Construction Industry, Real Estate Industry

Examples of Dispute Resolution (Central Construction Work Disputes Committee)

The Central Construction Works Disputes Committee receives between 40-50 applications per year and resolves close to 60% of the cases. Below are a few examples.
The proceedings of the committee, like those of other ADR institutions, are not disclosed to the public in compliance with the Construction Industry Law. Therefore, the names of the concerned parties and information related to the specifics of the concerned parties are not disclosed to the public. In this respect, the following examples only portray the conclusions of cases in general in order to serve as referential precedences.
Persons who wish to know the details for the examples of arbitration decisions should request the "Collection of Arbitration Decisions of the Central Construction Works Disputes Committee Vol. 2."
 

1. Examples of applications from ordinary individuals concerning ordered houses

Mediation Nr. 8, 2000 (duration from application to resolution: 4 months, 2 hearings; defective construction work)
This was a dispute based on the contract for construction of a new house in which an individual applied for mediation stating, "the accused party (contractor) lied about the contract terms, which differed from the terms of the construction contract established with consent of both parties, and made the applicant affix his signature and seal to it. Furthermore, the accused party made contradictory assertions about fulfillment of the contract, and due to repeated actions lacking good faith, the applicant was asking for cancellation of the contract and return of preliminary contract money in the sum of 1 million JPY." The accused party replied, "there has been no unilateral change in the contract terms, and the construction work could not be started in the respective period due to delayed payment of the contract money and failure to determine the final building construction plan. We therefore emphatically repudiate the accusations."
A settlement was ultimately reached in which "the applicant and accused parties cancelled the contract by mutual agreement. Out of the 1 million JPY already paid by the applicant, 600,000 JPY were recognized as expenses of the contract, and the applicant had to pay the remaining 400,000 JPY."
 
Conciliation Nr. 2, 2000 (duration from application to resolution: 4 months, 2 hearings; faulty construction work)
This was a dispute based on the contract for construction of a new house in which an individual applied for conciliation stating, "the accused party (contractor) should pay me (the applicant) 36 million JPY for repair and construction work delays due to defects in building construction and that the applicant would like to make an additional request concerning the responsibility to let the applicant build on a planned road." The accused party replied, "we built according to the contract and agreements, and the problem of the planned road was explained by the person in charge."
This case was concluded through conciliation in which "the obligation of the accused party to pay 30 million JPY for this conciliation case was acknowledged."
 
Conciliation Nr. 23, 1999 (duration from application to resolution: 7 months, 4 hearings; faulty construction work)
This was a dispute based on the contract for construction of a new house in which an individual applied for conciliation stating, "the accused party (contractor) must pay 10.9 million JPY as compensation for damages for defects in building construction." The accused party replied, "the warranty has expired, but as the accused party has, in good faith, conducted repair work for free, it has no obligation to pay compensation."
This case was concluded through conciliation in which "1 million JPY were to be paid as consolation money in addition to 100,000 JPY of the conciliation fees."
 
Mediation Nr. 6, 1999 (duration from application to resolution: 3 months, 2 hearings; cancellation of contract)
This was a dispute based on a contract for apartment construction work in which an individual applied for mediation stating, "the accused party (contractor) should return to the applicant's 4 million JPY deposit due to cancellation of the contract for the work." However the accused party replied that, "we reject mediation."
This case was concluded after a settlement was reached that "both parties agreed without objection that the contract was cancelled by mutual agreement, and the accused party was to return the already received 4 million JPY and pay an additional 500,000 JPY as settlement money."
 

2. Examples concerning building construction work (except 1. above)

Examples of resolved disputes between contracting organizations and contractors
 
Arbitration Nr. 11, 1999 and Arbitration Nr. 3, 2000 (combined case; duration from application to resolution: 1 year and 7 months, 14 hearings; contract money/faulty construction)
This was a dispute based on a contract for new construction of a private home with applications from both parties stating that "the contracting organization must pay the contractor 9 million JPY as the remaining money for the construction work" and "due to the fault of the contractor, the quality and form of the construction work could not be secured, and therefore 130 million JPY must be paid for removal of the completed work and restart of the construction."
This case was concluded after a settlement was reached that "the contracting organization would pay settlement money of 6 million JPY for the arbitration case," and with the content of the settlement, an arbitration decision was made without a reason.
 
