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mARCH 2012 60 Legal Focus
Construction Law UAE
Despite the recent economic difficulties, the UAE has recently seen a number of key deals announced, including the government of Saudi Arabia having signed a hefty contract with a Saudi-Spanish consortium to develop phase II of the Haramain High Speed Rail project in Saudi Arabia. To find out more about the construction industry in the UAE and the legal issues that surround it, Lawyer Monthly speaks to Shahram Safai, partner and head of the real estate department at Dubai-based law firm, Afridi & Angell.
Q
Can you briefly introduce yourself and your firm?
I have extensive experience advising on joint ventures, shareholder transactions, purchase and sale transactions, hotel management structuring and transactions, leasing, jointly owned property strategies and documentation, and related court cases and arbitrations. I regularly represent master developers, sub-developers, property owners, architects, engineers, contractors and government entities in all stages of the real estate and construction processes.
Afridi & Angell is one of the most
established law firms in the UAE, having been in the region for 35 years. Afridi & Angell’s offices are in Dubai, Abu Dhabi and Sharjah in the UAE. The firm conducts a general corporate, commercial and financial legal practice and international practice specializing in the Middle East, North Africa and South Asia.
Our clients include multinational corporations, businesses, entrepreneurs,
financial institutions and governments who seek advice in respect to their domestic and international affairs, including cross-border transactions and inward and outward investment activities.
Q Q
Please give me an overview of construction law in your jurisdiction currently.
Following the global financial crisis, the extent of construction in Dubai (and in the UAE generally) has been curtailed. Whilst some building work is taking place, this tends to be the completion of projects already started, as opposed to the launch of brand new developments. The majority of construction law work is therefore contentious, and focused on resolving disputes about the delays and cancellations of projects.
what are the main challenges you face?
Under Dubai’s Law 27 of 2006 (Law 27)
and the Directions issued pursuant to Law 27, a mechanism for the charging and recovery of service charge for the management and maintenance of common areas by Owners Associations was introduced. The concept that, even after the entire purchase price has been paid for a property, the Unit Owner would be required to make ongoing payments to be made is quite alien to many Arab countries.
Perhaps in part due to this cultural
issue, the recovery rates for service charge have been comparatively low. Of course this impacts on the standard to which buildings are maintained. The elements in Dubai (be it the extreme heat or the sand blasting in from the desert) age buildings more rapidly than in cooler countries. These two issues combine such that any defects in construction that might exist are more likely to become evident earlier into the building’s lifespan.
In short, the topic of claims for
construction defects is likely to be a major talking point in Dubai in the coming years. The claims will, broadly speaking