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The construction industries of Singapore and Japan are both complex engines of economic development, with ambitious projects demanding robust legal frameworks to manage risk, allocate responsibility, and resolve disputes.

A comparative look at Singapore and Japan reveals a fascinating contrast between a globally integrated, contract-centric model (Singapore) and a more domestically focused, relationship-aware system (Japan). This article explores these differences by examining their standard form contracts and preferred dispute resolution methods, including the impact of the Singapore Convention on Mediation.

The Construction Landscape: Market Structure and Competition

Singapore’s market is intensely international and competitive. The market is a dynamic arena where local contractors compete with major foreign main contractors from Japan, China, South Korea, Europe, and India. Numerous landmark projects in Singapore feature the involvement of foreign companies on either the employer or contractor side. The participation by foreign companies is facilitated in large part by the robust, transparent, and predictable legal framework provided by standard form contracts and the construction industry’s support for internationally recognised dispute resolution mechanisms like arbitration and mediation. Parties to construction contracts in Singapore generally have the confidence to operate, knowing that contractual rights and obligations are typically robustly stipulated and can be effectively enforced.

In contrast, the Japanese construction industry is often described as relationship-driven. Long-term relationships between employers and contractors are highly valued, and disputes tend to be frequently resolved through dialogue and mutual understanding—even when not explicitly addressed in the contract terms. Similarly, Japanese large general contractors have traditionally maintained long-term partnerships with subcontractors and suppliers, commonly referred to as “partner companies.” These relationships are built on mutual trust and continuity, forming a collaborative ecosystem rather than a strictly hierarchical structure. Similarly, this relationship-oriented approach complements the less prescriptive nature of Japanese standard forms.

In recent years, however, the involvement of foreign stakeholders in Japanese construction projects has increased. As a result, contracts are more frequently drafted in English and tend to be longer and more detailed compared to traditional domestic practices.

Standard Form Contracts in Singapore and Japan

Standard form contracts provide a pre-defined set of rules, offering efficiency and predictability. Both Singapore and Japan have developed sophisticated suites of these documents, but they serve distinctly different industry ecosystems.

Singapore: A Detailed and Internationally-Aligned Framework

Singapore’s construction industry has adopted several well-established standard forms. The most prominent are those published by the Singapore Institute of Architects (SIA) and the Public Sector Standard Conditions of Contract (PSSCOC). The Real Estate Developers' Association of Singapore (REDAS) and the Singapore Contractors Association Limited (SCAL) also produce forms.

Generally, these contracts are renowned for their precision, comprehensiveness, and balanced approach to risk allocation. Heavily influenced by common law principles and international practices, these standard forms feature meticulous procedures for variations, extensions of time, and certification by a neutral contract administrator (e.g. engineers or architects). The framework is designed to pre-empt conflict by clearly defining roles and responsibilities, leaving little to implication. The clarity and legally predictable playing field brought about by these standard forms has been crucial in attracting participation and investment from foreign employers and main contractors.

Japan: An Industry-Led and Concise Model

Japan’s construction industry operates with its own set of standard forms, primarily developed by major industry federations. The key documents for private projects are as follows:

• “General Conditions of Construction Contract” (minkan (nanakai) rengoukyoutei kouji ukeoi keiyaku yakkan)
• "General Conditions of Design/Build Contract” published by the Japan Federation of Construction Contractors
• “General Conditions of Design and Supervisory Services Contract” (shikai rengou kyoutei kenchiku sekkei kannritou gyoumuitaku keiyaku yakkan)

In contrast to Singapore’s comprehensive documents, the Japanese standard forms are often more concise and principle-based. They frequently serve as a foundational agreement, with the expectation that detailed terms will be managed through established business relationships and supplemented by Japan’s Civil Code. The contracts focus on core obligations and relationships rather than attempting to legislate for every conceivable scenario. This reflects a system where long-term partnerships and a hierarchical market structure have historically reduced the need for exhaustive contractual detail.

