Construction Law and Arbitration Guide in the Gulf

Vicarious performance is quite common in construction projects. Vicarious performance refers to the performance of contract or part of it by a third party. It is quite rare for contractors to perform construction contracts without receiving help from specialized subcontractors especially in cases of purpose-built premises such as hospitals, factories, etc. Such projects require diversity of expertise that one contractor rarely acquires. Construction projects are known for their multi-contractual relations. Under the traditional construction procurement, employers start by signing a service agreement with an architect or designing engineer. The latter prepares the drawings, specifications, bill of quantities and any other particular documents. The tender process starts with the help of the engineer who may have a significant role in selecting the right contractor for the project. The employer will then sign a construction contract with the contractor who will likely subcontract part...

“ It is unwise to pay too much, but it’s worse to pay too little. When you pay too much, you lose a little money - that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do. The common law of business balance prohibits paying a little and getting a lot - it can’t be done. If you deal with the lowest bidder, it is well to add something for the risk you run. And if you do that, you will have enough to pay for something better. ” John Ruskin, 1860 (quoted in Accelerating Change)

A new Dubai law to establish a dispute resolution authority in the DIFC A new Dubai Law (Dubai Law No. 7 of 2014) was enacted by His Highness Sheikh Mohammed Bin Rashid Al Maktoum and has come into force on 21 May 2014 (the "Law"). A statement was made by His Highness on 27 May 2014 announcing the Law and its objectives although a copy of the Law has just become available. The Law amends certain provisions of the law that established the Dubai International Financial Centre ("DIFC") (Dubai Law No. 9 of 2004) by mandating the establishment of a DIFC Disputes Resolution Authority that will be comprised of the existing DIFC Courts and what is referred to as the Arbitration Institute together with any other special purpose DIFC tribunals and dispute resolution bodies. Background The DIFC was established in 2004 pursuant to a number of UAE Federal Laws and Dubai Laws as a financial free zone within Dubai. A body called the DIFC Authority was established to overse...