Indian Institute of Quantity Surveyors

Review of UAE Law in context of Construction law provisions 28th September 2013

Presented by: R. Venkat, FCIArb, FCMA LLM (Const Law), B.Eng, C.Eng
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Civil

Review of UAE Law in context of Construction law provisions
Question: What is Construction law?

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Construction law Construction Engineer Lawyer

Construction lawyer

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NO ONE LIKES TO LITIGATE © Venkat 4 .

1 Language/s and Law (b) the country or state the law of which shall apply to the Contract and according to which the Contract shall be construed. 5 . FIDIC 99 Clause 1. WHY IT IS RELEVANT TO US? Contracts in UAE are mostly administered by FIDIC 87 and FIDIC 99 with amendments. What do they say on local law? FIDIC 87 Clause 5.4 Law and Language The Contract shall be governed by the law of the country (or other jurisdiction) stated in the Appendix to the Tender © Venkat Law of the Country is like a safety net.UAE CIVIL CODE.

A mandatory provision [of law] shall take precedence over a duty created by a contractual stipulation (Art 31) Ignorance of the provisions of the law is no excuse (Art 29).UAE CIVIL CODE. WHY IT IS RELEVANT TO US? Civil code on the applicability of the local law The law of UAE will prevail if there is a conflict of laws (Art 10) Residency or where the Contract was concluded will decide the applicable law (Art 19(1)) The lex situs of the place in which real property is situated shall apply to contracts made over such property (Art 19(2). © Venkat 6 .

Important provisions © Venkat .PROPOSED WALK-THROUGH • • • • • • • Categories of Law Common law Versus Civil law Middle eastern law What is UAE Civil Code? Does it address all Construction related issues? Is it only based on Sharia Law? Law of Contract.

CATEGORIES OF LAW Common law Contract law Civil law Tort law Construction law Case law Public law Private law Criminal law © Venkat 8 .

CATEGORIES OF LAW Legal systems Civil law Common law Source of law Case law Statute Regulation Civil law Criminal law Applicability Private law Public law © Venkat 9 .

529 AD) • Civil law is fully codified. highly systemized and structured • Broad general principles without setting out the details © Venkat 10 .Civil Law legal system • Legal tradition which has its origin in Roman law • Codified in the Corpus Juris Civilis of Justinian (Eastern Roman emperor.

Switzerland.Civil Law legal system Roman law Code Napoleon French Influence Circa 1800 Belgium. Turkey. Luxembourg. Korea and Taiwan 11 © Venkat . Spain. Japan. Louisiana and Quebec Germanic family (Enacted in 1900) Austria.

Common Law legal system • Refers to legal systems that adopted English legal system • Evolved in England from the 11th Century onwards • Established by William the Conqueror • Principles appear in the reported judgments (most part!) • Scope for a discretionary approach • Rules seem to be more specific and detailed © Venkat 12 .

Wales.COMMON LAW SYSTEM COUNTRIES Basis of private law for • • • • England. Malaysia etc. Pakistan. Ireland.) USA is the main receiver and considerable changer of English Common law © Venkat 13 .. All states of USA (except Louisiana) Canada (except Quebec) and Former colonies of British Empire (India.

Claimant Sues the defendant. contract Criminal law is aspect of public law Relates to conduct which the State considers inappropriate Involves enforcement including sentence to prison Public Prosecutor prosecutes the defendant (accused) © Venkat 14 . debt recovery. It’s a private law Examples: dispute in a sale of land.Civil Law and Criminal law Every legal system will have both Civil law and Criminal law Not to be confused with Civil law legal system Civil law is to settle dispute between two individuals.

