Disputes in the desert

In his article, Sharpening the Knives in Dubai (18 July, page 64), Liam Holder noted that it is likely that construction disputes will become more common over there. So it’s vital to understand how the resolution of disputes works.

Although federal law is applied across the UAE, each individual emirate retains the ability to pass local laws relating to the construction industry. Federal Law Number Five of 1985 (also known as the Civil Code) also contains a number of important provisions that govern construction contracts.

Unless the parties have opted in their contract for another forum, claims arising out of construction projects in Dubai generally fall within the jurisdiction of local courts. The UAE is a civil law jurisdiction relying on codified laws within, for example, the Civil Code.

Unlike common law systems, previous case law and court decisions are not binding or prescriptive and each case will be looked at on its own facts. The legal submissions to the court must be drafted and presented to the court by a local lawyer in Arabic.

Ordinarily, all submissions are made by way of written documents, served over the course of a number of short public hearings. There will not usually be a lengthy trial involving testimony and cross-examination of witnesses, and documents are the key form of evidence. Once all written submissions and documents have been served, a written judgment is delivered by the court.

There are no specialist construction courts in Dubai and there are no specialist construction judges. It is therefore usual for the court to appoint a technical “expert” who will assess the parties’ submissions and prepare a report. The qualifications of that expert to deal with construction disputes are not always readily apparent.

The qualifications of the ‘expert’ to deal with construction disputes are not always apparent

The entire court procedure can take about two years but is often much longer because of the tendency for parties to appeal to Dubai’s Court of Appeal and then its Supreme Court. The timescale, language barrier, absence of specialist judges and the desire for privacy often mean that other forms of dispute resolution are used.

In recent times, the Dubai International Financial Centre has set up a court and an arbitration centre that are based on the UK’s civil procedure and arbitration rules, and where the judges are from a common law background. Parties can take their disputes to this forum and the judgment is binding.

Where the parties have agreed to it in their contracts, arbitration has proven to be the most commonly used forum for resolving disputes. The UAE does not have a separate arbitration law (although the Civil Code contains about 20 simple provisions on arbitration process).

Legislation concerning arbitration is expected to be ratified and issued in the coming months. Presently, parties using arbitration sign up to a set of rules usually operated and issued by the arbitration centre of their choice. Very often this is the Dubai International Arbitration Centre. The UAE is a signatory to the New York Convention on arbitration, meaning that arbitral awards made in the UAE can be enforced in more than 130 countries. It also means that foreign arbitral awards should be enforceable in the UAE’s courts.

Arbitration remains the most common forum for dispute resolution in Dubai for a number of reasons: clear procedural rules, speed, neutrality and the impartiality of the arbitrators, the ability to appoint construction specialists and experts to decide the dispute, and the fact that the most common forms of contract used in the UAE, the FIDIC forms, include arbitration as standard.