Primer on UAE Civil Code_Copyrighted2

8/13/2019 Primer on UAE Civil Code_Copyrighted2

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Indian Institute of Quantity Surveyors

Review of UAE Law in contextof Construction law provisions

28 th September 2013

Presented by:R. Venkat, FCIArb, FCMALLM (Const Law), B.Eng, C.Eng

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Review of UAE Law in contextofConstruction law provisions

Civil

Question: What is Construction law?

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ConstructionEngineer

Lawyer

Constructionlawyer

Construction law

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NO ONE LIKES TO LITIGATE

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UAE CIVIL CODE;WHY IT IS RELEVANT TO US?

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FIDIC 99Clause 1.4 Law and LanguageThe Contract shall be governed by the law of thecountry (or other jurisdiction) stated in the Appendix tothe Tender

Contracts in UAE are mostly administered by FIDIC87 and FIDIC 99 with amendments.What do they say on local law?

FIDIC 87

Clause 5.1 Language/s and Law(b) the country or state the law of which shall applyto the Contract and according to which the Contractshall be construed.

Law of the Country is like a safetynet . Venkat


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UAE CIVIL CODE;WHY IT IS RELEVANT TO US?

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Civil code on the applicability of the local law

The law of UAE will prevail if there is a conflict of laws (Art10)

Ignorance of the provisions of the law is no excuse (Art 29).

A mandatory provision [of law] shall take precedenceover a duty created by a contractual stipulation (Art 31)

Residency or where the Contract was concluded will

decide the applicable law (Art 19(1))

The lex situs of the place in which real property issituated shall apply to contracts made over such property

(Art 19(2).

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PROPOSED WALK-THROUGH

Categories of Law Common law Versus Civil law Middle eastern law

What is UAE Civil Code? Does it address all Construction related

issues? Is it only based on Sharia Law? Law of Contract; Important provisions

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CATEGORIES OF LAW

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Common law

Civil law

Case law

Public law

Private law

Criminal law

Contract law

Tort law

Constructionlaw

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CATEGORIES OF LAW

Legalsystems

Civil law

Commonlaw

Source of law

Case law

Statute

Regulation

Civil law

Criminal law

Applicability

Private law

Public law

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Legal tradition which has its origin in Roman law

Codified in the Corpus Jur i s Civ i li s of Justinian(Eastern Roman emperor; 529 AD)

Civil law is fully codified, highly systemized andstructured

Broad general principles without setting out thedetails

Civil Law legalsystem

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Roman law

Code NapoleonFrench Influence

Circa 1800

Germanic family(Enacted in 1900)

Belgium,Luxembourg,Spain, Louisiana

and Quebec

Austria,Switzerland,Turkey, Japan,

Korea and Taiwan

Civil Law legal system

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Refers to legal systems that adopted English legalsystem

Evolved in England from the 11 th Century onwards

Established by William the Conqueror

Principles appear in the reported judgments (most part!)

Scope for a discretionary approach

Rules seem to be more specific and detailed

Common Law legal system

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COMMON LAW SYSTEM COUNTRIES

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Basis of private law for

England, Wales, Ireland, All states of USA (except Louisiana) Canada (except Quebec) and Former colonies of British Empire

(India, Pakistan, Malaysia etc.,)

USA is the main receiver and considerablechanger of English Common law

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Criminal law is aspect of public law

Relates to conduct which the State considersinappropriate

Involves enforcement including sentence to prison

Public Prosecutor prosecutes the defendant (accused)

Civil Law and CriminallawEvery legal system will have both Civil law and Criminal

lawNot to be confused with Civil law legal systemCivil law is to settle dispute between two individuals.

Claimant Sues the defendant. Its a private law

Examples: dispute in a sale of land, debt recovery,contract

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What is UAE Civil Code? Does it address all Construction relatedissues?

Is it only based on Sharia Law?

