Preparing And Submitting Construction Claims In Dubai - A Changing Landscape

Rossendale, United Kingdom (PressExposure) June 21, 2009 -- In the past few years the world has witnessed a construction boom of almost unprecedented proportions taking place in Dubai. Plans for 1km high skyscrapers, underwater hotels and a galaxy of man-made islands have fuelled a much deserved fascination with the Emirate's grand designs. Due to Dubai's insatiable appetite for development and up until recently its bottomless pot of gold, it is perhaps not surprising that few disputes concerning claims for additional time and payment ever survive for very long.

Perhaps even culturally, negotiated ‘win-win' settlements are much more consistent with the way in which business is conducted in Arab countries. And, up until recently developers had much more liquidity, the ability to draw down vast funds, and greater leverage based on a seemingly endless pipeline of new projects.

Frequently, potentially major disputes were ultimately settled over coffee or in the ‘majlis'. This relative ease with which a negotiated settlement could be attained gave rise to a further sub-culture, one in which claims for additional time and compensation would not be adequately particularised or reasonably substantiated. Theoretical or ‘hypothetical' forms of delay analysis, and global approaches to the assessment of additional payment were relied on in many (but not all) cases.

Anecdotally, Contractors might have submitted comparatively weak claims more as a basis for negotiation, and would frequently recover either an adequate portion of the claimed extension of time, or an award of time without money, and the parties would continue their working relationship on the project and the many ensuing further projects thereafter.

Consequently, whilst robust and well particularised claims are not unheard of in Dubai, many contractors have become accustomed to preparing and tabling ‘thin' submissions in the aim of facilitating a negotiation. Furthermore, few have experienced at first hand the bruising reality of demonstrating entitlement in tribunal proceedings.

Since the global recession landed in Dubai (and many other parts of the Middle East for that matter) in November of last year, liquidity has deteriorated into a state of gridlock, creating an unprecedented cashflow crisis. As many of the ongoing and planned future projects were being cancelled or postponed, Employers experienced significant reductions in their ability to apply leverage in terms of negotiating and settling disputes. At the same time however, due to a chronic inability to ‘deal out', the same Employers - and their certifiers - have never had such a great need for reasons to not pay, whether such reasons are contractually legitimate or otherwise.

Contractors who submit weak, poorly substantiated, or ‘summary' claims for additional payment frequently gift the Engineer or Employer with many of the reasons they so desperately need to justify a refusal to make reasonable awards, more so in the many instances where the Employer has the final word on any determination by the Engineer.

A good number of ongoing major disputes in Dubai are being very well stewarded by extremely talented and competent people within the parties' management teams, seeking and acting on good advice provided by consultants and legal advisers. However, old habits die hard, and many Contractors - and their consultants - too readily advocate the old approach of preparing and submitting ‘negotiation documents' - little more than a theoretically framed ‘complaint' supported by a schedule of correspondence - as opposed to well formulated and particularised claims, in the hope that a deal with the Employer will be achieved.

My colleagues and I at Driver Consult are becoming increasingly involved in matters where previously prepared and submitted claims for additional time and/or payment have been rejected outright by the Engineer or the Employer, and have had to be extensively re-prepared and drafted to a level which provides both a firm platform for negotiation and a solid launch pad for any ensuing formal dispute resolution procedure.

Frustratingly, whereas carrying out a fully robust form of delay analysis or properly ascertaining and particularising claims for additional payment can be expensive, the associated costs are not nearly as prohibitive as those that are wasted in failed ‘punts' with weak submissions.

Moreover, in cases where the events and corresponding losses are analysed and ascertained as the works proceed, in ‘real-time' as it were, the associated costs can be minimised to a level where they are practically insignificant when considered in the context of the amounts claimed.

Construction professionals in Dubai and many other parts of the Middle East have up until recently relied extensively on ‘cheap and cheerful' means of formulating claims for additional time and money - but such methods are scarcely cheap or cheerful. As the region deals with the hangover following what could possibly be the biggest, longest and most exciting party the world has ever seen, the professionals working within the market are slowly and steadily realising that the old ways of dealing with claims are no longer fashionable with Employers and Developers.

© Written by Andrew Mellor. Copyright and ownership of this material rests with Driver Consult Limited.

About Driver Consult Ltd.

Driver Consult is a leading provider of dispute avoidance, dispute resolution and consultancy services to the construction and engineering industries. Formed in 1978, our history endows us with the knowledge to understand our clients' business and contracts, and the experienced and appropriately qualified staff to deliver the optimum resolution to their contractual issues and business needs.

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Press Release Submitted On: June 20, 2009 at 10:31 am
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