PROPOSED WALK-THROUGH • • • • • • • Categories of Law Common law Versus Civil law Middle eastern law What is UAE Civil Code? Does it address all Construction related issues? Is it only based on Sharia Law? Law of Contract. Important provisions © Venkat .

because of the presence of international law firms (in UAE) with “common law” roots. This has created difficulties in the application of the law to these contracts by the courts of the UAE since judicial authority does not recognize some of the principles or the practices of the common law system…” Leading UAE Lawyer Mr. many contracts which have been drafted in the UAE appear to have been influenced by common law principles.WHY WE SHOULD KNOW THE DIFFERENCE “.. Essam Al Tamimi © Venkat 16 .

Established Common law principles are not recognized in UAE • • • • Time at large Prevention principle Fitness for purpose Pre estimated LD’s © Venkat 17 .

Source of law 2. Interpretation of Contracts 4. Judicial procedure © Venkat 18 .Common Law Versus Civil Law 1. Principle of precedents 3.

Case law is mostly irrelevant (notable exception French Tort law which is fully based on case law) • Codes are concise. CIVIL LAW • Mostly based Codified legislation. Statutes are also referred. Source of law • Mainly from case law from previous judgments. state broad principles only • Statutes are detailed with definitions and contain lengthy enumerations of specific applications and exceptions © Venkat 19 .COMMON LAW 1.

Principle of precedents • Judges are subject to doctrine of stare decisis • Decisions from Upper Courts must be respected and followed • Hierarchical structure CIVIL LAW • Judges are bound by Code and facts and not on precedents! • Court of Cassation judgments are referred for understanding of law © Venkat 20 .COMMON LAW 2.

Interpretation of Contracts • Respects freedom of Contract • Primary focus on the written words in the contract. Evidence of negotiation is admissible • Mandatory provisions can’t be excluded • Tribunals have power to rewrite the parties’ agreement “prevents a party to a written contract from presenting extrinsic evidence that contradicts or adds to the written terms of the contract that appears to be whole”.COMMON LAW 3. • Parol evidence CIVIL LAW • Interest of fairness (as against freedom of contract) • Primary focus on the wider context and intentions of the parties • Not limited to literal meaning of the terms. © Venkat 21 .

COMMON LAW 4. Judicial procedure • Parties collect evidence and present • More reliance on evidence of fact. oral arguments • Parties appoint experts • Judges are appointed from senior lawyers in practice CIVIL LAW • Judge plays main role in collecting evidence • Trials are based on written evidence • Court appoints the experts • Judges are separately trained and appointed © Venkat 22 .

R. L. L. L. (1) A judgment that a patent was valid determined issues only between the parties to the revocation action. Appeal dismissed.Resolution Chemicals Ltd v H Lundbeck A/S Court of Appeal (Civil Division) Where Reported 29 July 2013 [2013] EWCA Civ 924. Legislation Cited Patents Act 1977 (c. L. Floyd.65.72 S A M P L E U K C O U R T © Venkat J U D G M E N T 23 .. Official Transcript Summary: The Court of Appeal re-stated the test to be applied when assessing whether there was privity of interest between a new party and a party to previous proceedings. so as to prevent the new party litigating the same matter. [2007] Bus. Abstract: The appellant patent proprietor (L) appealed against a decision ([2013] EWHC 739 (Pat)) that the respondent company (R) was not precluded from bringing proceedings to challenge the validity of L's patent.J. Moore-Bick.37) s. 759. Judge: Longmore.37) s.. Significant Cases Cited Special Effects Ltd v L'Oreal SA [2007] EWCA Civ 1. Patents Act 1977 (c.J.J.

