An Analysis of Omission, Suspension & Termination of Construction Contracts Essay

An analysis of Omission, Suspension & A ; Termination of Construction Contracts under Civil Law of Qatar & A ; UAE

1. Introduction

Qatar has a well-developed and structured legal system. The beginning of the Qatar legal system is found in both antediluvian and traditional beginnings. It is based on Islamic jurisprudence and law but has adopted many of the rules of the Napoleonic Civil Code ( French Civil Code ) . In add-on, Egyptian doctrine of jurisprudence and process ( Egyptian Civil Code ) had a great influence on the legal and judicial system of Qatar.

The State of Qatar is a traditional state ruled by Al-Thani household and the province leading being inherited by Al-Thani household since mid-19th century Qatar’s judicial history was influenced by a series of events get downing with the Ottoman business of the part in the nineteenth century. As stated in Background to legal system in Qatar by Qatar Law website “The Ottoman swayers established a system of justness based on instructions of the Hanafi school of Islamic Law. As the Ottoman Empire started to lose its clasp on its regulation in Qatar and elsewhere in the Arabian Gulf, Qatar underwent a gradual displacement towards the Hanbali school of Islamic Law under the influence of the so emerging regional power, Saudi Arabia” ( Partners, 2014 ) .

Qatar became a associated state of Britain after the 1916 pact and British legal system was established officially after the pact. The civil tribunals established by British enforced English Torahs albeit local tribunals continued to administrate a legal system based on Sharia jurisprudence ( Islamic jurisprudence ) which was the legal system in pre British epoch. This pattern created a double tribunal system that existed until recent clip in Qatar.

Modern Qatar legislative procedure began in 1961, when Law No. 1 for the twelvemonth 1961 was issued. Subsequently, several modern statute laws covering the administrative, economic and societal activities were enacted. Qatar passed the new Judicial Law No. 10 for the twelvemonth 2003 in October 2003 which revolutionized and unified the judicial system in Qatar. This jurisprudence became effectual in October 2004.

Qatar enacted a new Civil Law in 2004, supplying pertinence in regard of restriction of clip and territorial legal power. Other of import definitions such as of natural and juridical individuals & A ; rules and legal capacity to action and be sued were incorporated in to the new Civil Law. Contractual relationships in building sector were codified as Law No. ( 22 ) of 2004 with the passing of Qatar Civil Law.

Law No. ( 22 ) of 2004 Proclaiming the Civil Code was issued by H/H Hamad Bin Khalifa Al Thani, Emir of Qatar exerting the executive authorization vested under the Constitution. As stated in Qatar Law web site “Qatar Civil Code provides guidelines for the constitution of contractual dealingss and duties originating therefrom. It specifies basic elements of a contract such as consent, capable affair, and intent of undertaking. It besides deals with revocation, building and binding nature, consequence, and cancellation of contracts” ( Partners, 2014 ) .

The UAE federation consisting seven Emirates viz. ; Abu Dhabi, Dubai, Sharjah, Ras Al Khaimah, Umm Al Quwain, Ajman and Fujairah was established on 02nd of December 1971. The Constitution declares the Sharia is the chief beginning for jurisprudence in the UAE and a civil jurisprudence legal power to a great extent influenced by the Egyptian jurisprudence system which was to a great extent influenced by Gallic and Roman jurisprudence.

Commercial minutess are governed by UAE Federal Commercial Transactions Law ‘Commercial Code’ ( No. 18 of 1993 ) . Civil minutess are governed by UAE Law of Civil Transactions ‘Civil Code’ ( No. 5 of 1985 & A ; No. 1 of 1987 ) ( Whelan, 2011 ) . In the absence of any specific commissariats in Civil Code, the Islamic Sharia jurisprudence will be applied. In affairs of process, the UAE tribunals follow the Federal Civil Procedure Law ‘Civil Procedure Code’ ( No. 11 of 1992 as amended ) . Articles 872 to 896 of the UAE Civil Law 1987 ( the “ Civil Law ” ) associating to building plants, every bit good as general axioms and rules set out in the same jurisprudence, organize the footing of the legal model associating to building. Besides, UAE Commercial Transactions Law commissariats would use to the grade that the parties to a building claim could be defined as bargainers carry oning commercial concern as per Articles 6 and 11.