In recent years, Japan has seen increasing investment from global corporations in projects such as semiconductor plants and data centers. These international stakeholders often seek to apply their own globally-used standard forms of contract when engaging Japanese contractors. While Japanese contractors were previously more willing to accommodate such requests, the domestic construction market has become increasingly tight, making it more difficult to secure contractors. As a result, contractors now hold greater bargaining power, and it has become more common for negotiations to begin with Japanese standard forms as the baseline.

Resolving Conflict: Arbitration, Litigation, and the Rise of Mediation

Singapore’s robust arbitration framework has arguably provided greater comfort to international commercial parties over domestic litigation. That said, both Singapore and Japan are not resting on their laurels, and are embracing mediation as a viable alternative for dispute resolution. It will be interesting to see if mediation can gain traction as a preferred or even default method of dispute resolution for construction disputes in Singapore and Japan.

Singapore: The Arbitration and Mediation Hub

Singapore standard forms almost universally specify arbitration as the default method for final dispute resolution. This strategic choice aligns with Singapore’s position as a leading international dispute resolution centre. The preference for arbitration is driven by its confidentiality, the ability to select technically expert arbitrators, and the streamlined finality of awards.

Crucially, as a signatory to the New York Convention, Singapore-seated arbitral awards are readily enforceable in over 170 countries, providing critical assurance for international contractors. The arbitration ecosystem in Singapore is comparable to the best in the world, be it in terms of jurisprudence from the Singapore courts, leading arbitral institutions and a deep bench of arbitration lawyers with practices in Singapore.

Beyond arbitration, Singapore has been a global pioneer in promoting mediation. The Singapore Convention on Mediation, which entered into force in September 2020, establishes a framework for the cross-border enforcement of settlement agreements resulting from mediation, similar to the New York Convention for arbitration. Singapore itself has robust domestic mediation infrastructure, such as the Singapore Mediation Centre, and its standard forms often encourage mediation as a step before arbitration. By ratifying the Singapore Convention, Singapore has reinforced its status as a comprehensive dispute resolution hub, offering a multi-tiered approach to conflict management.

Japan: A Traditional Preference for Litigation and Cautious Modernization

Japanese standard forms have traditionally favoured resolution through the domestic court system. This preference stems from a high level of trust in the judiciary and a market that has been domestic, reducing the need for internationally enforceable mechanisms such as arbitration.

However, this landscape is gradually evolving. As international stakeholders become more involved in Japanese construction projects, and as a result contracts and related documentation are increasingly drafted in English, arbitration is now more frequently considered as a dispute resolution method—particularly in cross-border contexts—although litigation in domestic courts continues to be selected in many cases.

In 2023, Japan ratified the Singapore Convention on Mediation, marking a noteworthy legal development. While mediation is not yet widely known or adopted within the Japanese construction industry, this ratification signals growing institutional awareness of mediation as a potential tool for resolving international commercial disputes.

It is important to note that Japan's ratification came with a declaration of a limitation. Under Article 8(1)(b) of the Convention, Japan declared that it will apply the Convention only to the extent that parties to the settlement agreement have agreed to its application. This reservation provides flexibility and allows parties to consciously choose the Convention's framework, reflecting a cautious and measured approach to its implementation.

Conclusion

Singapore has engineered a precise, internationally-aligned system centred on arbitration and now mediation to facilitate global commerce and investment. While Japan’s construction industry continues to be shaped by long-standing relationships, domestic practices, and a preference for litigation, recent developments such as the internationalisation of contracts driven by the involvement of global stakeholders suggest a gradual shift toward more internationally aligned approaches.

For any firm operating across Asia, understanding this dichotomy is essential. Navigating Singapore’s market requires a firm grasp of its detailed contractual procedures and dispute resolution pathways. Engaging in Japan requires an awareness of its established industry practices and a recognition that while the tools for international dispute resolution are evolving, the path is one of gradual integration rather than wholesale adoption.

As both jurisdictions continue to develop, their approaches offer invaluable insights into the future of construction law in a globalized world.

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Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect those of Nishimura & Asahi (Singapore) LLP. The information provided in this article is for general informational purposes only and should not be construed as legal advice or otherwise.