Contract. 131 and 132 5. Judges : 23 January 2007 Keywords: 1.SAMPLE UAE COURT JUDGMENT(IN TRANSLATION) Dubai Court of Cassation 240/2006 Subject: Muqawala.jurisdiction over questions of fact .description of obligation condition and term . Law of Civil Procedures .jurisdiction over questions of fact contract . obligation . and that offer was met with an implied acceptance by the latter company by its carrying out the works as set out in the letter.condition.Muqawala.effects of contract. 423 and 425 4. Proof.Contract . trial court .articles 130. Legislation referred to: 3. The appellant company made an offer in a letter to the respondent company.interpretation of contract. © Venkat 24 . 5.contract interpretation of contract. 4.condition.making of contract. 420.Contract .article 114 1. 2.condition and term .burden of proof. Civil Code – articles 243. contract . obligation .competence.description of obligation . Civil Code . containing the condition in the contract made between the appellant company and the head contractor.Proof . Thus. there was a contract made between the parties. 3.Judges .interpretation of contract. trial court .

Important provisions © Venkat .PROPOSED WALK-THROUGH • • • • • • • Categories of Law Common law Versus Civil law Middle eastern law What is UAE Civil Code? Does it address all Construction related issues? Is it only based on Sharia Law? Law of Contract.

MIDDLE-EASTERN LAW
• Neither common law nor purely based on civil code
• No single uniform Middle East or Arab law • Arab law is mixture of Islamic law and French civil code • Egyptian Civil Code is the first Arab law enacted

• Arab countries have followed the Egyptian Civil Code.
• To understand Middle east law, we need to know bit of history • Ottoman empire!
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OTTOMAN EMPIRE
Created by Turkish tribes in Anatolia. One of the most powerful states in the world during the 15th and 16th centuries. Spanned more than 600 years and came to an end in 1922.
Empire included modern Hungary, Serbia, Bosnia, Romania, Greece, and Ukraine; Iraq, Syria, Israel, and Egypt, North Africa as far west as Algeria; and most of the Arabian Peninsula.
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LEGAL SYSTEM IN MIDDLE-EAST
The Ottoman government compiled a uniform Civil Code called "Majella“

After the fall of Ottoman Empire, France and Britain took over different Arab countries.
Influence of French Civil Code grew in the Arab countries. Attempt to reconcile between the Sharia and the Western laws has began. The Egyptian Civil Code of 1948 was the first successful product. Legal scholar and professor Abd al-Razzāq al-Sanhūrī (1895-1971) is the author of Egyptian Civil code.

His twelve-volume commentary on Civil code is a magnum opus (Al-Wasīṭ fī sharḥ al-qānūn al-madanī al-jadīd)
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LEGAL SYSTEMS AROUND THE WORLD Common law Civil law Middle eastern law © Venkat 29 .

Leaning (falling?) Tower of Pisa Tourist View © Venkat 30 .

True leaning towers of the world Leaning Tower of Wanaka Leaning Tower of Abu Dhabi © Venkat 31 .

Leaning (falling?) Tower of Pisa Tourist View © Venkat 32 .

Leaning Tower of Pisa Contractor’ s view © Venkat 33 .

Leaning Tower of Pisa LAWYER’S VIEW © Venkat 34 .

Important provisions © Venkat .PROPOSED WALK-THROUGH • • • • • • • Categories of Law Common law Versus Civil law Middle eastern law What is UAE Civil Code? Does it address all Construction related issues? Is it only based on Sharia Law? Law of Contract.

(11) 1992 Commercial Transactions Act 1993 DIFC Law 2004 © Venkat 36 .LAW SYSTEMS. Federal Law No.TIME LINE Roman civil law English common law Code Napoleon Germanic laws Egyptian civil law 6th Century 11th Century 1800 AD 1900 AD 1948 AD Formation of UAE 1971 Civil Code (Federal law 5) 1985 Civil Procedure Code.

. • The other complimentary law is the Commercial Transactions Act declared under Federal Law No. © Venkat 37 . 18 of 1993 • Civil Code remains the baseplate both of commercial and of civil law in the UAE. • Civil Code that is the most referred law in Court of Cassation judgments. Sale etc.GLANCE AT UAE CIVIL CODE • The Law of Civil Transactions of the State of UAE • Decreed under Federal law 5 of 1985 • Commonly known as Civil Code • Covers all Civil transactions like Contract for work.