Law of Contract; Important provisions

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WHY WE SHOULD KNOW THE DIFFERENCE

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..because of the presence of international law firms(in UAE) with common law roots, many contractswhich have been drafted in the UAE appear to havebeen influenced by common law principles . This hascreated difficulties in the application of the law tothese contracts by the courts of the UAE since

judicial authority does not recognize some of theprinciples or the practices of the common law

system

Leading UAE Lawyer Mr. Essam Al Tamimi

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Time at large Prevention principle

Fitness for purpose Pre estimated LDs

Established Common law principles are not recognized inUAE

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Common Law Versus CivilLaw

1. Source of law2 . Principle of precedents3 . Interpretation of Contracts

4 . Judicial procedure

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COMMON LAW CIVIL LAW

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1. Source oflaw

Mainly from case law fromprevious judgments.Statutes are also referred.

Statutes are detailed with

definitions and containlengthy enumerations ofspecific applications andexceptions

Mostly based Codifiedlegislation. Case law ismostly irrelevant

(notable exception FrenchTort law which is fully basedon case law)

Codes are concise, statebroad principles only

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2. Principle of precedents

Judges are subject todoctrine of stare decisis

Decisions from UpperCourts must be respectedand followed

Hierarchical structure

Judges are bound byCode and facts and noton precedents!

Court of Cassation judgments are referredfor understanding of law

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3. Interpretation ofContracts

Respects freedom of Contract

Primary focus on the written

words in the contract.

Parol evidence

prevents a party to a written

contract from presenting extrinsicevidence that contradicts or addsto the written terms of the contractthat appears to be whole.

Interest of fairness (as againstfreedom of contract)

Primary focus on the wider

context and intentions of theparties

Not limited to literal meaning ofthe terms. Evidence ofnegotiation is admissible

Mandatory provisions cant beexcluded

Tribunals have power to rewritethe parties agreement Venkat


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4. Judicial procedure

Parties collect evidenceand present

More reliance onevidence of fact, oralarguments

Parties appoint experts Judges are appointed

from senior lawyers inpractice

Judge plays main role incollecting evidence

Trials are based onwritten evidence

Court appoints the

experts Judges are separately

trained and appointed

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Reso lu t ion Chemica ls L td v H Lu ndb eck A/S Court of Appeal (Civil Division) 29 July 2013

Where Reported [2013] EWCA Civ 924; Official Transcript

Summary: The Court of Appeal re-stated the test to be applied when assessing whetherthere was privity of interest between a new party and a party to previousproceedings, so as to prevent the new party litigating the same matter.

Abstract : The appellant patent proprietor (L) appealed against a decision ([2013]

EWHC 739 (Pat)) that the respondent company (R) was not precluded frombringing proceedings to challenge the validity of L's patent.

Appeal dismissed . (1) A judgment that a patent was valid determined issuesonly between the parties to the revocation action.

Judge: Longmore, L.J.; Moore-Bick, L.J.; Floyd, L.J.

Significant Cases CitedSpecial Effects Ltd v L'Oreal SA [2007] EWCA Civ 1; [2007] Bus. L.R. 759;

Legislation CitedPatents Act 1977 (c.37) s.65; Patents Act 1977 (c.37) s.72

S AMPL

E

UK

C

OURT

J

UDGMENT Venkat


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SAMPLE UAE COURT JUDGMENT(IN TRANSLATION)

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Dubai Court of Cassation 240/2006 : 23 January 2007

Subject: Muqawala; Contract; Proof; Judges

Keywords:1.Muqawala; obligation - description of obligation - condition and term - condition;2.Contract - interpretation of contract; trial court - jurisdiction over questions of fact -contract - interpretation of contract;3.Proof - burden of proof; contract - effects of contract; obligation - description ofobligation - condition and term - condition;4.Contract - making of contract; trial court - jurisdiction over questions of fact - contract- interpretation of contract;5.Judges - competence;

Legislation referred to:3. Civil Code articles 243, 420, 423 and 425

4. Civil Code - articles 130, 131 and 1325. Law of Civil Procedures - article 1141. The appellant company made an offer in a letter to the respondent company, and thatoffer was met with an implied acceptance by the latter company by its carrying out theworks as set out in the letter. Thus, there was a contract made between the parties,containing the condition in the contract made between the appellant company and thehead contractor, Venkat


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MIDDLE-EASTERN LAW

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Arab countries have followed the Egyptian Civil Code.

