Legal firm sees sharp rise in UAE contract disputes

There has been a sharp rise in litigation cases in the UAE resulting from contractors not being paid, law firm Al Tamimi said on Monday.

Speaking on the sidelines of an Al Tamimi seminar about financial and legal recovery strategies for creditors and stakeholders in Dubai, Raza Mithani, a senior advocate at Al Tamimi told Arabian Business: " We are seeing a huge upturn in the amount of litigation that is coming through which suggests amongst other things that a number of contractors are not being paid."

"In addition we are experiencing a significant rise in arbitration work across a variety of sectors. Presently we are dealing with a range of claims worth from hundreds of millions of dirhams to hundreds of millions of US dollars," he said.

"We are dealing with a number of truly massive claims which we believe to probably be some of the largest ever arbitrated in the UAE."

Arbitration is a legal process for resolving disputes outside the courts.

Severe liquidity conditions and a property downturn triggered by the global crisis has left many contractors and consultants in mainly the construction and real estate sectors owed millions of dirhams.

Almost $636m is owed to British consultants and engineers in unpaid fees from work undertaken in the UAE, according to the UK’s Association for Consultancy and Engineering (ACE).

WS Atkins, the engineering consultancy that designed the Burj Al Arab, said it was owed $39.7m that should have been paid in the first quarter by developers in the Middle East.

Evidence is also mounting that UAE companies who are not paying their customers are in “serious trouble”, said Gary Watts, head of the corporate commercial department at Dubai- based Al Tamimi – the largest law firm in the Middle East.

“It has become obvious that some people are tight with releasing cash, and other people are in serious trouble – they do not have the cash to release and they do not have the resources to meet their commitments,” he said.

Watts said that ‘an abrupt interruption of cash flowing around the system’ had put companies in the position of not being able to pay their contractors and consultants.

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