Construction Law in the United Arab Emirates and the Gulf Construction Law in the United Arab Emirates and the Gulf Michael Grose This edition first published 2016 © 2016 by John Wiley & Sons, Ltd Registered Office John Wiley & Sons, Ltd, The Atrium, Southern Gate, Chichester, West Sussex, PO19 8SQ, United Kingdom Editorial Offices 9600 Garsington Road, Oxford, OX4 2DQ, United Kingdom The Atrium, Southern Gate, Chichester, West Sussex, PO19 8SQ, United Kingdom For details of our global editorial offices, for customer services and for information about how to apply for permission to reuse the copyright material in this book please see our website at www.wiley.com/wiley‐blackwell. The right of the author to be identified as the author of this work has been asserted in accordance with the UK Copyright, Designs and Patents Act 1988. All rights reserved. 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Cover image: Getty Images © Apola Set in 10/13pt TrumpMediaeval by SPi Global, Pondicherry, India 1 2016 Contents About the Author xi Preface xiii 1 Overview 1 1.1 Basis of government 2 1.2 Division of powers in the UAE 2 1.3 Islamic Shari’ah 4 1.4 Civil law 6 1.5 Domestic courts 8 1.6 Financial free zones 10 2 Construction Law 13 2.1 Muqawala 14 2.2 Commercial and civil contracts 15 2.3 Delict (tort) 18 2.4 Public procurement 20 2.5 Administrative contracts 23 3 Contract Formation 25 3.1 Components of a valid contract 25 3.2 Offer and acceptance 26 3.3 Certainty 28 3.4 Mutual intentions 32 3.5 Capacity 33 4 Interpretation 35 4.1 Statutory maxims 35 4.2 Intentions 36 4.3 Resolution of ambiguity 39 4.4 Absence of express terms 39 5 Contractual Principles 41 5.1 Binding obligations 41 5.2 Mandatory obligations 43 5.3 Third parties 46 5.4 Subcontractors 48 5.5 Good faith 49 5.6 Related obligations 50 5.7 Abuse of rights 52 5.8 Unfair contract terms 53 5.9 Unforeseen circumstances 54 vi Contents 6 Health, Safety and Welfare 59 6.1 Construction safety 59 6.2 Design and management responsibilities 65 6.3 Welfare 66 6.4 International Labour Organisation 68 6.5 Inspection and reporting 69 6.6 Sanctions and penalties 71 7 Design and Supervision 81 7.1 Duty of care 82 7.2 Obligation of result 84 7.3 Standard of care 87 7.4 Defences 88 7.5 Statutory duties 89 7.6 Compensation 91 7.7 Joint liability 91 8 Defects 95 8.1 Materials 95 8.2 Workmanship 97 8.3 Statutory duties 98 8.4 Remedies 100 9 Decennial Liability 103 9.1 Statutory sources 104 9.2 Strict liability 106 9.3 Contractual status 107 9.4 Compensation 109 9.5 Mitigating decennial liability 110 9.6 Public projects 112 10 Physical Damage and Personal Injury 115 10.1 Delict 115 10.2 Criminal damage 116 10.3 Presumed liability for property damage 117 10.4 Inherent danger (nuisance) 118 10.5 Service lines and public utilities 120 11 Time for Completion 123 11.1 Agreement 123 11.2 Extension of time 125 11.3 Assessment of entitlement 125 11.4 Time at large 129 11.5 Concurrent delay 130 11.6 Prolongation costs 135 Contents vii 12 Delay Damages and Other Remedies 137 12.1 Termination for delay 137 12.2 Reducing delay damages 138 12.3 Increasing delay damages 142 12.4 Administrative contracts 143 13 Price 147 13.1 Formation of a contract 147 13.2 Fair remuneration: Contractor 148 13.3 Fair remuneration: Consultant 150 13.4 Supply contracts 151 13.5 Lump sum and remeasure contracts 151 13.6 Variations 152 13.7 Subcontracts 153 13.8 Public procurement in the UAE 154 14 Payment 157 14.1 Payment on delivery 157 14.2 Payment certificates 159 14.3 Subcontracts 159 14.4 Conditional payment clauses 160 14.5 Bank guarantee 163 14.6 Cheque 165 15 Interest 167 15.1 Riba and usury 167 15.2 Statutory right 169 15.3 Fixed or crystallised debt 170 15.4 Interest in the UAE 172 15.5 Interest under the FIDIC Conditions 172 15.6 Financing charges 173 16 Suspension 175 16.1 FIDIC Conditions 175 16.2 Statutory right of suspension 176 16.3 Excluding the right of suspension 177 16.4 Formalities 178 17 Termination 179 17.1 Termination of an innominate contract 179 17.2 Termination of a muqawala: Employer 183 17.3 Termination of a muqawala: Contractor 184 17.4 Consequences of termination 187 17.5 Impossibility and force majeure 188 viii Contents 18 Self‐help Remedies 191 18.1 Retention of ownership 191 18.2 Possessory lien 193 18.3 Priority right 196 18.4 Direct payment 197 18.5 Set off 198 19 Damages 201 19.1 Performance by compulsion 201 19.2 Entitlement to damages 203 19.3 Assessment of damages 204 19.4 Global claims 206 19.5 Loss of profit 207 19.6 Consequential and indirect loss 209 19.7 Mitigation 211 19.8 Limitation of liability 212 20 Evidence 215 20.1 Burden of proof 215 20.2 Documents 216 20.3 Disclosure and production 216 20.4 Witness testimony 218 20.5 Court appointed experts 219 20.6 Conclusive findings of fact 221 21 Prescription 223 21.1 Islamic Shari’ah 223 21.2 Commercial obligations 224 21.3 Civil obligations 225 21.4 Restriction on amendment 226 22 Litigation 229 22.1 Court structure 229 22.2 International jurisdiction 233 22.3 Jurisdiction between emirates 234 22.4 Commencement of proceedings 235 22.5 Proceedings against the government 237 22.6 Summary actions 238 22.7 Mediation and adjudication 242 23 Enforcement 245 23.1 Procedure 245 23.2 Appeal 247 23.3 Enforcement outside the jurisdiction 248