The general rule of freedom and holiness of contract is recognized under the Qatar Civil Code and a contract is treated as the jurisprudence of the catching parties. Natural and legal individuals are free to hold on whatever they desire, provided that their understanding does non conflict with jurisprudence, public order and morality. Verbal contracts and contracts as a consequence of behavior of the parties are largely recognized and are enforceable in tribunal subjected to set uping / turn outing the contractual-relationship.

The Civil Law besides deals with reading of contracts, contractual duties, liability for personal Acts of the Apostless, and duty for Acts of the Apostless of 3rd parties, ownership duties, surety, unfair enrichment, types of sale, rental, insurance, and rights attached to belongings, land jurisprudence, mortgage, volitions, bequest, privileges, and additions. It besides stipulates public presentation, compensation and mandatory executing, assignment of rights, invention and impossibleness of public presentation and legislative acts of restriction.

Contractors are frequently faced with employer- goaded Omission, Suspension & A ; Termination of the Construction Contracts due to fiscal restraints and other troubles encountered by Clients and Contractors in Qatar & A ; Middle East in general.

Medium to big scale public works undertakings procured by Public Works Authority of Qatar ( Ashghal ) use General Conditions of Qatar ( its ain radius signifier ) published by Contracts & A ; Engineering Business Affairs ( CEBA ) which were updated and reissued on July 2007 prepared by either in-house attorneies or external jurisprudence houses. The Qatar General Conditions of Qatar is a close resemblance of International Federation of Consulting Engineers ( FIDIC ) Yellow, Silver or Red Book contracts. The other major undertakings procured by province affiliated organisations such as Qatar Foundation, Qatar Gas, RasGas, Qatar Water & A ; Electricity board ( Kharamaa ) , New Doha Aiprt Steering Committee use their ain bespoke and “project specific” signifiers.

Where a undertaking is awarded on a ball sum footing, the 2007 General Conditions of Contract favoured by employers in Qatar topographic points much of the hazard for losingss on the contractor, except where losingss are adequately covered under the amended commissariats to the Contract. A moderately just appraisal of the General Conditions of Contract by many contractors in Qatar is that it to a great extent favours the employer. While this may be the instance, a contractor may besides be entitled to claim just alleviation in conformity with the Qatar Civil Law No. 22 of 2004.

In the above scenario, it is imperative to analyse the rights and entitlements of Clients & A ; Contractors in fortunes originating from Omission, Suspension & A ; Termination of the Construction Contracts under FIDIC 1987 alteration 4 & A ; FIDIC 1999 which are basal paperss for most of the Bespoke Conditions of Contracts in Qatar and its enforcement under the Civil Law of Qatar & A ; U.A.E.

2. Aim

Analyze the legal facets of Omission, Suspension & A ; Termination of the Construction Contracts under the Qatar & A ; U.A.E Civil Law.

3. Aims

There are four aims of this survey:

1. To place the bound of a Contractors’ exposure to the Employer in regard of Omission, Suspension & A ; Termination of the Construction Contracts.
2. To place the bound of Employer’s exposure to the Contractor.
3. Analyze the entitlements between FIDIC suit of Contracts and Qatar & A ; U.A.E. Civil Code
4. To find sensible solutions and safeguards.

4. Research methodological analysis

The undermentioned Literature was reviewed during the ab initio to determine the feasibleness of carry oning a comprehensive research on the capable thesis.

1. Binding Force of a Contract – Article 171of Law No. 22 of 2004 – Qatar Civil Code

“A contract is the jurisprudence of the catching parties, and it may non be revoked or amended, except by understanding of both parties or for prescribed by the law” ( Portal, 2014 ) .

2. Dissolution of a Contract – Article 183of Law No. 22 of 2004 – Qatar Civil Code

Article 183 provinces that “In contracts adhering on both parties and enforcing mutual duties ( synallagmatic contracts ) , where one of the parties fails to execute his duty, the other party may, upon formal notice to the former, demand public presentation of the contract or its recission, and may claim any amendss caused by such failure to perform” ( Portal, 2014 ) .

“The justice may, mutatis mutandis, find a period of grace within which the obligor shall execute his duty. The justice may besides reject the application for recission if the duty non performed is undistinguished compared with the duties considered in their entirety” ( Portal, 2014 ) .

