry J.Brown & Arthur L. Marriott, ADR Principles and Practice, Sweet & Maxwell, 1999.
8
Tania Sourdin, Alternative Dispute Resolution, Sydney, 2005.
9
National Alternative Dispute Resolution Advisory Council, DISPUTE RESOLUTION TERMS The use of terms in (alternative) dispute resolution, 2003
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negotiation, litigation, arbitration, mediation, adjudication, expert determination,
mini-trial, hybrid ADR, dispute review board and dispute resolution advisor 10.
Profiling has been chosen as the mode to highlight the different nature of
dispute resolution in ASEAN countries. The definition of profile in the Dictionary of
Marketing Terms is a “short description of a person, publication, broadcast station, or
group in terms of a number of relevant parameters”11. Other definitions, profiling can
be defined as a formal review of data, often can be seen in graph or table
representing the features or characteristic 12. The profiling elements will be done
based on the method, statute, professional bodies involved, procedure and rules. All
the elements need to be profiled because of the differences of all the ASEAN
countries for each element and we also can know and get information easily about
the dispute resolutions in construction industry.
On the other hand, two previous studies had been done on profiling which
consist of profiling of construction payment dispute13 and profiling of construction
dispute14. In these two studies, the discussion was on the disputes that occur in the
construction industry in terms of common dispute and payment dispute. With the
various parties involve in the same project and construction, it is not a surprise that
dispute can occur among them. The disputes occur because of the actions or inaction,
entitlement of extension of time and quantification, certification of interim payments
and many others from the Employer, the contractor and other consultants that will
give implication to their contractual position. Thus, this study has developed a profile
of the disputes resolutions mechanism in construction industry.
In addition, the dispute resolution is also well known as the mechanisms that
give benefits to the parties who are using it such as fast, cost-effective and flexible.
In each country, there are many dispute resolutions that have been used to settle the
dispute in construction industry. Dispute in construction can be solved in many ways
such as arbitration, mediation, conciliation, adjudication and others. Thus, it is
important to develop a profiling of dispute resolution mechanism and to identify the
common dispute resolution modes in construction industry in ASEAN countries.
10
Oon Chee Kheng, Resolution of Construction Industry Disputes – An Overview, The Institution of
Engineers Malaysia, 2003.
11
Dictionary of Marketing Terms. Business Glossary, Available at
http://www.allbusiness.com/glossaries/profile/4949065-1.html [Accessed on 15 March 2012]
12
The Free Dictionary, available at http://www.thefreedictionary.com [Accessed on 17 March 2012]
13
Ooi Poh Poh, Profile of Construction Payment Dispute, Universiti Teknologi Malaysia, 2010.
14
Asniah Abidin, Profile of Construction Dispute, Universiti Teknologi Malaysia, 2007.
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1.3 Objective
The objective for this study is to develop a profile of dispute resolution
mechanism in ASEAN countries.
1.4 Scope of study
The scopes of this study will focus on dispute resolution methods in the
construction industry in ASEAN countries and to identify the common dispute
resolution mode in term of elements which are the methods of dispute resolution,
professional bodies involved, statute, rules and procedure. It is also based on the
secondary data such as articles, journals, books, conference and other resources.
1.5
Significant of study
From the research finding, we will know the ordinary method of dispute
resolution in ASEAN countries. It will show the general information about all the
dispute resolution and the best way to resolve the problem in construction industry
because different countries have their own method to use.
Besides that, the findings also give important and relevant information to the
public to learn and know more about dispute resolution in ASEAN countries. It
includes the statute involved, professional body in charge of the dispute resolution
and procedure in the dispute resolution.
It is also significant for students, workers who want to work in other country,
party that involves in construction industry and others to know about it. It will help
them to identify the best and poor mechanism in dispute resolution in construction
industry. On the other hand, we also can know about dispute resolution in other
countries and how they use it in their construction industry to settle the dispute
between them.
