FIDIC Contract in the UAE

The International Federation of Consulting Engineers is known as FIDIC. National associations of consulting engineers make up its membership. In addition to disseminating information and resources of interest to its members, FIDIC was established in 1913 to advance and implement the strategic goals of the consulting engineering business on behalf of its Member Associations.

To further its objectives, FIDIC publishes standard pre-qualification forms and international standard forms of contracts for works and clients, consultants, sub-consultants, joint ventures, and representatives.

According to FIDIC, several books are containing standard conditions for specific contracts. The main of them are:

• The Red Book establishing Conditions of Contract for Construction for Building and Engineering Works designed by the Employer;
• The Yellow Book establishing Conditions of Contract for Plant and Design-Build.

Within UAE, construction contracts are mainly regulated by the Federal Civil Transactions Law No. (5) of 1985, under the Muqawala (contract to make a thing or to perform a task) Section and other legislative acts.

Objectives of FIDIC Contracts

1. Serve as the recognized leading authority on global matters involving consulting engineering best practices.
2. Encourage everyone participating in the construction of infrastructure around the world to act with high moral standards.
3. Uphold and improve FIDIC’s global representation of the consulting engineering sector.
4. Improve consulting engineering’s reputation.
5. Promote and aid in the growth of thriving consulting engineering industries globally.
6. Promote and enhance the leading position of FIDIC’s Forms of Contract.
7. Improve and develop FIDIC’s training and publishing activities.
8. To promote and encourage the development of Young Professionals in the Consulting Engineering Industry.

Parties to the Contract

Construction contracts within UAE legal framework usually engage the two leading “players”:

• Employer (sometimes known as client) – party initiating the construction works (land or developer);
• Contractor – party that is engaged by the employer or client to design conduct, and complete certain parts of the works. Usually, by the prior consent of Employer, the Contractor can nominate Sub-Contractor to carry out separate works.

Obligations

The parties to the construction contract must behave in good faith, per FIDIC and UAE Civil Law. It implies that the Contractor is obligated to deliver the best-possible works to the Employer. Unfortunately, there is no protection against construction errors in buildings. Due to this, the Contractor is subject to a distinct responsibility under the FIDIC Books to inform the Employer of any construction mistake or fault as soon as possible. However, the comparable clause is absent from the Muqawala.

Liability

Parties’ responsibility in construction agreements is based on their duty to act honestly. Therefore, the contractor’s responsibility under the FIDIC wording that mandates notifying the Employer about the Construction is to offer suitable remedies for any flaws discovered after the works have been completed. A contractor is no longer responsible for the deficiencies once such remedies are suggested.

UAE Civil Law is much more robust in this regard. It imposes a 10-year joint liability period on the contractor and the designer concerning any flaws that could cause a structure to collapse in Article 880 of UAE Civil Law. This clause should be considered while using FIDIC contracts in the UAE.

Dispute Resolution

Termination

Article 267 of UAE Civil Law prevents the termination of a contract by unilateral will. Thus parties should be aware of this if they agree to carry out construction under UAE Law. In actuality, people and private organizations are applying the FIDIC under the assumption that the Employer has the freedom to end the contract at any time by giving the Contractor a termination letter with no repercussions. Parties in such situations should be aware that the Employer may be liable for damages under Article 879 of the UAE Civil Law.

Dispute Adjudication Board (DAB)

FIDIC contracts forms state that conflict parties should turn to a Dispute Adjudication Board (DAB) at first. The DAB clause is recognized and apply in UAE if there is a performance of the contract by both parties. Such performance in the meaning of law is concluded as the consent to arbitration.

Consult Us!

Suppose you’re considering working with FIDIC contracts in the UAE. In that case, we’d be pleased to provide you with a specific consultation on FIDIC and create a contract that best suits your needs and those of your contracting partner by including all elements required by UAE law and removing any unfavorable ones.