Licensing and Building Claims
In United Arab Emirates each State of Emirates has legislation providing for licensing of some categories of contractors. The legislation in each emirate is completely efferent. It is beyond the scope of this article to examine the differences. That would be an enormous task.
However, there are some uniform common law principles. This article considers the effect which licensing legislation may have on a contractor who wants to make a claim with respect to building work covered by licensing provisions. There are three aspects, namely, the effect of a ban o carrying out work without a license, the effect of contracting without a license and the effect of bars on recovery of recompense for work done in contravention of the legislation.
Contracting without a License
The first step in licensing legislation is to provide for the issue of licenses to individuals or corporations or both for certain types of work. The next step is to ban unlicensed persons from contracting to carry out that type of work.
UAE law clearly stated that no work shall be carried out without a license, and the Builder or the contracting company must be registered and have a valid Trade License issued by the government and approved by the Municipality.
About Dubai Municipality
Dubai Municipality or DM looks after all the facilities provided to the people of Dubai by the Dubai government. It has jurisdiction over all the city services and provides a tremendous amount of online services to residents as well as government sectors of Dubai. In 2001, Dubai Municipality Approval started its online service portal, wherein 40 city services were provided online in its initial phase. Today, almost all the services provided by the Dubai Municipality can be accessed online.
All contractors working in Dubai must have a ‘contractor classification licence’ which will allow them to work as a contractor. In relation to other permits, the permits required are dependent on which municipality the site is located in: the Dubai Municipality, the JAFZA or TECOM.
UAE & Dubai Law
Dubai, being part of the federation of the United Arab Emirates is bound by both federal laws and laws specific to the Emirate of Dubai. The construction specific laws are comprised of federal and emirate laws and regulations. The main federal law is the Civil Transactions Code Federal Law No. 1 of 1985 (as amended) (‘the Code’) which contains the general contract principles as well as a section on Muqawala which relates specifically on construction related matters.
In addition to the Federal laws, Dubai has numerous regulations, standards, codes of practice, guidelines and circulars issued by Dubai Municipality and the free zones of TECOM and JAFZA in relation to building standards in their relevant jurisdictions. These standards include building standards, environment, health and safety guidelines and other technical conditions.
Administrative Resolution No. 125 of 2001 concerning the adoption of Building Regulations and Standards provides a detailed technical discourse about how to build in Dubai Municipality governed areas. Similar standards are used in JAFZA and TECOM areas.
The main health and safety provisions fall under Federal Law No. 8 of 1980 (as amended) (‘the Labour Law’), as well as all employment related matters in addition to numerous regulations, codes of practice and specific technical guidelines.
Certain provisions are implied into construction contracts by statute.
The Civil Code imposes certain conditions on Muqwala (Arabic word) contracts, including a provision that a contractor is liable for damage caused by its acts.
The provisions in the Building Codes and guidelines issued by Dubai Municipality, JAFZA and TECOM dictate the design terms and conditions.
Contract or Claim Limitation period
Under Dubai law, limitation periods are set out in the Civil Code and the Commercial Transactions Code.
In a contract claim, the limitation period will run from the date when the contract was breached. It will be necessary, at the outset of any new claim, to determine whether or not the limitation period has expired. If it has, the claim will be ‘statute-barred’ and the claimant may be prevented from bringing a claim against the alleged wrongdoer. If a claim is brought out of time, the defendant will be able to plead the defence of limitation and the claimant will have the burden of proving that the cause of action arose within the relevant statutory period.
Dispute resolution in the courts
Construction disputes are common in the construction industry, and it is crucial to understand how they can be resolved to avoid costly delays and legal battles. While there are no courts that specialize in construction disputes, the civil courts often handle these cases if they escalate to litigation.
However, parties involved in a construction dispute may agree to submit to the jurisdiction of the Dubai International Financial Centre (DIFC) courts. Although primarily commercial courts, they may provide a suitable alternative for resolving construction disputes.
In this article, we will explore the various methods of resolving construction disputes in the courts, with a focus on the DIFC courts as an option.
Litigation in Civil Courts
Litigation in civil courts is the traditional method of resolving construction disputes. The court process involves presenting evidence and arguments to a judge, who then makes a decision based on the evidence presented. This process can be lengthy and expensive, and the outcome is uncertain.
However, litigation can be a useful tool for resolving complex disputes that cannot be resolved through other methods. In some cases, parties may find it necessary to escalate the dispute to the civil courts to enforce their legal rights.
As mentioned earlier, parties may agree to submit to the jurisdiction of the DIFC courts for resolving construction disputes. Although primarily commercial courts, the DIFC courts have jurisdiction over civil and commercial matters.
The DIFC courts have a specialist Technology and Construction Division (TCD) that deals with complex construction disputes. The TCD has judges with expertise in construction law and can handle disputes involving technical and factual issues.
In conclusion, construction disputes can be resolved through various methods, including litigation, arbitration, mediation, and submission to the DIFC courts. Each method has its advantages and disadvantages, and parties should carefully consider their options before deciding on the best method for their dispute.
Private arbitration is used as an alternative to litigation.
Commercially, in contracts with international contractors, arbitration is the preferred method of dispute resolution. Further, the Rules of the International Chamber of Commerce (ICC) are preferred over submitting the dispute to the local Dubai arbitration body.
The United Arab Emirates is a signatory to the New York Convention on the Enforcement of Arbitral Awards which allows the enforcement of arbitration awards in the UAE.
The leading institutions for construction arbitration are the Dubai International Arbitration Centre and the DIFC-LCIA (Dubai International Financial Centre – London Court of International Arbitration) Centre and it is common for construction contracts to provide that in the case of a dispute, the matter is first to be referred to DIFC-LCIA before being referred to the courts
Contracting without a license in Dubai is illegal and can result in serious consequences for individuals and companies. In Dubai, it is mandatory for all construction companies and contractors to have a valid license issued by the Dubai Municipality or the Dubai Civil Defense. The license ensures that the contractor has met the necessary qualifications and standards to perform construction work in Dubai.
Contracting without a license is considered a violation of the law and can result in fines, imprisonment, or both. The Dubai Municipality has the authority to issue fines and penalties to individuals and companies found guilty of contracting without a license. The amount of the fine can vary depending on the severity of the offense and the extent of the damage caused by the unlicensed contractor.
In addition to the legal consequences, contracting without a license can also have serious financial and reputational consequences. Unlicensed contractors may not have the necessary skills and experience to perform the work properly, leading to poor-quality work, delays, and additional costs. In the event of a dispute, unlicensed contractors may not have legal recourse to defend themselves or enforce their rights.
To avoid the risks associated with contracting without a license in Dubai, it is important to ensure that all construction companies and contractors are properly licensed before hiring them. It is also important to verify the validity of the license and to check the contractor’s credentials and references before signing a contract.
E-basel, a legal tech platform, can help individuals and companies in Dubai to ensure that they are contracting with licensed and qualified contractors by providing tools to verify licenses and check credentials. By using e-basel, parties can reduce the risk of contracting with unlicensed contractors and improve project outcomes.