Insights / 05-10-2020 / Decennial Liability in the UAE

What is Decennial Liability?

At its core, decennial liability is a form of strict liability imposed on architects, engineers and contractors in the case of total or partial collapse of a building or structure or defects found in the building or structure that threaten the structural integrity of the building. As can be inferred from the name, decennial liability is designed to cover a period of ten years post construction and handover. The purpose of decennial liability, broadly speaking, is to improve public safety and promote good workmanship.

Decennial liability originated from the French Civil Code of the early 19th century. As the French Civil Code spread, first to Egypt and then to other MENA countries including the GCC countries, so too did the decennial liability regime. There are key differences, however, between the way decennial liability is applied in France and other European jurisdictions and the way it is applied in North Africa and the Middle East.

Decennial liability in the UAE

In the UAE, decennial liability is set out in Articles 880 to 883 of UAE Federal Law No. 5 of 1985 on the Civil Transactions Law of the United Arab Emirates (the “UAE Civil Code”). Article 880 of the UAE Civil Code is the primary basis for decennial liability and provides as follows:

Article 880

1. If the subject matter of the contract is the construction of buildings or other fixed installations, the plans for which are made by an architect [this can include an engineer], to be carried out by the contractor under his supervision, they shall be jointly liable for a period of ten years to make compensation to the employer for any total or partial collapse of the building they have constructed or installation they have erected, and for any defect which the threatens the stability or safety of the building, unless the contract specifies a longer period. The above shall apply unless the parties intend that such installations should remain in place for a period of less than ten years.

2. The said obligation to make compensation shall remain notwithstanding that the defect or collapse arises out of a defect in the land itself or that the employer consented to the construction of the defective buildings or installations.

3. The period of ten years shall commence as from the time of delivery of the work.

Who is liable?

Under the UAE decennial liability regime, architects (this can include engineers) and contractors who enter into construction contracts with an employer can be held liable. Privity of contract is essential for the decennial liability provisions to kick in, this means that sub-contractors and sub-consultants cannot be held liable under the UAE Civil Code decennial liability provisions. There must be a direct contractual relationship in place with the employer for decennial liability to attach. All contractors engaged by the employer will be held liable whether they are carrying out enabling works, works on part of the structure or even remedial works.

The liability of architects is limited by Article 881 of the UAE Civil Code, which states that ‘If the work of the architect is restricted to making the plans to the exclusion of supervising the execution, he shall be liable only for defects in the plans.’

This means that architects who do not actually supervise construction can only be held liable if the building collapse is a result of a fault in design in the drawings prepared by the architect.

Decennial liability under the UAE Civil Code is a strict liability regime. This means that fault on the part of the contractor or architect is not required. Pursuant to Article 880(2) of the UAE Civil Code, liability will still attach even where the building collapse or defect arises out a defect in the land itself or where the employer has accepted the building or installation as built.

Joint and several liability

Contractors and architects are jointly and severally liable for any claim under the decennial liability provisions. This means that an employer may choose to bring an action against the contractor, the architect, or both, and that payment by either party of the damages claimed is sufficient to extinguish the claim.

This is, however, subject to the limitation set out in Article 881 of the UAE Civil Code with respect to liability of the architect where he is only involved in the design of the works and in supervision of the construction.

Note, however, that the courts may elect to apportion responsibility between the contractor and the architect, or to hold one or the other liable, depending on the specific factual circumstances in play.

Who does decennial liability benefit?

Under UAE law, decennial liability is treated as a contractual duty and is therefore considered for the benefit of the employer, who has contractually engaged the contractor and architect. Liability has in some instances also been extended to general successors and assigns where the building has been sold to multiple owners, however the general position under UAE law with respect to parties other than the employer is not clear. Whilst other regimes (e.g. France) provide for liability owed specifically to the owner of the building as well as anyone deriving title from the owner, under UAE law this is not necessarily the case. The recent recognition of jointly owned property in the UAE has added further uncertainty to this issue.

As far as other third parties are concerned, they generally do not benefit from decennial liability provisions. Such third parties would need to avail themselves of the usual tort provisions regarding doing harm. This includes the usual requirements of a wrongful act, damages suffered by the third party and those damages being caused by that wrongful act. This would also generally be against the owner / employer opposed to the contractor or architect though this would depend on the specific facts and circumstances of the case.

Types of structures covered by decennial liability

Decennial liability is intended to cover fixed permanent structures, such as buildings, bridges, dams, factories, etc., and there is no distinction or carve out in the case of public or civil structures.

Conversely, temporary structures or structures designed to support the construction of the main structure, such as retaining walls or scaffolding, are not covered. However, note that this is distinct from other structures that are intended to be built for a temporary period, such as field hospitals or temporary storage facilities. For this kind of temporary structure, the decennial liability will extend for as long as the structure is intended to last (pursuant to Article 880(1)). If the field hospital is intended to be set up for 5 years, for example, the decennial liability will extend for 5 years (as opposed to the usual 10 years).

Installations that are not fixed, such as fit outs and interior decoration are not covered by the UAE decennial liability provisions.

Limitation of liability

UAE law does not permit limitation or exclusion of decennial liability. Article 882 of the UAE Civil Code specifically provides that ‘Any agreement the purport of which is to exempt the contractor or architect from liability, or to limit such liability, shall be void.’

Therefore, it is not open to contractors or architects to limit or exclude decennial liability. This is similar to other mandatory liability provisions, such as the tort provisions of the UAE Civil Code.

Duration of liability and time for bringing a claim

Decennial liability covers any total or partial collapse or defects discovered within 10 years following handover of a project.

Separately, Article 883 of the UAE Civil Code provides that ‘No claim for compensation shall be heard after the expiration of three years from the collapse or discovery of the defect.’

In practice, this therefore means that decennial liability could potentially cover a period of 13 years, since a claim could be brought within 3 years of a collapse or defect discovered up to 10 years after handover.

Insurance for decennial liability claims

Decennial liability is a strict liability that cannot be limited or excluded and potentially lasts for 13 years. Given this, insurance becomes an attractive option that must be considered by contractors and architects and in the construction industry.

In addition, decennial liability is often not covered by all risks or professional indemnity insurance policies. All risks insurance is usually limited to the defects liability period under the construction contract in question (usually 12 or 24 months), which is much shorter than the time for which decennial liability applies. Professional indemnity insurance requires negligence or fault on the part of the insured, whilst decennial liability is a strict liability which does not require proof of fault and may therefore fail to trigger the professional indemnity insurance policy.

However, specific decennial liability insurance is relatively expensive and uptake in the market has therefore been limited. There has been discussion in the last few years of the UAE Insurance Authority making decennial liability insurance mandatory, however this has not come to fruition as yet. Other jurisdictions, mainly in Europe, do already have mandatory decennial liability insurance provisions in place. It remains to be seen how such measures would affect the cost of projects in the UAE, as the cost of any insurance policy would likely need to be factored in to the pricing of the project.

Decennial liability across the Middle East

The legal position is generally the same across the various civil code countries in the Middle East, including the UAE, Iraq, Jordan, Kuwait and Qatar.

There are some minor differences. For example, in Jordan and Iraq an employer is given 1 year instead of 3 years from collapse or discovery of a defect to make a claim. In Jordan, there are also questions as to what type of fixed installations decennial liability will cover. In Iraq, the courts have also included a foreseeability requirement in respect of the cause of the collapse or defect, meaning that the cause must have been foreseeable at the time of construction. However, the applicability of this principle is not straightforward, particularly where a lot of time has passed.