United Arab Emirates: Arbitration Saga For Small And Medium-Sized Subcontractors In The Construction Industry

Last Updated: 15 August 2017
Article by Imad Kassir and Samer Abou Said

Small and medium-sized subcontractors often find themselves unable to recover monies owed to them by main contractors due to the high costs involved in legal proceedings. We explain below what steps you can take for a more positive outcome.


Subcontractors, chiefly operating in the construction industry, frequently visit our firm with gloomy faces expressing their anger at main contractors who have failed to pay monies due upon completion of the project as per their clearly agreed contractual terms.

As our lawyers analyse the strengths of the client's case, we often find that they have honoured their obligations and that payment of their monies is unconditionally due. Reading through the contractual documents, we often further discover that the client has agreed to arbitration as a dispute resolution mechanism, which will cost them a substantial amount of the claimed amount, making it virtually unaffordable to pursue their claim. And here lies the problem.

This problem frequently belies small and medium-sized subcontractors who do not have access to good legal advice or to any legal advice at all, and to lesser extent large subcontractors whose legal advisers fail to anticipate the business costs of agreeing to such clauses. For this reason, parties adopt contract templates or resort to the copy/paste of contractual clauses that refer to arbitration without weighing the risks and merits to any potential dispute.

The Arbitration Saga

First, it is not our intention to suggest here in any way that arbitration should not be used as an alternative dispute resolution mechanism. Without doubt, arbitration has its advantages when it is appropriate and convenient for the underlying transaction at hand. However, we believe clients should consider the dispute resolution mechanism carefully after taking into consideration the circumstances of the transaction.

In the UAE, like many other jurisdictions worldwide, arbitration awards must be enforced through the courts. Article 215 et seq of the UAE Federal Civil Procedures Law govern the enforcement of arbitration awards in circumstances where the party that lost the arbitration does not comply voluntarily. Enforcement is effected through the issuance of a claim before the relevant court for an order to enforce the award. This claim, like any other claim, follows the ordinary course of litigation whereby the claim is served upon the defendant who then has the right to reply and to challenge the validity of the award and so on. Such claim may be litigated before the three levels of courts (first instance, appeal, and cassation).

Consequently, in addition to the duration of the arbitration proceedings which may range from one to four years on average depending on the complexity of the case, one must add the time spent to litigate the claim of enforcement of the award before UAE courts, which may range from nine months to two years on average. It is notable here that UAE courts are ranked among the most expeditious courts worldwide in settling claims submitted before them.

Furthermore, litigating the same case twice in arbitration and before the courts will obviously require the payment of double the litigation fees including arbitration and courts costs, expert fees, and attorney fees.

How Will You Know Whether Arbitration is Appropriate for Your Contract?

It is essential that you determine in consultation with your legal adviser the best dispute resolution mechanism to resolve any potential dispute that may arise in the future. For the sake of narrowing the potential scenarios, we shall presume that the transaction is between two private persons (companies and individuals) both based in the UAE.

Some would argue that the language of the contract and the language spoken by its administrators take precedence over any other factors. We beg to differ, although this is significant, particularly if the contract is worded in English and the contract administrators (such as the engineers or quantity surveyors handling the transaction) do not speak Arabic, which is the language of the proceedings before UAE mainland courts. There are capable Arabic-speaking litigation lawyers in the UAE whom clients can trust to handle the case professionally and serve their best interests.

It is submitted that one of the first things to consider should be the value of the contract and, more precisely, the amount that would be the subject of a claim if a potential dispute arises. This is important because arbitration costs and attorney fees for the same are usually much higher than court fees and attorney fees for litigating the case. Dubai courts (mainland courts) have a cap on their fees equivalent to AED 40,000 regardless of the value of the claim, while there is no cap for arbitration cases. By way of example, a claim with a value of AED 3 million before Dubai courts (mainland courts) would not involve more than AED 40,000 of court fees. However, the same-value arbitration would cost AED 130,000 before a single arbitrator, and three times this amount (roughly AED 350,000) if the contract provided for a three-arbitrator panel. Moreover, if you successfully obtained the award, you would have to pay an additional AED 40,000 by way of court fees to enforce the award.

Furthermore, the number of panel arbitrators should be carefully considered because the fees of an arbitration panel of three arbitrators will be three times that of a sole arbitrator. Recently, a client, an international supplier of building materials instructed our firm to commence proceedings against a main contractor to claim an outstanding balance. Upon review of the supply contract, we discovered the presence of a UNCITRAL arbitration clause whereby any dispute was to be resolved through a panel of three arbitrators. When informed of the estimate of arbitration and attorney fees, the client's representative refused vehemently to proceed down that route for economic reasons. In the words of the client's representative, the fees were "exorbitant". However, luckily, after the client submitted to us additional documents, we detected a loophole in the contract, which we used to avoid the arbitration agreement. Hence, the decision was taken to bring proceedings before the Dubai mainland court.


Our client was fortunate in that an exit was found to avoid the high fees of filing an arbitration claim, but this is not always the case. Several prospective clients approached us who were surprised to learn of the level of the fees that they would incur to claim their outstanding balance from main contractors, and they have changed their minds about commencing proceedings due to the relatively high value of the fees in comparison to the value of the claim and the risk of not being able to enforce the award in time.

Therefore, next time a transaction is looming on the horizon, consult your legal adviser and inquire specifically about the dispute resolution mechanism to reach the best decision as to whether there it is advisable to opt out of the court's jurisdiction or not.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions