Adverse ground conditions in the UAE—what you need to know

Adverse ground conditions in the UAE—what you need to know

While UAE law generally recognises theparties' freedom to contract as they see fit, there are mandatory provisions of theUAE Civil Code that will override any agreed risk allocation for adverse ground conditions. Bill Smith, Partner, and Alistair Price, Associate, at Pinsent Masons give a brief introduction to thekey legal issues to be aware of under UAE law when disputes concerning adverse ground conditions arise.

Who is liable if adverse conditions are discovered prior to completion of theproject?

If thecontract between theparties does not contain provisions apportioning this risk, thestarting position is that thecontractor will be liable for thecosts of overcoming any adverse ground conditions encountered. Whilst UAE law does not contain any direct provisions dealing with theapportionment of risk in this situation, it is likely that a Court or Tribunal would have regard to Article 53 of theUAE Civil Code. This requires thecontractor to provide that which is 'ancillary' to thecontract, even if not specified within it. Overcoming adverse ground conditions may well be considered ancillary to, and therefore part of, thecontractor's obligations to complete theproject in accordance with thecontract in some circumstances.

If thecontract does contain provisions dealing with therisk of adverse ground conditions encountered prior to completion of theproject, those agreed contractual terms will govern which party is liable. The majority of projects in theregion are let upon standard forms, often containing complex provisions dealing with theapportionment of therisk of encountering adverse ground conditions.

Risk allocation under FIDIC Red and Silver Books

By way of example, themost commonly encountered form of contract in theregion, theFIDIC Red Book 4th Edition apportions therisk (and therefore thecost) of encountering adverse ground conditions on thebasis of what would be foreseeable to an experienced

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