Concurrent Delay Under UAE Laws: Litigation Perspective
Real Estate & Construction and Hotels & Leisure
Delay analysis is crucial in most construction disputes, particularly due to the legal liability that follows such analysis.
Law Update: Issue 369 - Real Estate & Construction and Hotels & Leisure
Ahmad GhoneimPartner,Dispute Resolution
Delay analysis is crucial in most construction disputes, particularly due to the legal liability that follows such analysis. The party who can successfully demonstrate that any delay in completing the project was not attributable to them, will likely be the party entitled to compensation, including prolongation costs, and head office expenses.
However, in many construction disputes, it may transpire that both the contractor and the employer have some responsibility for the project delay (referred to as “concurrent delay”) and so, it is important to consider the legal position for concurrent delay and the parties’ legal liability in this scenario.
In this article, we consider the issue of “concurrent delay” and the legal implication under UAE law.
While there is no unified definition of concurrent delay under UAE Law or within the construction industry, it is generally accepted that concurrent delay exists where two or more delay events, one caused by the employer, and one caused by the contractor, occur at the same time and affects the critical path of the project. There are certain principles which help to determine when exactly concurrency takes place, such as, the dominant cause doctrine, and the But For Test. Additionally, the Society of Construction Law (“SCL”) has issued a protocol that provides a similar definition for concurrent delay:
“True concurrent delay is the occurrence of two or more delay events at the same time, one an Employer Risk Event, the other a Contractor Risk Event, and the effects of which are felt at the same time. For concurrent delay to exist, each of the Employer Risk Event and the Contractor Risk Event must be an effective cause of Delay to Completion (i.e. the delays must both affect the critical path). Where Contractor Delay to Completion occurs or has an effect concurrently with Employer Delay to Completion, the Contractor’s concurrent delay should not reduce any EOT due.”
The SCL’s latest protocol adopts the dominant cause doctrine to define and determine whether or not concurrent delay has occurred. According to the SCL Protocol, where there is more than one delay event which has affected the critical path of the project, but one of the delay events was the dominant cause for the delay, then all the other delay events should not be considered truly concurrent delay events.
As previously mentioned, UAE law does not specifically define concurrent delay, and the SCL’s protocols do not constitute UAE law, nor are they binding on the parties, unless expressly agreed to the contrary.
The Abu Dhabi Cassation court asserts that if there are several reasons for the damage caused by delay, then the party responsible for the “main and true reason” behind the damage shall be solely liable to pay compensation. This liability does not extend to any other party who may have committed minor acts that would not, by their own nature and under normal circumstances, lead to such damage.
The key question here is: if a party to a construction contract is able to evidence before an onshore UAE Court that both the employer and contractor are jointly liable for the delay to a project, how would the Court approach compensation claims? Is the dominant cause doctrine recognised under UAE Law?
In a recent judgment issued by the Abu Dhabi Court of Cassation in 3 October 2023 (the “ADCC”) (Case Nos. 856 and 916 of 2021 dated 3 October 2023), the ADCC highlighted and explained certain pertinent legal points regarding the approach to compensation.
In this case, the ADCC referred to Article 292 of the UAE Civil Transaction Law (Federal Law. No. 5 of 1985) (the “UAE Civil Code”) and highlighted the general rule for any compensation claim which is that, any compensation to be awarded shall cover the actual damages and loss of profit (if any). Articles 282, 283 and 284 of the UAE Civil Code provide that where a party is affected by damage caused by another, the latter is legally liable to pay compensation, even if he/she is found to be irrational, and irrespective of whether the damage was direct or indirect. This is confirmed by the Explanatory Memorandum for the UAE Civil Code which states this to be the case irrespective of whether it relates to a positive or a negative act. However, if the damage resulted from several direct and indirect acts committed by more than one person, then those responsible for the direct act(s) shall be liable to pay compensation, unless the indirect act on its own, would have led to the same damage.
On that basis and in the context of concurrent delay, if the onshore UAE Court is satisfied that both the employer and the contractor caused delay to a project, it will likely find that both parties are responsible for the consequences of such delay. Article 290 of the UAE Civil Code stipulates that the judge may, at its own discretion, reduce or waive the compensation if the affected party contributed to or increased the damage by its own act. However, it is pertinent to note that the usual legal test for determining liability for a harmful act will apply. As such, the three elements of civil liability must be established: (1) fault, (2) damage, and (3) causal link.
In Case Nos. 856 and 916 of 2021, the ADCC held that, where there are several causes of the damage, the party responsible for the main and true cause shall be solely liable to pay compensation for the same. Any other party who may have committed minor acts that would not, by their own nature and under normal circumstances, lead to such damage would not be liable. However, where the Court is satisfied that the affected party by its own act contributed to or increased part of this delay/damage then, liability should be apportioned between the parties according to their responsibility for the delay.
This ADCC judgment affirms that the onshore UAE Court would likely adopt the apportionment approach where there is evidence of concurrent delay.
Where there is evidence of concurrent delay, the onshore UAE Courts would likely apportion liability for the delay between the contractor and the employer according to their percentage of responsibility for the delay.
The ADCC has made clear that, where there are several reasons for the damage caused by delay, then the party responsible for the “main and true reason” behind the damage shall be solely liable to pay compensation. This liability does not extend to any other party who may have committed minor acts that would not, by their own nature and under normal circumstances, lead to such damage.
For further information,please contact Ahmad Ghoneim.
Published in June - July 2024