3. Termination of a Contract of Works under Articles 703, 704 & A ; 707 of Law No. 22 of 2004 – Qatar Civil Code
4. Termination of a Contract under Articles 892 & A ; 893 of UAE Federal Law No. 2/87 – The Civil Code
5. Dissolution of a Contract under Articles 185 & A ; 188 of Law No. 22 of 2004 – Qatar Civil Code

Article 185 provinces that “When a contract is rescinded, the catching parties shall be reinstated to the place they were in anterior to the day of the month of the decision of the contract. If reinstatement is impossible, the tribunal may allow indemnity” ( Portal, 2014 ) .

Article 188 provinces that ;

• “The undertaking parties may reciprocally hold to end the contract upon its decision, provided that the capable affair of the contract remains in the ownership of either party.
• Where the capable affair of the contract is lost, damaged or disposed of in portion in favor of a 3rd party, the contract may be rescinded to the extent of the staying portion and the portion of the party” ( Portal, 2014 )

6. Dissolution of a Contract under Article 273 of UAE Federal Law No. 2/87 – The Civil Code
7. Dissolution of a Contract under Articles 267 & A ; 268 of UAE Federal Law No. 2/87 – The Civil Code
8. The adhering force of a Contract under Article 172 of Law No. 22 of 2004 – Qatar Civil Code
9. The consequence of the Contract under Article 246 of UAE Federal Law No. 2/87 – The Civil Code
10. Governing issued for the twelvemonth 2006 by Court of Cassation, Dubai

Literature survey and analytical research are my major larning methods which play an of import function in this study. Analytic research involves analysing bing instance jurisprudence, facts and information. The information will be collected from primary/secondary beginnings, interviews with industry experts and instance studies/laws.

Literature survey and analytical research have been chosen due to complex Torahs of the state and its reading by the Law experts. However, any analysis contained in this thesis is the author’s ain sentiment and shall non be construed as grounds in a tribunal of jurisprudence. This paper does non hold any legal or contractual standing in construing a binding Contract Document.

5. Scope and Restriction

The edifice building contracts stipulate express commissariats regulating the rights of one or both parties to end the contract under certain fortunes. These express commissariats are categorized as non-contractual rights and contractual rights to end a binding contract. The Non-contractual rights to end are defined as ;

1. Frustrationand this occurs when fortunes instead than the default of undertaking parties have intervened to forestall the contract being performed as intended originally. When defeat occurs, farther public presentation of the contract is impossible, illegal or radically changed from what the parties contemplated at the clip of subscribing the contract. The contract is automatically terminated one time a defeat event occurs and the parties are absolved from farther duties but accumulated liabilities remain with them. The party who is trusting on defeat commissariats in the contract must be certain of that a defeat event really occurred when warranting the ceasing of operations under the contract to avoid being in breach ( the contract is more expensive to execute is non a frustrating event ) . It is prudent that the events stipulated under force majeure clauses should non overlap with the defeat events and the events which are provided & amp ; their effects are stated in the contracts shall besides non be considered as frustrating events.

It is imperative to specify Force Majeure events in the contract and clause 19.1 of FIDIC 1999 First Edition province that the definition of “Force Majeure” as ;

“Means an exceeding event or circumstance:

( a ) which is beyond a Party’s control,

( B ) which such Party could non moderately hold provided against before come ining into the Contract,

( degree Celsius ) which, holding arisen, such Party could non moderately hold avoided or overcome, and

( vitamin D ) which is non well attributable to the other Party” ( FIDIC, 1999 ) .

Force Majeure events are exceeding events or fortunes as listed FIDIC 1999 below and those satisfy the clause 19.1 of FIDIC 1999 sub-clause ( a ) to ( d ) above:

“ ( one ) war, belligerencies ( whether war be declared or non ) , invasion, act of foreign enemies,

( two ) rebellion, terrorist act, revolution, rebellion, military or usurped power, or civil war,

( three ) public violence, disturbance, upset, work stoppage or lockout by individuals other than the Contractor’s Personnel and other employees of the Contractor and Subcontractors,

( four ) weaponries of war, explosive stuffs, ionizing radiation or taint by radio-activity, except as may be attributable to the Contractor’s usage of such weaponries, explosives, radiation or radio-activity, and

( V ) natural calamities such as temblor, hurricane, typhoon or volcanic activity” ( FIDIC, 1999 ) .