To understand Middle east law, we need to know bit ofhistory

Ottoman empire!

Neither common law nor purely based on civilcode

No single uniform Middle East or Arab law Arab law is mixture of Islamic law and French civil

code

Egyptian Civil Code is the first Arab law enacted

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OTTOMAN EMPIRE

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Created by Turkishtribes in Anatolia.

One of the mostpowerful states inthe world during the15th and 16thcenturies.

Spanned more than600 years and cameto an end in 1922 .Empire included modern Hungary, Serbia, Bosnia, Romania,Greece, and Ukraine; Iraq, Syria, Israel, and Egypt, North Africa asfar west as Algeria; and most of the Arabian Peninsula.

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The Ottoman government compiled a uniform Civil Code called " Majella

After the fall of Ottoman Empire, France and Britain took over different Arab countries.

Influence of French Civil Code grew in the Arab countries.

Attempt to reconcile between the Sharia and the Western laws hasbegan.

The Egyptian Civil Code of 1948 was the first successful product.

Legal scholar and professor Abd a l- Razzq al - Sanhr (1895-1971)is the author of Egyptian Civil code.

His twelve-volume commentary on Civil code is a magnum opus( Al-Was f shar al -qnn al -madan al- jadd )

LEGAL SYSTEM IN MIDDLE-EAST

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LEGAL SYSTEMS AROUND THE WORLD

29CommonlawCivillaw

Middle eastern law Venkat


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Leaning (falling?)Tower of Pisa

Tourist View

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Leaning Tower of Wanaka Leaning Tower of AbuDhabi

True leaning towers of theworld

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Leaning (falling?)Tower of Pisa

Tourist View

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Leaning Tower of Pisa

Contractor sview

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LAWYERS VIEW

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Leaning Tower of Pisa

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LAW SYSTEMS- TIME LINE

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Roman civil law 6 th CenturyEnglish common law 11 th CenturyCode Napoleon 1800 ADGermanic laws 1900 AD

Egyptian civil law 1948 AD

Formation of UAE 1971Civil Code (Federal law 5) 1985Civil Procedure Code, Federal Law No.(11) 1992Commercial Transactions Act 1993DIFC Law 2004

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GLANCE AT UAE CIVIL CODE

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The Law of Civil Transactions of the State of UAE

Decreed under Federal law 5 of 1985

Commonly known as Civil Code

Covers all Civil transactions like Contract for work, Sale etc.,

The other complimentary law is the Commercial Transactions Actdeclared under Federal Law No. 18 of 1993

Civil Code remains the baseplate both of commercial and ofcivil law in the UAE.

Civil Code that is the most referred law in Court of Cassation judgments.

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WHAT DOES CIVIL CODE COVER?

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Formation of Contract What constitutes offer and acceptance The capacity of the parties Effect of fraud and mistake

Interpretation of agreements The liberty to withdraw Remedies for breach and Numerous general questions of contract law

Important Any Clause that purport to exclude a partys right toapply to Court for excessive hardship is invalid underUAE Law.

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DOES CIVIL CODE SUFFICIENT?

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General complaint

Civil code contains just 25 articles on ConstructionContract.

The Billions of dirhams being spent on buildings areworthy of greater attention than just 25 short articles inthe Civil Code.

Comment by a lawyer trained on CommonlawIs it true?

Let us use an analogy. Columbus and Civilcode!!

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COLUMBUS AND CIVIL CODE

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Christopher Columbus Adventurous sailor, tough negotiator and shrewd businessman

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Wanted to reach India by


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ysailing westward from SpainLanded in Bahamas instead

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Vasco da G amas maiden voyage to India(1498)

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FIRST VOYAGE OF COLUMBUS (1492)

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Landed in Bahamas which he thought was Japan .Then went to Cuba which he declared as China

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DISCOVERY OF AMERICA

45He never saw the main land of America, until his Third Voyage! Venkat


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UAE CIVIL CODE COVERS THE FOLLOWING

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Formation of Contract What constitutes offer and acceptance The capacity of the parties Effect of fraud and mistake

Interpretation of agreements The liberty to withdraw Remedies for breach and Numerous general questions of contract law

1528 Articles4 VolumesContract of work, Contract of Sale, Lease, Mortgageetc.,

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COLUMBUS AND CIVIL CODE

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ConclusionDeclaring Civil code contains only 25 articles on ContractsandThe Code does not address the complexities ofConstruction Contracts is akin to

Columbus discovery of America until the thirdvoyage

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WHAT DOES CIVIL LAW EXPERTS SAY?