Arbitration Nr. 6, 2000 (duration from application to resolution: 4 months, 2 hearings; contract money)
This was a dispute based on a contract for apartment construction work in which a contractor applied for arbitration stating, "the accused party (contracting organization) must pay the applicant the remaining amount for construction work, 490 million JPY." The accused party replied, "we acknowledge the points of the application, but the company went bankrupt; we cannot make concrete plans for payment and would like to make a payment plan in 2001." The accused party never appeared for a hearing.
This case was concluded after an arbitration decision was made according to the assertions of the applicant.
 
Arbitration Nr. 15, 1999 (duration from application to resolution: 5 months, 2 hearings; contract money)
This was a dispute based on a contract for apartment construction work in which a contractor applied for arbitration stating that "the accused party (contractor) must pay the applicant the remaining amount for the construction work, 47 million JPY," to which the accused party replied, "the real contracting organization is not the accused party, and the contract is invalid."
This case was concluded after an arbitration decision was made according to the assertions of the applicant.
 
Arbitration Nr. 14, 1999 (duration from application to resolution: 1 year 6 months, 6 hearings; contract money/faulty construction)
This was a dispute based on a contract for new construction of company housing in which the contractor applied for arbitration stating that "the accused party (contracting organization) must pay the applicant the remaining amount for the construction work, 13 million JPY, and the amount for additional construction work, 1.5 million JPY, for a total of 14.5 million JPY." The accused party replied, "the ordered construction work is not finished. There are grave defects in the buildings constructed by the contractor. There was no agreement on the additional work stated by the contractor, but the contractor delayed the construction term. We reject the points demanding an arbitration." The contractor company went bankrupt during the time of the hearings, and the bankruptcy administrator became the applicant.
This case was concluded after an arbitration decision was made according to the assertions of the applicant.
 
Examples of resolved disputes between master contractors and subcontractors
 
Conciliation Nr. 1, 2001 (Duration from application to resolution: 3 months, 2 hearings; construction money)
This was a dispute based on a building construction work contract for a private home in which a subcontractor applied for conciliation stating, "the accused party (master contractor) must pay the applicant 7 million JPY for changes in the construction work." The accused party replied, "the estimate for the change in construction work was made without agreement, and the demanded sum is too high."
This case was concluded by conciliation in which "the accused party acknowledged that the unpaid construction work money was 3.6 million JPY."
 
Conciliation Nr. 19, 2001 (duration from application to resolution: 4 months, 1 hearing; construction money)
This was a dispute based on a contract for repair work for a building where a subcontractor applied for conciliation stating, "the accused party (master contractor) must pay the applicant the remaining amount of 4 million JPY for the construction work." The accused party replied, "as a result of talking to the applicant, we agreed to pay 2 million JPY."
This case was concluded by conciliation in which "the accused party must pay settlement money of 2 million JPY to the applicant."
 

3. Examples concerning civil engineering

Examples of resolved disputes between contracting organizations and contractors
 
Conciliation Nr. 12, 1996 (duration from application to resolution: 1 year 8 months, 9 hearings; construction money)
This was a dispute based on a contract for construction of a cemetery in which the applicant [contracting organization (regional government)] made an application stating that, "the accused party (contractor) must pay the applicant the remaining money from the advance payment of 290 million JPY minus the money for construction already completed." However, the accused organization protested that "the remaining money exceeded the first estimate, was used for the cost of administration of the work site, and should not be returned."
This case was concluded after a settlement was reached that "the accused party must pay the applicant settlement money of 20 million JPY as a partial payment."
 
Examples of resolved disputes between master contractors and subcontractors
 
Conciliation Nr. 14, 1994 and Conciliation Nr. 16, 1995 (combined case; duration from application to resolution: 2 years 1 month, 11 hearings; faulty construction work/construction money)
A dispute based on a contract for construction of a public underground water line in which both concerned parties made an application for conciliation stating, "the master contractor must pay the subcontractor 25 million JPY for repair of defects and as an advance payment" and "the subcontractor must pay the master contractor the remaining amount of 8 million JPY for the construction work."
This case was concluded by conciliation in which "the master contractor must pay the subcontractor settlement money of 2 million JPY, and in accordance with the previous statement, the dispute should be forgotten about and the parties should make a joint effort for the smooth process of future transactions."
 
Conciliation Nr. 2, 1999 (duration from application to resolution: 7 months, 4 hearings; faulty construction work/construction money)
This was a dispute based on a contract for construction of a motorway bridge in which a secondary subcontractor made an application for conciliation stating, "the accused party (subcontractor) must pay the applicant the 15 million JPY that remains outstanding." The accused party replied, "the additional construction work was conducted before deciding on the contract money, and as the money from the contracting organization was less than expected, we reject the claim."
This case was concluded by conciliation in which "the accused party must pay the applicant settlement money of 8 million JPY."
 
