Law and regulation of concurrent delay in the UAE

While concurrent delay is a relatively underdeveloped concept in the United Arab Emirates (“UAE”), employers and contractors are becoming increasingly willing to assert it in an attempt to defeat claims for extensions of time and liquidated damages respectively.

There is no definition of concurrent delay referred to in UAE legislation or case law.

Under UAE law, there are no statutory rules dealing with delays and/or the allocation of risks and responsibilities in the event of concurrent delay arising. Further, as a civil law system, there is no established body of case law dealing with the treatment of concurrent delay. 

Potential claims relating to concurrent delay are often argued on the basis of the general legal principles contained in Federal Law No. 5 of 1985 (the “Civil Code”). The Civil Code arguably provides courts and arbitral tribunals with a high degree of flexibility when determining liability for concurrency and is often used as a basis to promote an apportionment approach:

• Article 290 states: “[i]t shall be permissible for the judge to reduce the level by which an act has to be made good or to order that it need not be made good if the person suffering harm participated by his own act in bringing about or aggravating the damage.”
• Article 291 states: “[i]f a number of persons are responsible for a harmful act, each of them shall be liable in proportion to his share in it, and the judge may make an order against them in equal shares or by way of joint or several liability.”

These articles arguably permit the court/tribunal to assess the causes of competing delays and apportion responsibility for these between the parties. These provisions can in turn be complimented by other articles of the Civil Code:

• Article 246(1), which requires that contracts must be performed in a manner consistent with the requirements of good faith. This principle essentially allows considerations of fairness and common sense to be applied to situations where concurrent delays have arisen in relation to a contract. This could be used to argue that both parties’ contribution to a delay period should be taken into account when assessing the associated time and costs consequences. 
• Article 106, which generally precludes a party from unlawfully exercising its rights. This provision can be relied upon by contractors seeking to avoid the application of liquidated damages in circumstances where concurrent delays have arisen. For example, it can be argued that the application of liquidated damages by an employer (which had contributed to the delays), would be an unlawful exercise of its rights.
• Article 318, which is generally regarded as a prohibition against unjust enrichment. Again, this could be relied upon by both parties to argue that if compensation associated with a concurrent delay were paid, the recipient would be unjustly enriched; which is not permissible.

Reading these provisions together, there is a plausible basis for an apportionment approach to be applied to concurrent delays as a matter of UAE law. 

That being said, there is no guidance as to how any delays or costs associated with concurrent delay should be apportioned, as such, this issue will be entirely at the discretion of the court or the tribunal.  

As highlighted above, while the issue of competing causes of delay and concurrency are not expressly addressed under UAE law, it is commonly argued that the general principles contained in the Civil Code support an apportionment approach.  

UAE law does not provide for any specific rules for evidence as to causes and/or periods of delay. In particular, there are no officially accepted types of delay analysis. Furthermore, if this issue is not dealt with by the contract then disputes as to the correct method often arise.

In such circumstances, each of the parties will usually present independent opinions issued by delay experts who will adopt their own preferred method of analysis. 

In arbitration, the tribunal will generally determine which method of delay analysis (and consequently which expert opinion) it prefers. However, in disputes before the UAE courts, a court expert will generally be appointed who may choose to disregard any third party reports in favour of his/her own assessment

Article 257 of the Civil Code states: “[t]he basic principle in contracts is the consent of the contracting parties and that which they have undertaken to do in the contract.” This reflects the general principle that the parties have freedom of contract, provided that the terms agreed do not conflict with the law and are not contrary to public order or public morals. 

As such, a contract term which clearly provides that one or other party will take the risk of concurrent delay should be effective in the UAE

An event that is at the Contractor’s risk under the contract (a “Contractor Risk Event”) will result in five weeks delay to completion, delaying the contract completion date from 21 January to 25 February. Independently and a few weeks later, a variation is instructed on behalf of the Employer which, in the absence of the preceding Contractor Risk Event, would result in delay to completion from 1 February to 14 February.

7.1 Is the Contractor entitled to an extension of time in respect of the variation? If so, for how long?

In this case, the contractor has accepted responsibility for Contractor Risk Events. As such, it is liable for the delay from 21 January to 25 February. 

However, the Civil Code arguably permits the court to apportion responsibility where competing delay events have occurred:

• Article 290 – the court can reduce the obligation to complete on time if the employer participated in the harm suffered. 
• Article 291 – where the employer and the contractor are responsible, they shall be held liable in the proportion of their share. 

As a result it is arguable that the contractor should be awarded an extension of time for the period between 6 February and 20 February. Otherwise, the contract would not be operated in accordance with the requirements of good faith, the employer could be viewed as unlawfully exercising its rights (e.g. by applying LDs when it contributed to the delay) and there could be an unjust enrichment of the employer if it obtained LDs in circumstances where it had contributed to the delays which arose.

7.2 Assuming the Contractor is contractually entitled in principle to recover delay-related costs relating to the variation, for what period (if any) could it recover those delay-related costs?

Each party would have competing arguments which would be at the discretion of the court or tribunal.

Taking into account Article 290 and 291, along with good faith and unjust enrichment – it would be arguable that the contractor should not be awarded delay costs in these circumstances. Equally, LDs should not be applicable for the period of delay caused by the employer.