Designing the project, preparing tender and contract documents, supervising the construction, administering the contract, certifying payments, determining extension of time and compensation claims, and much more — these are all the roles of the Engineer. In each of these roles the Engineer wears a different hat. In certain instances, the Engineer is simply acting as a service provider to the Employer, and in others the Engineer is the neutral third party deciding on matters between the Employer and the Contractor.
Achieving a balance between these roles has been the subject of more papers and conferences than I can remember. However, this multiple role is the primary reason for disputes in the construction industry. In fact, according to a recent report,1 three out of the five major causes of construction disputes in the Middle East relate to the Engineer's role. These three causes are:
- failure to properly administer the contract;
- failure to make interim awards on extension of time and compensation; and
- errors and omissions in contract documents.
The Engineer's liability in the United Arab Emirates (UAE) for these various roles can be split into three major categories: (1) contractual liability; (2) liability as a designer and/or supervisor; and (3) liability in tort. These are, of course, in addition to the Engineer's professional liabilities under the relevant regulatory body.
In the UAE, the parties to a contract are free to agree the terms and conditions of their contract as long as none of these terms conflict with a mandatory law provision or public order in that country.
The UAE Civil Transactions Law (the Civil Code) mandates that each of the parties to the contract performs its obligations.2 In the event that one of the parties fails to perform its obligations, the other party has the right to request specific performance (if possible). If specific performance is not possible, then the non-breaching party has the right to claim damages.3
As in any other contractual relationship, the Engineer will have a contractual liability towards the Employer for its actions (or inactions) under the consultancy agreement.
This Engineer's liability may be limited or set out in any manner that the parties agree. However, this does not mean that an Engineer may limit its liability totally. By way of example, an Engineer operating in the UAE will remain liable for any actions of fraud or gross negligence.4 Moreover, while it is common in contracts to agree a ceiling for liability in the form of a certain sum of money or the contract value, the courts in the UAE (and/or any arbitral tribunal), when considering a contractual dispute between the Employer and the Engineer, have the authority to reassess this amount in order to equate it to the actual damage sum.
The major liability arising out of designing and/or supervising construction in the UAE (and in the majority of civil law countries) is the decennial liability. In this respect Article 880 of the UAE Civil Transactions Law (the Civil Code) provides that both the Engineer (whether designing or supervising the works) and the Contractor will be jointly and severally liable for the complete or partial demolition of any building (or structure) that was intended to last for more than 10 years. This liability arises in respect of any defect affecting the safety or stability of the building (or the structure).
The decennial liability is a strict no fault liability and cannot be contracted out of or limited, although it may be increased. This means that the Employer does not have the burden of proving any error, negligence or mistake on the part of the Engineer, but simply the occurrence of one of the circumstances giving rise to the decennial liability.
The law also differentiates between the Engineer's liability as a designer and as a supervisor. Article 881 of the Civil Code provides that if the Engineer produces the design but does not supervise the work, the Engineer will only be liable for demolition or defects related to the design. On the other hand, if the Engineer has only supervised the construction works, the Engineer will only be liable for demolition or defects arising from that supervision.
As one cannot contract out of this liability, the best way to deal with it is to procure insurance covering decennial liability.
Liability in tort
Although the Engineer may be the major source of construction disputes, the Contractor would not normally pursue claims against the Engineer, but rather against the Employer. This is of course for some good practical reasons, most importantly because there is no contractual agreement between the Contractor and the Engineer.
However, this does not mean that the Engineer may not be liable, in tort, due to its actions (or inactions) with regard to the Contractor. In respect of a tort liability (literally referred to as "harmful acts"), Article 282 of the Civil Code sets the general premise that anyone causing damage to another person will be liable for damages.
For this liability to arise there must be a breach of the law itself and this breach must cause a loss. However, for the Contractor to have such a right of action against the Engineer, the Contractor will need to show that the Engineer has performed a "harmful act" that is not covered by the construction contract itself.
1. EC Harris, Global Construction Disputes Report 2013 - http://www.echarris.com/pdf/EC%20Harris%20Construction%20Disputes%202013Final.pdf
2. Article 243 Civil Code.
3. Article 380 Civil Code.
4. Article 383, Civil Code.
Heba Osman, Partner Ahmed Ibrahim in association with Fenwick Elliott
International Quarterly is produced quartely by Fenwick Elliott LLP, the leading specialist construction law firm in the UK, working with clients in the building, engineering and energy sectors throughout the world.
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.