Arbitration Nr. 7, 1999 (duration from application to resolution: 1 year 9 months, 13 hearings; construction money/incomplete construction)
This was a dispute based on a contract for construction of motorway facilities in which a secondary subcontractor applied for arbitration stating that "the accused party (subcontractor) must pay the applicant 290 million JPY in outstanding payments for additional construction work." The accused party replied, "there were no terms in the contract about additional construction work, the work is not completed, and we reject the claim of the applicant," and requested an arbitration decision.
This case was concluded after a settlement was reached in which "the accused party had to pay resolution money of 7 million JPY," and the committee made an arbitration decision stating no reason based on the settlement.
 

4. Examples concerning work related to facilities, electricity, and others

Examples of resolved disputes between contracting organizations and contractors
 
Conciliation Nr. 2, 2001 and Conciliation Nr. 4, 2001 (combined case; duration from application to resolution: 5 months, 2 hearings; construction money)
This was a dispute based on a contract for setting up new facility instruments in a private home in which the guarantor of a bankrupt company (contractor) not part of the application applied for conciliation stating, "based on the guarantor contract between the guarantor and the contracting organization, we acknowledge that there exists no debt of the guarantor towards the contracting organization." The contracting organization (individual) applied for conciliation stating, "due to bankruptcy and discontinuation of the business of the contractor, the guarantor, who is the arranger and has administrative responsibility, must pay the overpayment of 2.58 million JPY out of the 7 million JPY paid to the contractor plus the money for violation of the contract with regard to delay of fulfillment, totaling 17.9 million JPY."
This case was concluded when a company (contractor) not part of the application joined to act as an interested party and a conciliation was reached in which "the contracting organization had to refrain from any demands on the guarantor and interested party based on the responsibility for damages or guarantor responsibility concerning the contract and not state any objections. The interested party must refrain from claims of unpaid contract money based on this contract. The three parties mutually acknowledged smooth resolution of the dispute concerning this contract through agreement."
 
Arbitration Nr. 2, 1999 (duration from application to resolution: 9 months, 6 hearings; construction money)
This was a dispute based on a contract for construction work on firefighting facilities within the communal development plan of a train station area in which the contractor applied for conciliation stating that, "the accused party (contracting organization) must pay the outstanding 7.5 million JPY for the construction work." The accused party replied, "the outstanding amount based on the construction subcontractor standard contract has been paid, and we therefore reject the items of the claim."
This case was concluded after a settlement was reached in which "both parties agreed for the money to be paid according to the assertion of the applicant," and the committee made an arbitration decision without reason based on the terms of the settlement.
 
Examples of resolved disputes between master contractors and subcontractors
 
Mediation Nr. 2, 2001 (duration from application to resolution: 2 months, 2 hearings; contract money)
This was a dispute concerning a contract for construction work on machinery and facilities for an elementary school due to the estimate sheet in which the subcontractor applied for mediation stating, "the accused party (master contractor) must pay 12 million JPY of construction money to the applicant because there was no agreement on the construction money right from the start." The accused party replied, "the applicant cancelled the contract with an unilateral reason, and as the sum calculated by the accused party is 44 million JPY and 63 million JPY has already been paid, the accused party demands the difference of 19 million JPY."
This case was concluded after a settlement was reached in which "the accused party agreed to pay the applicant settlement money of 5 million JPY."
 
Conciliation Nr. 35, 1998 (duration from application to resolution: 5 months, 2 hearings; construction money)
This was a dispute regarding a contract for work to install and construct extra-pure water devices and electrical measuring instruments (work on connecting pipes, air pipes, installation of measuring instruments, and work on pipes and wires) in which a subcontractor applied for conciliation stating, "the accused party (master contractor) must pay the applicant the outstanding amount of 2 million JPY for the construction work." The accused party replied, "the applicant understood and agreed on all terms of the construction work and then suddenly refused the construction, causing great trouble. This is why we refrained from the payment of the outstanding money."
This case was concluded by conciliation in which "the accused party must pay settlement money of 1 million JPY."
 
Conciliation Nr. 9, 1999 (duration from application to resolution: 1 year 3 months, 8 hearings; construction money)
This was a dispute concerning a contract for installation of water supply and hygiene facilities and electrical wiring for construction of a new hotel in which a subcontractor applied for conciliation stating "the accused party (master contractor) must pay the applicant the remaining amount of 8.5 million JPY for construction work and advance payment."
This case was concluded by conciliation in which "the accused party acknowledged the obligation to pay 3 million JPY."

pagetop