© Venkat 38 .WHAT DOES CIVIL CODE COVER? • • • • • • • • Formation of Contract What constitutes offer and acceptance The capacity of the parties Effect of fraud and mistake Interpretation of agreements The liberty to withdraw Remedies for breach and Numerous general questions of contract law Important Any Clause that purport to exclude a party’s right to apply to Court for excessive hardship is invalid under UAE Law.

Important provisions © Venkat .PROPOSED WALK-THROUGH • • • • • • • Categories of Law Common law Versus Civil law Middle eastern law What is UAE Civil Code? Does it address all Construction related issues? Is it only based on Sharia Law? Law of Contract.

DOES CIVIL CODE SUFFICIENT? General complaint Civil code contains just 25 articles on Construction Contract. Comment by a lawyer trained on Common law Is it true? Let us use an analogy. Columbus and Civil code!! © Venkat 40 . The Billions of dirhams being spent on buildings are worthy of greater attention than just 25 short articles in the Civil Code.

COLUMBUS AND CIVIL CODE Christopher Columbus Adventurous sailor. tough negotiator and shrewd businessman © Venkat 41 .

Wanted to reach India by sailing westward from Spain Landed in Bahamas instead © Venkat 42 .

Vasco da Gama’s maiden voyage to India (1498) © Venkat 43 .

FIRST VOYAGE OF COLUMBUS (1492) Landed in Bahamas which he thought was Japan. Then went to Cuba which he declared as China © Venkat 44 .

until his Third Voyage! (1498) © Venkat 45 .DISCOVERY OF AMERICA He never saw the main land of America.

. Lease. Mortgage etc. © Venkat 46 . Contract of Sale.UAE CIVIL CODE COVERS THE FOLLOWING • • • • • • • • Formation of Contract What constitutes offer and acceptance The capacity of the parties Effect of fraud and mistake Interpretation of agreements The liberty to withdraw Remedies for breach and Numerous general questions of contract law 1528 Articles 4 Volumes Contract of work.

COLUMBUS AND CIVIL CODE Conclusion Declaring Civil code contains only 25 articles on Contracts and The Code does not address the complexities of Construction Contracts is akin to Columbus discovery of America until the third voyage © Venkat 47 .

• The UAE Civil Code contains more or less as many provisions as it should without becoming over-intrusive in the way private parties wish to distribute their tasks.WHAT DOES CIVIL LAW EXPERTS SAY? • It doesn’t mean that bulky construction law is required to justify the construction boom. • Civil Codes of most countries are generally minimalistic • Expanding civil codes into greater detail on the intricacies of specific aspects would be deemed as interventionist in most civil law-based jurisdictions. © Venkat 48 .

The common intention of the parties rather than adherence to the literal meaning of the words shall be sought in interpreting a contract. Louisiana Civil Code (USA) Art. Interpretation of a contract is the determination of the common intent of the parties. © Venkat 49 . 2045 One must in agreements seek what the common intention of the contracting parties was. 1156 Quebec (Canada) 1425. rather than pay attention to the literal meaning of the terms.CONTRACT INTERPRETATION COMPARISON OF CIVIL CODES French civil code Art.

. it may not be departed from by way of interpretation to ascertain the intention of the parties. Corresponding articles from the civil codes of other countries: • Jordan 239 and 240. • Egypt 150 and 151. • Syria 151 and 152 © Venkat 50 . (2) If there is scope for interpretation of the contract.CONTRACT INTERPRETATION UAE CIVIL CODE Article 265 (1) If the wording of a contract is clear. an enquiry shall be made into the mutual intentions of the parties without stopping at the literal meaning of the words .

