Dispute resolution and litigation in the construction industry. Evidence on conflicts and conflict resolution in The Netherlands and Germany

The construction industry is regarded to be a tough and competitive business characterized by short-term and opportunistic relations rather than being based on cooperative partnerships. In particular, conflicts and litigation have been claimed to proliferate in the construction industry. Upon closer inspection of the literature, it seems that the empirical basis of these claims is largely circumstantial. Using data on contractor–subcontractor relations in the construction industry in The Netherlands, we consider the extent to which litigation in construction is common. Then we compare the results to similar data sets on IT-purchasing both in The Netherlands and Germany, and to a data set with more general business-to-business transactions of larger Dutch and German firms. We find some evidence that the construction industry has higher percentages of transactions leading to either arbitration, suspension of the relation, or legal steps (1.6% versus 1.2, 0.4 and 0.6). The differences are however not as extreme as one might conclude based on superficial reading of the popular and scientific literature, and certainly not bigger than the differences between the other data sets.