KEY MANDATORY RULES OF

UAE CONSTRUCTION LAW

Faisal Attia
Senior Associate
24 S
September
t b 2014

Introduction

Mandatory law provisions -vv Non-mandatory

Non mandatory law provisions
Mandatory provisions

Wording

Nature of provision

Non-mandatory provision (supplementary law provisions)

Only apply if the contract is silent

Scope of this paper

Legal Framework

Hierarchy of laws (Art 2 of Commercial Code)

Contract (subject to mandatory law provisions Art 31 of Civil Code)

Commercial Code

Commercial custom

Civil Code (Muqawala Articles 872 896)

Muqawala Articles are not enough?

S
Some Muqawala Articles would not apply to large construction
projects?

Art 885 of Civil Code?

Other Persuasive Authorities

No precedent systems

Supreme Courts judgments are still important

MOJs Official Commentary

Al-Majalla
Leading Middle Eastern Civil Law jurists

Contractual Liability

Breach

Loss

Causation

Contractual Liability and Possible

Defences
No causation due to (Art 287 of Civil Code):

Force majeure;

Injured partys
party s fault; or

Third partys fault

Non-mandatory
Non mandatory rules

Limitation of Liability

Limitation of liability clauses

Contractual liability is a creature of contract
Enforceable but subject to mandatory exceptions (Art 383.2 of Civil
Code):

Fraud

Gross breach

Decennial liability

Decennial Liability

Joint liability (Engineer Contractor) - Art 880 of Civil Code

Provision of design (without supervision by engineer)

Scope

Total or partial collapse of the works

Defects which threaten the stability or safety of the works

Strict / no fault liability (Burden of proof)

Possible defences
Duration of liability (10 years from the date of completion)
Statute of limitations (3 years from the date of collapse / discovery)
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Liquidated Damages

Permissibility of liquidated damages (Art 390.1

390 1 of Civil Code)
Adjustment of liquidated damages (Art 390.2 of Civil Code)

Actual loss

Reduction / increase of liquidated damages

Mandatory provision
Burden of proof

Concurrent liability

Concurrent liability (Art 290 of Civil Code)

Injured partys fault
Determination of liability (Art 291 of Civil Code)

Dominant fault -v- mutual fault

Allocation of shares of liability

Presumption of equality

Concurrent liability provisions are contained in Ch 3 (tort-based

liability)

Contractual Time-Barring Clauses

FIDIC 20.1
20 1 notices
Two possible defenses by the employer
Jurisdictional defense
487.1
1 of Civil Code)
Statutory time bars are mandatory (Art 487
Civil v- Commercial transactions
10 years time limit shall apply to (commercial) construction contracts

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Contractual Time-Barring Clauses

Substantive defense

Contractors breach

Employer s
s loss

Causation

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Suspension

Right of suspension at law (Art 247 of Civil Code)

Contracts binding on both parties

Corresponding contractual obligations

Suspended obligation must be due after the performance of the

corresponding obligation (Article 482 of Al-Majalla)

Effect of suspension
Right of suspension is a form of right of retention (Art 414 of Civil
Code)
Right of suspension and the abuse of rights doctrine (Art 106 of Civil
Code) / good faith (Art 246.1 of Civil Code)

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Suspension under Contract

Contractor
Contractors
s right to suspend (FIDIC 99 cl.
cl 16.1)
16 1)

Payment v- progress with work

Unilateral suspension by the employer (FIDIC 99 cl.8.8)

Not dealt with by law

Possible conflict?

Contractual right to suspend in tandem with the right to suspend at

law?

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Termination

Types of termination under UAE law (Art 267 of Civil Code)

By consent

By court order

By operation of law

Is Art 267 mandatory? Consequences?

Termination provisions within the Muqawala Section are in line with
Art 267

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Termination

Termination by consent

Upon formation of contract (Art 271 of Civil Code)

Express provision that no need for a court order

After formation of contract (Articles 268 270 of Civil Code)

Termination by court order (Art 272 of Civil Code)

Contracts binding on both parties

Notice to cure

Material breach

Termination is effected from the date of judgment

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Termination

Termination by operation of law (Art 273 of Civil Code)

When performance becomes impossible;

for reasons not attributable to the contracting parties

Consequences of termination

Instant contracts v- Continuous contracts

Construction contracts are continuous contracts

Termination has no retrospective effect

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Termination under Contract

FIDIC provisions regarding termination (FIDIC 99 cl.

cl 15.2
15 2 & 16.2)
16 2)
These provisions do not constitute termination by consent for the
purpose of UAE law?
Possible conflict?
Practical difficulties
Termination for convenience by the employer

FIDIC 99 cl. 15.5

Practice of UAE Courts (Art 663 of Egyptian Civil Code)

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THANK YOU