Building is a prominent feature of the United Arab Emirates (UAE), with significant infrastructure, commercial, and residential developments being developed in the country. Contracts, disputes, liability, and safety regulations are among the areas of construction law that follow in the UAE. It is a mixture of civil law, Islamic law (Sharia), and international best practices, with federal laws and regulations specific to each emirate. Demonstrations are also present.
Construction Law in the UAE: Crucial aspects.
1. Contract Law
Construction contracts in the UAE are mainly subject to the provisions of the Civil Code (Federal Law No.). 5. 18. Contractors, subcontractors, developers, and clients have certain rights and obligations under these codes. What are these duties? Significant features in construction law include:
Forming a contract: A contract must specify the extent of work, the duration, and the remuneration. The FIDIC (International Association of Consulting Engineers) is the most widely accepted standard form of contract in the UAE, but it can be adjusted by parties to local legal requirements.
Failure to meet their performance obligations as stated in the contract may result in penalties, compensation claims, or contract termination.
Changes and affirmations: The scope of work is frequently modified in construction projects. The contract must specify how it will be modified, including cost and time adjustments, as per UAE law.
2. Decennial Liability
Contractors and architects are held responsible for structural defects in a building under the UAE Civil Code for ten years after its completion, as a decennial liability. According to Article 880 of the Civil Code, the contractor and architect are jointly accountable for any structural failure or defects that pose a risk to the safety and integrity of construction. This provision cannot be waived, preventing parties from being exempt from this liability.
This liability is only relevant to permanent constructions like buildings and major civil works, without excluding non-structural elements or repairs. What does this liability exclude?
The liability period begins from the completion and handover date, which is 10 years. Period.
3. Dispute Resolution
The construction industry in the UAE is frequently troubled by delays, payment irregularities, alterations, or breaches of agreements. Dispute resolution methods include:
The UAE courts are responsible for resolving disputes. The UAE has courts that cater to commercial disputes, including construction matters. However, the process in court is lengthy and decisions are based on local laws).
Arbitration is the preferred means of resolving construction disputes in the UAE. Several arbitration centers in the country exist, including the Dubai International Arbitration Centre (DIAC) and the Abu Dhabi Commercial Conciliation and Arbitration Centre (ADCCAC). Arbitration is more flexible and confidential than litigation; parties can choose arbitrators who specialize in construction law.
ADR methods can be used to reach settlements without the need for court or arbitration. Mediation is also available.
4. Payment and Performance Bonds
In the UAE, construction contract provisions usually include payment bonds and performance obligations that secure contractors’ responsibilities and ensure payment to subcontractors or suppliers. Bonds off er financial protection to subcontractors if they default on the work, known as payment bonds, while performance bonds pledge that the contractor will perform the task as per the contract. These bonds are usually issued by banks or insurance companies.
5. Health and Safety Regulations
Health and safety are the primary concerns in construction projects in the UAE. The obligations of Federal Law No. Apply to both employers and contractors as well. 8. Regulations include requirements for:
Safety equipment such as helmets, gloves, and harnesses must be provided to workers.
Worksite safety is ensured through proper security measures and employee training.
Employers are obligated to report worksite accidents promptly, and not doing so can result in fines or legal action.
6. Environmental and Sustainability Requirements
To promote sustainable construction and environmental protection, the UAE government has implemented various regulations. New construction projects must meet green building standards, such as energy efficiency, water conservation, and waste management, according to the Dubai Green Building Regulations and Specifications. Buildings in Abu Dhabi are evaluated on sustainability measures, including the Estidama rating system.
7. Delays and Liquidated Damages
Construction projects that are delayed often result in disagreements. In UAE construction contracts, liquidated damages are frequently included as a form of compensation for the client’s delayed project completion. Liquidated damages provisions under UAE law must be reasonable and reflect the client’s actual losses. The court or arbitrator has the authority to decrease damages if they are determined to be too high.
8. Termination of Construction Contracts
Certain conditions, such as material breach, non-performance, or mutual agreement, may result in the termination of a construction contract. If there’s a fundamental breach of obligations under UAE law, either party can terminate the contract. In addition, termination must adhere to the procedures outlined in that contract and any claims for damages can be made as a result of wrongful termination.