How to manage claims and dispute resolutions in construction sector?

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The construction industry is the very essence and backbone of the UAE’s economy, with an estimated valuation of USD 101 billion in 2020 and is projected to reach a valuation of USD 133 billion by 2026. The fast-paced growth of the construction industry also comes with the increasing number of construction disputes.

Construction disputes are highly complicated due to their technical nature. The common factors that can trigger a construction dispute, may include amongst others:

  • Delays in the work progress
  • Non -payment of part payments or the final accounts
  • Disputes concerning variations
  • Defect liability and quality issues
  • Breach of contract
  • Back-to-back payment terms

Large-scale construction projects in the UAE follow the FIDIC principles in terms of contract construction. FIDIC stands for International Federation of Consulting Engineers (commonly known as FIDIC, an acronym for its French name Fédération Internationale Des Ingénieurs-Conseils), which is an international standards organization for engineering & construction, and best known for contract templates for construction.

When discussing construction disputes, it goes without saying that it is best suited to avoid potential disputes in the first instance by ensuring that clear contractual terms are entered into between the parties as per industry standard and FIDIC principles. The Construction industry being highly technical is it essential to maintain keen legal acumen in handling matters concerning bonds, liens, finances etc. Along with it, the parties must include provisions for disputes resolution via litigation or alternative dispute resolution in the form of mediation and arbitration. An ineffective dispute resolution clause can potentially tie down the parties to costly, lengthy, as well as even parallel litigation processes.

The Dubai court has recently issued new guidelines that provide a clearer process in terms of handling construction disputes in the emirate. Pursuant to the same, a claimant in a construction dispute is required to support his claims at the time of filing the same through a consultant report issues by one of the Dubai court’s listed experts. Such experts being skilled in the construction industry, would be able to evaluate the claim and provide their final report, which is to be now submitted before the Court substantiating the claim. The consultant report often supports the fact-finding by referring to supporting documents and evidence, and hence they have a high value in terms of evidence before the courts. The new changes are expected to speed up the court process because they will now make the statement of claim clear and straightforward by narrowing the points of conflict to the most relevant and accurate points.1

The UAE Construction industry has expanded immensely, recovering from the impact of the 2007-2008 global financial crisis. It has both faced and overcome internal and external challenges to reach this pedestal today. The new practical and innovative dispute handling measures being introduced, would immensely contribute towards strengthening of this sector.

Construction industry is the very essence and backbone of the UAE’s economy with estimated valuation of USD 101 billion in 2020 and is projected to reach a valuation of USD 133 billion by 2026. With the fast-paced growth of the construction industry also comes with the increasing number of construction disputes.

Construction disputes are as such highly complicated due to their technical nature. The common factors that can trigger a construction dispute may include amongst others:

  • Delays in the work progress
  • Non -payment of part payments or the final accounts
  • Disputes concerning variations
  • Defect liability and quality issues
  • Breach of contract
  • Back -to-back payment terms

Large-scale construction projects in the UAE follow the FIDIC principles in terms of contract construction. FIDIC stands for International Federation of Consulting Engineers (commonly known as FIDIC, acronym for its French name Fédération Internationale Des Ingénieurs-Conseils), which is an international standards organization for engineering & construction, and best known for FIDIC contract templates for construction.

When discussing construction disputes, it goes without say that it is best suited to avoid potential disputes in the first instance by ensuring that clear contractual terms are entered into between the parties as per industry standard and FIDIC principles. The Construction industry being highly technical is it essential for keen legal acumen is needed in handling matters concerning bonds, liens, finances etc. Along with it, the parties must include provisions for disputes resolution via litigation or alternative dispute resolution in the form of mediation and arbitration. An ineffective dispute resolution clause can potentially tie down the parties to costly as well as even parallel and lengthy litigation process.

The Dubai court have recently issued new guidelines, that provide a clearer process in terms of handling construction disputes in the emirate. Pursuant to the same, a claimant in a construction dispute is required to support his claims at the time of filing the same through a consultant report issues by one of the Dubai court’s listed experts. Such experts being skilled in the construction industry would be able to evaluate the claim and provide their final report which is to be now submitted before the Court substantiating the claim. The consultant report often supports the fact finding by referring to supporting documents and evidence and hence they have a high value in terms of evidence before the courts. The new changes are expected to speed up the court process because it will now make the statement of claim clear and straightforward by narrowing the points of conflict to the most relevant and accurate point.

The UAE Construction industry has expanded immensely recovering from the impact of the 2007-2008 global financial crisis. It has faced and overcome internal and external challenges to reach the pedestal today. With practical and innovative dispute handling measures being introduced recently would immense help in further strengthening this sec.

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