2. Repudiationand this occurs when a party to the contract commits a serious breach of contract that entitles the guiltless party to see the contract as terminated with immediate consequence and Sue for amendss due to breach of the contract. The followers will be considered as clear renunciation of a building contract

• Contractor’s refusal to transport out contract range ;
• Vacant the site or un-authorized remotion of works by the contractor ;
• Procuring other contractors to transport out the whole or portion of the range of work originally contracted ;
• Employer’s failure to give entree to the site ( ownership of the site ) .

The Contractual rights to end are classified as ;

1. Termination for Causeand the clauses stipulated in the contract enthroning powers/rights to end the contract for breaches of specified contractual duties such as unjustified/ irrecoverable holds attributed non-performance of the plants. The parties may exert their rights to end in other fortunes excessively, such as happening of a force majeure event.

2. Termination for Convenience or ‘at will’ clauses may be incorporated in to building contract enthroning powers to one party to end the contract without holding to set up any cause or breach for expiration for the other party. This clause is really utile in the event that the ;

• the employer changes the usage of the land ( eg. Condominium development to a hotel development )
• the employer’s inability to procure funding for the whole undertaking or procure ground tackle renters
• the contractor finds the undertaking will be unprofitable or excessively hazardous
• the undertaking has been suspended for a prolong period with no chance of it being recommenced.

There is a really close relationship between suspension and expiration and, depending on how the clause is drafted. The terminal consequence of a suspension clause may be much the same as a expiration clause in that either party will hold the right to end the contract at the terminal of the in agreement suspension period. The justification for suspension clauses will be loosely similar to termination such as a alteration of fortunes on the land that makes go oning with the plants impossible in the short term. Notwithstanding the above, suspension may be used by one party to let it infinite to see how to continue with a undertaking, which should be acceptable to the other party if kept within bounds.

The range of this research is to place the legal commissariats to procure the rights and entitlements provided under Qatar Civil Code and UAE Federal Law in Omissions, Suspensions and Terminations and limited to the building contracts under the legal power of the capable states.

The chief restriction is the Language. The Qatar and UAE Laws are written in Arabic and official interlingual rendition in English linguistic communication is non available. The writer relies on many unofficial interlingual renditions of Qatar and UAE Laws for the intent of this research. Arabic linguistic communication prevails over the any launage in a Court of Law in Qatar and UAE.

6. Decision

The Contractor shall be compensated for ;

1. Re-measured work done
2. Preliminaries
3. Material delivered / ordered
4. Under- recoveries
5. Costs/increases
6. Removal of Contractor’s equipment
7. Repatriation of staff/labour
8. Loss of harm ( loss of net income )
9. Costss ensuing from suspension

after retrieving the following from the contractor

1. Advance Payment
2. Previous payments
3. Employers recoveries

All these compensation and recoveries are stipulated in FIDIC Conditions of Contracts ( or amended made-to-order versions ) and enforceable under Law No. 22 of 2004 – Qatar Civil Code and UAE Federal Law No. 2/87 – The Civil Code. The Contractors ( and the Employers ) as the instance shall be able to seek the consolation of Law even if the Contract Agreement they entered in to is to a great extent bias towards the Employer as the Law of land prevails over any contractual relationship between parties.

7. Mentions

FIDIC. ( 1999 ) . Conditionss of Contract for Construction. In I. F. Engineers,General Conditionss( pp. 56-58 ) . ISBN 2 – 88432 – 022 – 9.

Spouses, S. A.-A. ( 2014 ) .Background – Legal System in Qatar. Retrieved 08 25, 2014, from www.qatarlaw.com: hypertext transfer protocol: //www.qatarlaw.com/background-legal-system-in-qatar

Portal, Q. L. ( 2014, 08 25 ) . Law No. 22 of 2004. Doha, Qatar.

Whelan, J. ( 2011, 07 ) .The Civil Code.Retrieved 08 27, 2014, from hypertext transfer protocol: //lexemiratidotnet.files.wordpress.com: hypertext transfer protocol: //lexemiratidotnet.files.wordpress.com/2011/07/uae-civil-code-_english-translation_.pdf