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It doesnt mean that bulky construction law is requiredto justify the construction boom.

The UAE Civil Code contains more or less as manyprovisions as it should without becoming over-intrusive

in the way private parties wish to distribute their tasks.

Civil Codes of most countries are generallyminimalistic

Expanding civil codes into greater detail on theintricacies of specific aspects would be deemed asinterventionist in most civil law-based jurisdictions.

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CONTRACT INTERPRETATIONCOMPARISON OF CIVIL CODES

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French civil code Quebec (Canada) Louisiana Civil Code(USA)

Art. 1156

One must inagreements seekwhat the commonintention of thecontracting partieswas, rather than

pay attention to theliteral meaning ofthe terms.

1425.

The commonintention of theparties rather thanadherence to theliteral meaning ofthe words shall be

sought ininterpreting acontract.

Art. 2045

Interpretation of acontract is thedetermination of thecommon intent ofthe parties.

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CONTRACT INTERPRETATION


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CONTRACT INTERPRETATIONUAE CIVIL CODE

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Corresponding articles from the civil codes of othercountries:

Jordan 239 and 240; Egypt 150 and 151; Syria 151 and 152

Article 265

(1)If the wording of a contract is clear, it may not be departedfrom by way of interpretation to ascertain the intention of theparties.

(2) If there is scope for interpretation of the contract, an enquiryshall be made into the mutual intentions of the parties withoutstopping at the literal meaning of the words ..

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CONTRACT INTERPRETATIONCOMPARISON OF CIVIL CODES

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French civil code Quebec (Canada) Louisiana Civil Code(USA)

Art. 1162

In case of doubt, an

agreement shall beinterpreted againstthe one who hasstipulated, and infavour of the onewho has contractedthe obligation

1432.

In case of doubt, a

contract isinterpreted in favourof the person whocontracted theobligation andagainst the personwho stipulated it.

Art. 2057

Contract interpreted

in favor of obligorIn case of doubtthat cannot beotherwise resolved,a contract must beinterpreted againstthe obligee and infavor of the obligorof a particularobligation.

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CONTRACT INTERPRETATIONWHAT DOES UAE CIVIL CODE SAY?

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This rule is adopted from Western jurisdictions.

Common law doctrine Contra Proferentem

Latin term which means against the offeror.

If a clause in a contract appears to be ambiguous, itshould be interpreted against the interests of theperson who insisted that the clause be included.

Article 266

(1) A doubt shall be interpreted in favour of the obligor.

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SHARIA LAW AND UAE CIVIL CODE


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SHARIA LAW AND UAE CIVIL CODE

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Is Sharia is the only source of UAE law?

Two different interpretations

The starting point is the UAE Constitution,

Article 7 of the Constitution says:'Islam is the official religion of the Federation and the Islamic Sharia is amain source of its legislation'.

One view is that since Federal laws shall be promulgated inaccordance with the Constitution (Article 110), any law which is does

not take Sharia as a source will be void because it violates theconstitution.

However this is a narrow interpretation.Note the construction of this Article:

Sharia is a main source not the on ly sou rce Venkat


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Sh i l d UAE i il d


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In summary

Islamic Sharia is a source of UAE law, but it is notthe only source.

Where UAE law contains a specific provision, UAEcourts will give effect to that provision.

A UAE court will pass judgment according toSharia in the absence of a provision of UAE lawcovering the issue to be determined.