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1.6
Research Methodology
Research methodology is a research process and is also known as a research
design. In simple words, research methodology can be defined as a plan, structure
and strategy of investigation to obtain answer for research problem that have been
stated earlier 15. It means to accomplish the objective; the data collection and
techniques to analyse must be clearly and systematically planned from the beginning
of the research.
15
Ranjit Kumar, 2nd Edition Research Methodology : a step-by-step guide for beginners, SAGE
Publication Ltd., 2005.
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• Dispute resolution mechanism in ASEAN
countries
• Profile of dispute resolution
Research Issue
Literature Review
• Dispute resolution mechanism
• Elements to profile
Research Analysis
• Analysis of documents such as articles,
journals, books, conference and other
resources in term of elements selected to
profile dispute resolutions
• Conclusion & Recommendation
Conclusion
Table 1.1 Research process of the study
1.6.1 Identifying the research issue
Identifying the research issue is the first stage of research process. The issue
of the study can be recognized by reading the various sources such as cases, journals,
articles, reports, books and others. In this stage, the writer also there need to discuss
with the supervisor or lecturer about the research issue, objective of the research and
the research title to make sure that the research can be continued successfully without
any problem.
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1.6.2 Literature review
Second stage of research process is literature review. This stage involved the
collection of documents from the secondary data such as books, articles, journals,
reports, conferences, internet and others. In this study, the literature review focused
on dispute resolutions in construction industry for the ASEAN countries based on the
elements stated earlier and also the elements to be profiled.
1.6.3 Research Methodology
Research methodology in this study is to know the steps to use in order to
complete the study. Research methodology determined the ways to search the
information for this study.
1.6.4 Research analysis
This is the important stage of research methodology towards achieving the
objective of research. In this stage, the writer had to determine whether the objective
stated above has been reached or not. This stage also showed the findings of the
research according to the elements stated.
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1.6.5 Conclusion and recommendation
The final stage of research methodology is conclusion and recommendation.
It will show the findings of the research whether it achieves the objective or vice
versa. The recommendation is a ways for other researchers to adopt and improve the
research in the future. The outcome also can determine the best way of dispute
resolution in construction industry in ASEAN countries.
1.7 Organisation of the thesis chapters
This research consists of five chapters that are related to the dispute
resolutions in construction industry in ASEAN countries. These five chapters are
briefly explained as below:
1.7.1 Chapter 1 : Introduction
This chapter will briefly describe in the proposal of the research which
include the background, problem statement or issue, scope, significant, research
methodology and organisation of the chapters. It is related why the dispute resolution
in construction industry in ASEAN countries need to be profiled. It is because there
might be having differences in those countries to solve their disputes. The elements
profiled are the method, professional bodies involved, statute involved, rules existed
in the dispute resolution and the procedure in the dispute resolution mechanism. All
the process of this study explained summarily in this chapter.
1.7.2 Chapter 2 : Dispute Resolution Mechanism In ASEAN Countries
In the Chapter Two, writer will study and examine the dispute resolution in
ASEAN countries which focus on construction industry. It also involved the element
to be profiled which is to be explained by the writer. The ten ASEAN countries
include Malaysia, Indonesia, Singapore, Philippines, Thailand, Vietnam, Laos,
Myanmar, Brunei and Cambodia.
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1.7.3 Chapter 3 : Profiling Methodology
This chapter discussed about the concept of profiling in terms of definition,
importance of it to the construction industry, data collection and data analysis. It is
also highlighted and explained the elements stated for profiling which are method,
professional bodies involved, statute involved in dispute resolution, rules in dispute
resolution and the procedure in dispute resolution mechanism.
1.7.4 Chapter 4 : Profiling Of Dispute Resolution Mechanism In ASEAN
Countries
This chapter showed the analyses and findings based on the elements chosen
for profiling information from the secondary data which stated in the Chapter Two. It
profiled the dispute resolution mechanism in ASEAN countries and then, further
determined the summary of profiling clearly.
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1.7.5 Chapter 5 : Conclusion and Recommendation
This chapter discussed about the conclusion of the research at the end of the
study. It provides the summary of profiling dispute resolution and the
recommendation for the future study in the area of dispute resolutions.