Contract interpreted in favor of obligor In case of doubt that cannot be otherwise resolved. a contract must be interpreted against the obligee and in favor of the obligor of a particular obligation. © Venkat 51 . 1162 Quebec (Canada) 1432. a contract is interpreted in favour of the person who contracted the obligation and against the person who stipulated it. 2057 In case of doubt. and in favour of the one who has contracted the obligation In case of doubt. Louisiana Civil Code (USA) Art.CONTRACT INTERPRETATION COMPARISON OF CIVIL CODES French civil code Art. an agreement shall be interpreted against the one who has stipulated.

This rule is adopted from Western jurisdictions.CONTRACT INTERPRETATION WHAT DOES UAE CIVIL CODE SAY? Article 266 (1) A doubt shall be interpreted in favour of the obligor. it should be interpreted against the interests of the person who insisted that the clause be included.” If a clause in a contract appears to be ambiguous. Common law doctrine Contra Proferentem Latin term which means “against the offeror. © Venkat 52 .

Important provisions © Venkat .PROPOSED WALK-THROUGH • • • • • • • Categories of Law Common law Versus Civil law Middle eastern law What is UAE Civil Code? Does it address all Construction related issues? Is it only based on Sharia Law? Law of Contract.

One view is that since Federal laws shall be promulgated in accordance with the Constitution (Article 110). Article 7 of the Constitution says: 'Islam is the official religion of the Federation and the Islamic Sharia is a main source of its legislation'.SHARIA LAW AND UAE CIVIL CODE Is Sharia is the only source of UAE law? Two different interpretations The starting point is the UAE Constitution. Note the construction of this Article: Sharia is a main source not the only source © Venkat 54 . any law which is does not take Sharia as a source will be void because it violates the constitution. However this is a narrow interpretation.

There shall be no scope for innovative reasoning in the case of provisions of definitive import. © Venkat 55 . If the judge finds no provision in this Law. he must pass judgment according to the Islamic sharia. So the Civil code states that Sharia law will be applicable only when the Civil code has no provision.SHARIA LAW AND UAE CIVIL CODE Article 1 of UAE Civil Code states that The legislative provisions shall apply to all matters dealt with by those provisions in the letter and in the spirit.

Federal Supreme Court held that commercial transactions are permissible unless they are shown to be expressly repugnant to Sharia. 164/2006) Lower courts declared Margin trading is forbidden under Sharia. © Venkat 56 . Margin Trading Agreements are referred to in the UAE Banking Law and hence it is presumed to be in accordance with Sharia. Accordingly. the Court held that Margin Trading Agreements were valid and enforceable under UAE law.SHARIA LAW AND UAE CIVIL CODE What is the Court’s view on the applicability of Sharia law? Case involving Margin trading ( Abu Dhabi supreme court Case No.

but it is not the only source. © Venkat . UAE courts will give effect to that provision. A UAE court will pass judgment according to Sharia in the absence of a provision of UAE law covering the issue to be determined. Where UAE law contains a specific provision.Sharia law and UAE civil code In summary Islamic Sharia is a source of UAE law.

Sharia in Construction law Riba Unjust enrichment Gharar Uncertainty Due Process Good faith 58 © Venkat .

PROPOSED WALK-THROUGH • • • • • • • Categories of Law Common law Versus Civil law Middle eastern law What is UAE Civil Code? Does it address all Construction related issues? Is it only based on Sharia Law? Law of Contract. Important provisions © Venkat .

Works contract or Construction Contract • • • • • Definition and Scope Obligations of the Contractor Obligations of the Employer Subcontractor Termination of Contract Article 871 to 874 Article 875 to 883 Article 884 to 889 Article 890 and 891 Article 892 to 896 25 Articles covering all aspects of Construction contracts Compare Articles 646 to 676 of Egyptian Civil Code © Venkat 60 .MUQAWALA CONTRACTS Means “a Contract to make a thing or perform a task” In simple words.

period over which the contract has to be performed and Consideration description of subject matter Complete drawings and specification manner of performance period over which the contract..MUQAWALA CONTRACTS Article 874 A Muqawala Contract must provide description of subject matter of the contract. the manner of performance. consideration Method statements Construction period Contract Sum © Venkat 61 .

