From left to right: Cheryl Cairns, leader of the international construction practice, and Karie Akeelah, partner specializing in construction disputes at Trowers & Hamlins, both located in Dubai/Image: Supplied
As significant construction initiatives continue to alter the landscapes of the Gulf region, legal professionals are raising concerns about a corresponding increase in intricate international construction disputes.
Cheryl Cairns, who heads the international construction practice at Trowers & Hamlins, states, “Projects in the Middle East typically involve substantial financial investments, numerous stakeholders, and innovative technologies, coupled with tight deadlines.” She adds, “The large scope and intricacies of mega projects in this region elevate the chance of discrepancies in work scopes, timelines, and accountability—all potential triggers for disputes.”
Cairns explains that claims related to delays and extensions are frequently seen, often stemming from ambiguous contracts or inadequate contract management. She also highlights that “significant and costly modifications to work scope after the tender stage” remain a persistent challenge.
The cross-border intricacies of mega projects
The involvement of stakeholders from various legal systems complicates the resolution of disputes.
Karie Akeelah, a partner in the construction disputes team, remarks, “Stakeholders from diverse legal frameworks may have varied preferences for dispute resolution, which complicates the process even further. To maintain neutrality and adaptability, arbitration remains the favored method for resolving disputes.”
Akeelah cautions that arbitration clauses need to be clearly defined. “If the clause is too vague, there may be circumstances in which a crucial party connected to the dispute cannot participate in the arbitration—or worse, where it turns out a significant party lacked the capacity to engage in arbitration.”
She suggests conducting early stakeholder mapping and including clauses for joining and consolidating multiple parties to simplify proceedings.
Challenges of enforcement under the New York Convention
All Gulf Cooperation Council (GCC) nations are signatories to the New York Convention, which mandates the enforcement of foreign arbitral awards. However, the enforcement process often encounters hurdles.
Cairns notes, “Enforcement in the region can be complicated due to local procedural norms, legal cultures, and sometimes a broad interpretation of ‘public policy’ in certain GCC countries.” She adds, “Arbitral awards cannot contradict Sharia law, existing legislation, or previous court rulings.”
Despite a trend towards a narrower interpretation of public policy, Cairns warns that delays in enforcement remain a concern, necessitating careful legal navigation.
Managing third-party risks in arbitration
An ongoing challenge for firms is the involvement of non-signatory third parties in disputes.
Akeelah insists that “Clear and precise drafting of contracts is essential to mitigate this risk.” For arbitration clauses that are restrictive, construction firms might explore other legal principles that could bind non-signatories, such as agency, assignments, estoppel, and contractual chains.
Though these legal principles are less developed in civil law jurisdictions, she points out that constructs like good faith and non-contradictory conduct can offer alternative pathways, contingent upon appropriate legal guidance.
Enforcement approaches in the UAE’s dual legal system
The legal landscape in the UAE presents a distinctive environment for enforcing arbitral awards, featuring both onshore (civil law) and offshore (common law) systems.
According to Cairns, “When pursuing enforcement of an arbitral award, whether domestic or international, companies should analyze the legal frameworks of both onshore and offshore jurisdictions, including any relevant reciprocal treaties.” She emphasizes that, practically, a party often prefers to initiate enforcement proceedings in the courts where the assets belonging to the award debtor are situated.
Cairns observes that onshore courts have adopted a more pro-enforcement stance, especially following the enactment of UAE Federal Law No. 6 of 2018. Nevertheless, she underscores the importance of awareness regarding the applicable procedural timelines and the grounds on which enforcement can be challenged.
Crafting effective contracts to prevent disputes
Insufficient planning at the contract stage can lead to years of legal conflict. Akeelah encourages construction and infrastructure companies to conduct thorough due diligence at the outset:
- Investigate relevant jurisdictions prior to signing contracts
- Compose explicit jurisdiction and governing law clauses
- Integrate multi-tiered dispute resolution mechanisms, such as mediation or expert determination
“Such clauses clarify the venues and methods through which parties can resolve disputes, thus minimizing the risk of parallel proceedings,” she clarifies.
Preparing for future construction disputes
To proactively mitigate potential disputes, Cairns advocates for strategies that include:
- Comprehensive and legally sound contract documentation
- Effective project management with clear stakeholder communication
- Maintaining organized digital records for reference
- Engaging legal advisors early to pinpoint risks and assess merits
- Training teams on notification periods, escalation processes, and conflict resolution protocols
She also points to the rising role of generative AI in preparing construction claims: “A significant benefit of generative AI is its ability to analyze user queries, machine-read a set of documents, and produce valuable outputs, such as summaries and preliminary drafts.”
The increasing emphasis on mediation in the UAE and beyond
The UAE is progressively promoting the resolution of disputes outside of court. Akeelah observes, “The country is adopting a more ‘pro-mediation’ stance, bolstered by recent legislative changes and government initiatives advocating for mediation.”
Key developments include:
- Federal Decree Law No. 40 of 2023 that governs mediation processes
- The introduction of Wasata, an e-mediation platform set up by the Ministry of Justice
- Mandatory mediation training sessions for lawyers designated by the Dubai Legal Affairs Department
Dispute boards are also becoming increasingly recognized. “A recent 2024 study by King’s College London emphasizes their effectiveness, strong adherence from parties involved, and growing calls for an international enforcement framework,” notes Akeelah.
As the construction sector continues to thrive across the Middle East, the legal frameworks are adapting along with the associated risks. The takeaway for contractors, developers, and project owners is unmistakable: readiness in legal matters and careful contract formulation are now as essential as technical precision or meeting deadlines.