A disputed variation, unpaid certificate or termination notice can change a construction project's commercial position quickly. Businesses searching for the best lawyers in Dubai should look for advice that connects the contract, project records and applicable legislation. The government's announcement of the new Civil Transactions Law identifies works contracts, termination and unforeseen circumstances among the areas addressed by the reform.
Federal Decree by Law No. 25 of 2025 took effect on 1 June 2026. Its construction provisions deserve close attention, but applying them requires more than replacing old article numbers in a contract template.
Establish which law governs the disputed obligation
The new law regulates muqawala, or contracts for work, in Articles 812 to 839. Article 4 states that legislation operates from its effective date and does not apply to earlier facts and legal acts unless otherwise provided.
Consequently, a dispute arising after June 2026 does not automatically bring every earlier construction contract under the new provisions. Review when the contract was concluded, when the relevant events occurred, and whether later agreements created separate obligations. Governing law and jurisdiction also need examination, particularly where a project involves a financial free zone.
The practical starting point is a chronology connecting the signed agreement, amendments, instructions, notices and disputed events. That chronology helps identify the relevant legislation before anyone relies on a new statutory remedy.
Treat notifications as part of project delivery
Article 816 paragraph 3 requires immediate notification where defects appear in materials supplied by the employer or other factors obstruct appropriate execution. A contractor who neglects that duty is responsible for the consequences of the omission.
A site conversation may explain a problem without adequately documenting its timing or effect. Record what happened, when it became apparent, which activities were affected and what response is requested. Follow the contract's agreed notice channels and preserve proof of delivery.
For example, if employer supplied materials prove unsuitable, retain inspection records, test results and the request for instructions. A notification supports the factual record; it does not by itself establish entitlement to extra payment or additional time.
Separate quantity changes from rising costs
Articles 828 and 829 address different pricing arrangements. Under Article 828, where a unit price estimate must be exceeded by an amount that is not burdensome to execute the agreed design, the contractor must notify the employer and identify the expected additional payment. Failure can forfeit recovery of expenditure beyond the estimate. A burdensome excess gives the employer specified choices, including prompt withdrawal with payment for completed work.
For a lump sum contract based on an agreed design, Article 829 generally prevents increased remuneration merely because materials, labour or other costs rise. Changes to the design require examination of employer fault, authorisation and any agreement on additional payment.
Article 829 paragraph 3 separately allows judicial intervention where unforeseeable, exceptional circumstances of a general nature destroy the contractual financial balance. Possible responses include adjusting time or remuneration, or rescinding the contract. This is a demanding statutory assessment, rather than an automatic inflation adjustment. Keep the original pricing assumptions and evidence showing how the exceptional event affected them.
Distinguish defective performance from commercial withdrawal
Article 818 provides a process for defective or contractually noncompliant work. The employer may give notice requiring correction within a reasonable period. If correction does not follow, the employer may, after establishing the condition of the work, rescind the contract or appoint another contractor to complete or correct it at the original contractor's expense.
Paragraph 3 permits a request for immediate rescission in specified circumstances, including impossible rectification and delay making timely completion entirely unlikely. It should not be treated as permission to terminate whenever progress falls behind programme.
Article 836 addresses a different situation: employer withdrawal before completion. It provides compensation for expenditure, completed work and profit the contractor could have earned. The court may reduce lost profit compensation where equitable and must account for relevant savings and earnings from alternative work.
Before stopping work, distinguish breach based remedies from withdrawal for commercial reasons. Obtain a condition survey, establish quantities completed and calculate the financial consequences of the proposed route.
Check who can claim against whom
Subcontracting does not ordinarily remove the main contractor's responsibility to the employer. Article 832 preserves that responsibility and recognises restrictions arising from the contract or the personal nature of the work.
Article 833 does not give subcontractors a general direct claim against the employer for money due to the main contractor. Its exception concerns the main contractor referring the subcontractor to the employer. The effect of an assignment or direct payment arrangement therefore needs examination rather than assumption.
Keep the subcontract, payment certificates, assignment documents and any direct payment correspondence together. A payment dispute cannot be assessed accurately from an invoice alone.
Preserve evidence beyond the defects period
Articles 821 to 824 regulate decennial liability. Subject to the statutory conditions, the contractor and relevant engineer face ten years of responsibility for collapse and defects threatening structural strength or safety, starting when the employer takes delivery. The engineer's design or supervision role affects the analysis.
Article 823 invalidates clauses excluding or limiting that statutory responsibility. Article 824 also establishes a separate three year period for bringing the warranty claim, measured from collapse or discovery of the defect. The ten year responsibility period and the claim deadline must be considered separately.
An ordinary contractual defects period does not describe the entire statutory position. Preserve design revisions, inspection approvals, supervision records and delivery documents. Article 821 also excludes the contractor's recourse against subcontractors from its particular regime, making the subcontract's terms and applicable claim rules significant.
Build the dispute strategy around the actual clause
For arbitration governed by Federal Law No. 6 of 2018, Articles 4 and 7 require proper authority and a written arbitration agreement. Article 6 generally preserves a valid arbitration agreement despite termination or invalidity of the underlying contract, subject to its stated qualification concerning capacity.
Where DIAC rules apply, Article 4 requires the arbitration request to identify the agreement, dispute and relief sought. Article 20 deals separately with the seat and hearing location. These choices should be checked before proceedings begin.
DIAC’s 2024 Annual Report states that construction and real estate disputes represented 58% of its administered cases. This is the Centre’s reported sector mix, not the proportion of all UAE construction projects in dispute or a measure of claim success. It supports checking the arbitration clause and the team’s experience with technical project records at the outset.
Someone comparing the best lawyers in Dubai should ask who will review the technical evidence, how experts will be instructed and how fees relate to the dispute's value. Useful advice should identify weaknesses as well as possible claims.
Bring the full contract, programme updates, certificates, notices, variation records and an indexed chronology to the first meeting. This allows an informed discussion of negotiation, expert assessment and formal proceedings.
Frequently Asked Questions
1. Does the new law automatically govern an older project
No. Article 4 establishes nonretroactivity unless the law provides otherwise. Contract dates, later agreements and the facts underlying each disputed obligation require review. The date a claim is filed does not alone determine the applicable substantive law.
2. Can the employer terminate without paying lost profit
Not necessarily. Article 836 expressly includes potential profit when an employer withdraws before completion, subject to judicial reduction and deductions. A termination based on contractor breach raises a different analysis. The notice, contractual rights, evidence and statutory requirements must be considered together.
3. What should a subcontractor do when the main contractor does not pay
Review the subcontract's payment terms and dispute clause, preserve certificates and notices, and check whether any effective referral, assignment or direct payment arrangement exists. Article 833 does not make employer payment liability automatic simply because the main contractor has failed to pay.
4. How should a contractor organise a variation record
Keep the instruction, drawings, approval history, notices and supporting cost records together. Identify the work affected, relevant dates and any agreement on price or time. Show disputed items separately so the adviser can connect each request to its contractual basis.
5. What should parties clarify when appointing a construction expert
Identify the technical questions, documents to be reviewed and the proposed deliverable. Ask how inspections, testing and further information will be arranged and priced. Keep the expert’s factual assessment distinct from the lawyer’s advice on contractual rights and remedies.
About the author
Dr. Hassan Elhais is a Senior Legal Consultant at Amal Al Rashedi Lawyers and Legal Consultants in Dubai. He advises on UAE family, civil, commercial and criminal law matters.
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About the Author
Dr. Hassan Elhais publishes analysis of UAE property law matters, including property matters, tenancy obligations and rental disputes. For readers researching rental dispute lawyers in Dubai, his writing offers insight into the legal questions surrounding these topics. Explore his published work and practice-area information for further context.
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