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10/11/21

Construction litigation in the UAE

Construction litigation in the UAE

The pursuit of a perfect start, and the art of maintaining momentum


Author: Mahmoud Abougabal, Technical Director, Abu Dhabi


There are numerous ways in which construction disputes could end up in litigation: from defective and vague arbitration agreements to failed ADR1 procedures, and sometimes even, as a consequence of negotiated contract provisions. 

In one recent example, the Dubai Court of Cassation ruled an arbitration agreement null and void because for parties to refer to the use of the FIDIC Red Book in its entirety was too vague and imprecise. In another2, it was ruled that an agreement to follow specific amicable settlement procedures will not prevent parties from directly having recourse to local courts, should they eventually have jurisdiction.

These situations spell uncertainty for many international entities. Especially those unfamiliar with the local legal landscape, the speed in which the process takes place, or the importance of being consistently ready to either present your claim or defend your position before court-appointed experts.

Firing the Starter Round

For claimants, the rule of thumb is that by the time a dispute reaches court, claims must be consistent, complete, and ready to be presented concisely in Arabic from day one.

A common misconception is that claims produced during the progress of the works are adequate and sufficient for use in court proceedings, but this may not always be the case. Whether because of gaps, errors, or heavy reliance on complex technical matters, it is always recommended to have claims reviewed, inspected, and sometimes even adjusted by a claims professional before they are handed over to determination by a court.

The best time to lay the foundations for a sound defence strategy is during the period between a court’s notice and the date on which a court appoints a technical expert. 

Once an expert is appointed, time tends to warp and compress so much that defendants can be on the backfoot and playing catch up rather than working to put their best arguments forward.

Staying the Course

Work does not end with the first round of submissions but tends to persevere for the many skirmishes that usually follow.

A court appointed expert will often invite parties to several in-person meetings and will consider the prospects of site visits. They will also often require parties to reiterate and summarise their arguments by means of brief presentations in Arabic and invite the other party to comment on them.

While in-person meetings have now shifted online due to the pandemic, they are still a very important feature of construction litigation because they provide a roadmap to where experts should carry their investigations instead of sifting through tens of thousands of often convoluted technical documents.

There are two critical success factors to ‘staying the course’: first, there is the issue of keeping up with the expert’s requests for more information, which are often required within the span of only a few days. Then second, comes the delicate art of distilling complex matters and presenting them clearly in a manner that would withstand challenges. These presentations are done in-person and in the Arabic language.

The language barrier is a significant issue, not only because court submissions are required in Arabic and parties will often find themselves having to expend large sums of money for translation, but also because exhibits and technical documents are often processed by legal translators who, for the most part, are not trained engineers. Thus, parties may run the risk of having their technical arguments misinterpreted or, in extreme cases, altered. (See our other article in this edition of the Digest on the subject of the challenges of accurate translation.)

Common Pitfalls

Parties hailing from common law jurisdictions may quickly realise that expert determinations are not restricted by the contract agreed by the parties but will also extend to incorporate other civil law principles, such as the duty of good faith to avoid issues of unfairness.

Unlike common law jurisdictions which view construction entities as “normally well able to look after themselves”3,  and so have only developed “piecemeal solutions in response to demonstrated problems of unfairness”4,  the duty of good faith in local UAE court proceedings may very well extend to contentious issues such as: time bars, concurrent delays as well as perceivably delayed payments and engineer determinations. 

This is why defendants must be cautious not to centre their legal arguments around administrative failings alone, such as a claimant’s failure to submit a claim on time, without explaining why these have caused loss to the defendant. An example of such loss could be where a subcontractor fails to submit its claim to the main contractor within time, which then results in the main contractor losing its rights under the main contract.

Another issue is where claimants artificially inflate the value of their dispute in the hope of settling for a higher amount than they are actually owed. The downside is that court appointed experts may find this an overt element of bad faith, which may then have knock-on effects on other aspects of the matters in dispute.

Finally, one cannot stress enough the importance of appointing legal counsel and technical support in a timely manner. 

In an industry where construction disputes are handled by a limited pool of highly-qualified professionals, it is always advised to plan ahead and work towards building your ‘dream team’ as soon as practical. 

Signs of a highly functioning team can be seen arising from early identification of strengths and weaknesses of the case, agreement on claims or defence strategies, establishing efficient channels of communication, and then later, achieving a favourable and equitable outcome, either via negotiation or via the court process.


Alternative Dispute Resolution

Case 14 of 2008

Humphrey Lloyd, ‘Adjudication’ [2001] ICLR 437

Bingham LJ in Interfoto v Stiletto [1987] EWCA Civ 6


This article was originally written for issue 22 of the Driver Trett Digest. To view the publication in full, please visit: www.driver-group.com/digest-issue-22


 

Articles  /  Digest  /  Global  /  Middle East

Articles  /  Digest  /  Global  /  Middle East

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