Sharia law and UAE civil code

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Sharia in Constructionlaw

RibaGharar

DueProcessGoodfaith

Unjustenrichment Uncertainty

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PROPOSED WALK THROUGH


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MUQAWALA CONTRACTS

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Means a Contract to make a thing or perform a task

In simple words, Works contract or Construction Contract

Definition and Scope Article 871 to 874 Obligations of the Contractor Article 875 to 883 Obligations of the Employer Article 884 to 889 Subcontractor Article 890 and 891 Termination of Contract Article 892 to 896

25 Articles covering all aspects of ConstructioncontractsCompare Articles 646 to 676 of Egyptian Civil Code

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MUQAWALA CONTRACTS

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Article 874 A Muqawala Contract must provide description of subjectmatter of the contract, the manner of performance , periodover which the contract has to be performed andConsideration

manner of performance Method statements

description of subject matter Complete drawings and specification

consideration Contract Sum

period over which the contract .. Construction period

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MUQAWALA CONTRACTS

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Contractor obligations (briefly)

(for) Quality of materials Article 875 (to provide) tools Article 876 For any loss/damage arising from his work* Article 878 Permitted to retain the work until payment Article 879

* Except when the loss arising from his work cant be

prevented

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MUQAWALA CONTRACTS

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Mandatory Contractor obligations

Article 880(1)

Joint liability with Architect against partial/total collapse ofthe structure for TEN years.

Article 886

Obligation to notify if the quantities required to completethe work is substantially more than what is included in theContract in a Unit priced measurable contract

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MUQAWALA CONTRACTSEMPLOYER OBLIGATIONS (BRIEFLY)

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To take delivery upon completion Article 884

To pay agreed consideration Article 885 If any termination is sought, it should be done

without delay and Contractors must be paid forthe work done Article 886(2)

In a lump-sum contract, Contractor is entitled for additionalpayment only if the variation work is undertaken with theconsent of Employer

Article 887

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MUQAWALA CONTRACTSEMPLOYER OBLIGATIONS (CONTD)

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Contractor is entitled fair remuneration for the work done byhim even though there is no consideration specified in theContract Article 888

Quantum merit in Common lawSerck Controls Ltd v Drake & Scull Engineering Ltd[2000] (TCC)

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SUBCONTRACTING

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SUBCONTRACTING

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Article 890

Subcontracting is permitted unless

It is prevented by a condition in the contract

Or The nature of work requires that it should be performed bythe Contractor

The Main Contractor is still liable to the Employer(Article 890 (2))

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SUBCONTRACTING

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The Subcontractor shall have no claim against the Employerfor any outstanding monies from the first contractor unless,There is an assignment by the first contractor to the Employer

Article 891

Remember the Common law doctrine Privity of Contract

Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd

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TERMINATION OF CONTRACTS

A Muqawala contract can be terminated in three waysUpon completion of work ( actually it is completion !)Upon cancellation of the contract by mutual consentBy order of the court Article 892

A party injured by the cancellation may make a claim forcompensation from other party to the extent allowed bycustom. Article 895

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Concepts that are distinctly different from


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Common law doctrines

Statutory obligation of good faith (Article 246(1)) Statutory imposition of joint and several liability (Art 291) No requirement for Fitness for purpose. Obligation only to use reasonable skill and care (Art

383) Un just enrichment (Article 106) Judge has the power to alter the Liquidated damages

(390) Genuine pre-estimate is of less importance

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THEEND

NOT

The Journey has justbegan!

Questions?

A presentation by Venkathttp://www.linkedin.com/in/venkat1964

Please take few minutes to fill a feedback formhttp://www.surveymonkey.com/s/TQP55KX

Thank You!

Venkat

COURTS VIEW ON CONTRACT ISSUES
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COURT S VIEW ON CONTRACT ISSUES

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Validity of Contract Privity of Contract Governing law Rules of interpretation Non-performance of Nominated subcontractors Comment on the back to back obligation

Lump-sum subcontracts Breach of duty by subcontractor Conditional payment provisions Variation works Set off in payments Liquidated damages

Over 100s of Case law from Dubai Court of Cassation, Abu Dhabi SupremeCourts

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Concept of prevention principle Defects liability Time bars and condition precedent notice requirements Force majeure/Doctrine of unforeseen circumstances Duty of Good Faith Right to suspend work

Burden of proof Liens to secure payments Termination rights Unjust enrichment Role of Engineer

General concerns

Coming Soon!!

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Primer on UAE Civil Code_Copyrighted2