Disputes between contractors and developers over unpaid contracts in the UAE are close to “breaking point” as liquidity dries up in the real estate market, according to a construction lawyer in the country.
He told Arabian Business that his firm was seeing a “significant” increase in the number of contentious instructions it was taking on over the last two to three months.
A nervousness exists among some contractors and consultants to square up to large developers over contract disputes, said Andrew Greaves, a senior construction partner in Dubai at Trowers & Hamlins, which was dealing with "millions of pounds” of unpaid contracts.
He said the disputes related to the non-payment of contracts including poor performance, poor workmanship or merely a failure on the part of a client to pay invoices or pay the contractors and consultants for work undertaken.
Greaves said it was not appropriate for him to put a figure on the number of unpaid contracts it was dealing with or to name companies involved.
“It’s of no coincidence that the increase in contentious instructions has coincided with the credit crunch and the lack of liquidity in the market and the uncertainty in the sector,” said Greaves, a UK qualified solicitor with a background in the construction sector.
“We are seeing more and more of that sort of work coming in at the moment, given the lack of liquidity in the market. We have seen a significant increase in the number of contentious instructions coming into the office over the last two to three months.
“There is a lot of anecdotal evidence out there of contractors and consultants just not getting paid at all for the work they are undertaking and it’s getting to breaking point with some.
“We are hearing stories that the well known bigger developers are not paying their supply chain.”
Trowers & Hamlins will launch a free no obligation helpline for contractors and consultants in January covering Dubai and Abu Dhabi.
The firm offers legal advice to companies including reviewing the contract they have entered into and giving advice over their rights and responsibilities.
He said the majority of construction contracts it dealt with had inserted in them dispute resolution provisions and processes, which had to be followed by anyone who was making a legal claim.
As well as Dubai, the firm has a presence in Abu Dhabi, Bahrain, Oman, Egypt and Saudi Arabia.