MUQAWALA CONTRACTS Contractor obligations (briefly) • • • • (for) Quality of materials (to provide) tools For any loss/damage arising from his work* Permitted to retain the work until payment Article 875 Article 876 Article 878 Article 879 * Except when the loss arising from his work can’t be prevented © Venkat 62 .

MUQAWALA CONTRACTS Mandatory Contractor obligations Article 880(1) • Joint liability with Architect against partial/total collapse of the structure for TEN years. Article 886 • Obligation to notify if the quantities required to complete the work is substantially more than what is included in the Contract in a Unit priced measurable contract © Venkat 63 .

Contractor is entitled for additional payment only if the variation work is undertaken with the consent of Employer Article 887 © Venkat 64 . it should be done without delay and Contractors must be paid for the work done Article 886(2) In a lump-sum contract.MUQAWALA CONTRACTS EMPLOYER OBLIGATIONS (BRIEFLY) • To take delivery upon completion Article 884 • To pay agreed consideration Article 885 • If any termination is sought.

MUQAWALA CONTRACTS EMPLOYER OBLIGATIONS (CONTD) Contractor is entitled fair remuneration for the work done by him even though there is no consideration specified in the Contract Article 888 Quantum merit in Common law Serck Controls Ltd v Drake & Scull Engineering Ltd [2000] (TCC) © Venkat 65 .

SUBCONTRACTING © Venkat 66 .

SUBCONTRACTING Article 890 Subcontracting is permitted unless • It is prevented by a condition in the contract Or • The nature of work requires that it should be performed by the Contractor The Main Contractor is still liable to the Employer (Article 890 (2)) © Venkat 67 .

There is an assignment by the first contractor to the Employer Article 891 Remember the Common law doctrine ‘Privity of Contract’ Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd © Venkat 68 .SUBCONTRACTING The Subcontractor shall have no claim against the Employer for any outstanding monies from the first contractor unless.

Article 895 © Venkat 69 .TERMINATION OF CONTRACTS A Muqawala contract can be terminated in three ways  Upon completion of work (actually it is completion!)  Upon cancellation of the contract by mutual consent  By order of the court Article 892  A party injured by the cancellation may make a claim for compensation from other party to the extent allowed by custom.

Obligation only to use ‘reasonable skill and care’ (Art 383) Un just enrichment (Article 106) Judge has the power to alter the Liquidated damages (390) Genuine pre-estimate is of less importance © Venkat 70 .Concepts that are distinctly different from Common law doctrines • • • • • • • Statutory obligation of good faith (Article 246(1)) Statutory imposition of joint and several liability (Art 291) No requirement for “Fitness for purpose”.

com/s/TQP55KX © Venkat 71 .linkedin.NOT THE END The Journey has just began! Thank You! Questions? A presentation by Venkat http://www.com/in/venkat1964 Please take few minutes to fill a feedback form http://www.surveymonkey.

Abu Dhabi Supreme Courts © Venkat 72 .COURT’S VIEW ON CONTRACT ISSUES • • • • • • • • • • • • Validity of Contract Privity of Contract Governing law Rules of interpretation Non-performance of Nominated subcontractors Comment on the ‘back to back’ obligation Lump-sum subcontracts Breach of duty by subcontractor Conditional payment provisions Variation works Set off in payments Liquidated damages Over 100’s of Case law from Dubai Court of Cassation.

COURT’S VIEW ON CONTRACT ISSUES • • • • • • • • • • • • Concept of prevention principle Defects liability Time bars and condition precedent notice requirements Force majeure/Doctrine of unforeseen circumstances Duty of Good Faith Right to suspend work Burden of proof Liens to secure payments Termination rights Unjust enrichment Role of Engineer General concerns Coming Soon!! © Venkat 73 .