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Wed 7 Nov 2007 04:00 AM

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Defects liability

How accountable are contractors for their work after a building has been completed? Dennis Brand outlines the law in the UAE and how it may affect you in future.

Several jurisdictions in the Middle East have a statutory liability of ten years for both architect and builder that covers design, construction and engineering contracts. This is often referred to as decennial liability.

In the UAE, Federal Law No 5: 1985 (The Civil Code) contains express provisions for contracts that involve making something or performing a task (Muqawala). This includes specific provisions, which total some twenty-four Articles, concerning construction and engineering contracts.

With regards to design liability, Articles 880-883 of The Civil Code impose upon the contractor and architect strict joint liability for a ten year period from the date of delivery of the work. This covers any defect in the building, designed by the architect and built by the contractor, that threatens its stability or safety.

Article 880 (1) states that if the subject of a contract is the construction of buildings or other fixed installations, the plans for which are made by an architect to be carried out by the contractor under their supervision, they shall both be jointly liable for a period of ten years. During this time they must compensate the employer for any total or partial collapse of the building or installation that they have erected and for any defect that threatens its stability or safety, unless the contract specifies a longer period. This law will apply unless the contracting parties originally intend that the installations should remain in place for less than ten years.

It is therefore clear that liability between designer and contractor is joint, not joint and several, for a period of ten years. The defect referred to must be serious and not simply one that would be covered during the contractual defects liability period. However, I have on occasion seen contracts where the designer and contractor have been required to accept liability for any defect that occurs over the ten year period.    

Article 880 (2) states that the obligation to make compensation shall remain regardless of whether any defect or collapse arises out of a fault in the land itself or that the employer consented to the construction of the defective buildings or installations.

No exception is made for a defect in the land. The point being that the designer and/or contractor is required to satisfy themselves as to the ground conditions where the building is to be constructed. This is a responsibility that the contractor would normally bear rather than the architect.

The reference to the employer's consent developed because usually they accept the design and indeed the building when constructed. However, they may not have the necessary experience or technical knowledge to determine whether the quality of the design or standard of construction is correct or acceptable.

Article 880 (3) determines that the ten year period will start from the time of delivery of the work. For ‘delivery of the work' read ‘taken over by the employer' ie following the issue of a Completion Certificate. Depending on the terms of the contract, the ten year liability provision could exclude the contractual defects liability period, therefore possibly extend the overall liability time.

Architectural aid

In Article 881 it states that if the architect's work is restricted to making the plans and excludes supervision of the execution, they will only be liable for defects in the plans. This is an important provision for architects because if the design is correct and the defect is due to the construction they will not be liable. However, ‘supervision' doesn't just cover the construction of the works ie walking around the site, it can include approving a contractor's drawings or even a method statement where the construction is complex.

Article 882 adds that any agreement that purports to exempt the contractor or architect from liability or to limit such liability, shall be void. This means that the parties cannot contract out of the decennial liability provisions of Article 880 and any provision to that effect will be void and unenforceable in law.

The time to claim

Article 883 states that no claim for compensation will be heard after three years from the collapse of the building or the discovery of the defect. The law in the UAE does not distinguish between patent and latent defects. The courts apply a subjective test on the facts of the particular case ie should the employer have discovered the defect at an earlier time.

Not every design or construction contract undertaken in the UAE makes reference to decennial liability, however, the provisions of Articles 880-883 apply to all design and construction contracts in the Emirates.

I am now seeing a marked increase of cases with clients being asked to enter into contracts where there is a need for Professional Indemnity (PI) cover to run for the duration of their liability or, even more openly, for the period of decennial liability. Article 880 does not require an architect or contractor to insure against decennial liability. Also, as most professional clients have PI cover in place, to have a project specific policy is not a legal requirement, although it may be a contractual one.

Dennis Brand is senior legal advisor with Berrymans Lace Mawer.
Tel: +971 4 359 9939

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