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Decennial liability is a statutory liability which typically allows building owners to recover damages for structural failures that threaten the stability and safety of a structure. It is a regime found in certain civil law jurisdictions, such as the UAE, France and Indonesia. There is no direct parallel under common law jurisdictions.
Nature of liability
As the name suggests, decennial liability usually extends for a period of 10 years after completion and is generally:
- Mandatory, i.e. it cannot be disapplied by the parties' agreement and applies even where the relevant construction contract is governed by the laws of a country that is different from that of the project location; and
- Strict, i.e. establishing liability does not require proof of fault.
In certain jurisdictions, decennial liability not only arises from the performance of construction works but can also be triggered by ground conditions. Examples include France and the UAE where decennial liability in respect of ground conditions may arise irrespective of whether a contractor has contractually assumed such risk.
Decennial liability typically begins to run from the date on which works are delivered. Civil codes often do not contain detailed provisions on when "delivery" occurs. The issuance of a taking over certificate would likely constitute "delivery" of the works. However, the position is less clear in respect of sectional completion, where different parts of the work and "structures" are delivered at different times.
Whilst civil codes are often silent as to what "structures" attract decennial liability, residential and commercial properties are likely to be covered. The UAE civil law courts have also been willing to extend the application of decennial liability to broader civil infrastructure such as bridges.
Relationship with contract and claims
Although the scope of decennial liability can overlap with that of defects regimes commonly found in construction contracts, the former is usually limited to major structural failures affecting a structure's fitness, whether latent or otherwise, such as partial and total collapses or where there is a risk of significant damage occurring. It is possible, however, for a party to bring alternative claims under both the statutory regime and contract.
The relevant liability is often imposed on contractors for design and/or civil works. For example, the UAE Civil Code provides that supervising architects responsible for preparing designs will be jointly liable with the contractor, such that an employer may claim damages against either or both entities for breach of statutory duty. The French and Indonesian Civil Codes contain similar joint liability provisions.
The right of action is generally transferable and passes together with ownership of the structure.
Decennial liability insurance
If decennial liability applies, a contractor would usually be required to compensate the building owner for the harm caused. As civil codes often do not limit the categories of compensable loss, this could potentially extend to an owner's rectification costs, property damage and loss of earnings.
Given the wide scope of decennial liability and potentially severe financial consequences, contractors in certain civil law jurisdictions may consider obtaining decennial liability insurance, and in certain jurisdictions such as France, are mandated to do so.
* This article wasoriginally published as part of the "Legal Terms Explained" series of Construction Law.
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.
