mARCH 2012 www.lawyer-monthly.com

either be claims by the Unit Owners and Owners Associations or claims by the Developer.

(A) Claims by the Unit Owners/ Owners Associations

Article 26 of Law 27 states that the Developer remains liable for 10 years from the date of a Project’s completion certificate to repair and cure any defects in the structural elements of the Project notified to the Developer by the Owners Association or a Unit Owner.

Article 26 also explains that the

Developer remains liable for 1 year from the date of the Project’s completion certificate to repair or replace defective installations in the Project. Article 26 expressly states that this includes mechanical and electrical works and sanitary and plumbing installations.

If the sale/purchase agreement

between the Unit Owner and the Developer sought to reduce those time periods, Law 27 supersedes the agreement.

Further, under the UAE Civil Code,

the combination of Articles 254 and 544 allows the Owners Association and the Unit Owners to argue that they are entitled to take action against the contractor for breaches of the contractor’s obligations under the contract between the Developer and the contractor (even though the Owners Association/Unit Owners are not a party to that contract).

As mentioned above, though, given the

comparatively low recovery rates of service charge, the Owners Association may not have funds to pursue a claim. Flexible fee structures may be required in order to assist the Owners Association in enforcing its rights.

(B) Claims by the Developer

Under the UAE Civil Code, the Developer has a claim against the contractor and the supervising architect for ten years from the date of delivery of

the work if either (i) the building suffers total or partial collapse or (ii) there is a defect that threatens the stability or safety of the building. The contractor/ supervising architect cannot contract out of this liability.

The developer’s remedy is

compensation – and crucially the obligation to compensate applies even if (a) the building collapse/defect arises from a defect in the land or (b) the developer consented to the construction of the defective building.

This concept of strict liability is also

very important when we consider the projects that were started, but then moth-balled as the financial crisis really bit. Some of those projects are now being re-started. The years of exposure to the elements may have degraded the construction to an extent that remedial works are required even before the “construction proper” can be restarted.

Q

what legislative changes do you feel there is a need for?

Whilst the UAE has one of the highest carbon footprints per head of population in the world, it is seeking to be a world leader in solar energy and other renewable energy resources. (This is perhaps most notable in the Masdar City project in Abu Dhabi.) As part of this drive to make the UAE greener, we may see the introduction of more comprehensive legislation reducing carbon emissions. This would in turn impact on the construction industry, potentially in relation to requirements for carbon neutral buildings.

In November 2011 the jurisdiction of

the courts in the Dubai International Financial Centre (the DIFC) (one of Dubai’s free zones) was significantly expanded. Broadly speaking, the jurisdiction of the DIFC Courts had previously been limited to civil disputes involving or connected with the DIFC. The change in the law amends these

Shahram Safai ssafai@afridi-angell.com Legal Focus 61

jurisdictional limitations by allowing parties to agree expressly in writing to have their dispute determined by the DIFC Courts (so long as no final judgment has been issued by another Court). The legal system of the DIFC Courts is based on the English system, with proceedings taking place in English. Proceedings in the Dubai Courts are in Arabic, and largely through the submission of a series of written documents. Accordingly, it is anticipated that the DIFC Courts will become an increasingly popular forum for dispute resolution, notably for foreign companies trading and working in Dubai. Traditionally, Dubai’s construction disputes have been resolved by arbitration before the Dubai International Arbitration Centre (DIAC). It remains to be seen if the DIFC Court expansion will impact on the DIAC. LM

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