UAE Construction Agreements: How Altered Can A FIDIC Contract Be?

It is often the case that construction contracts in the UAE are largely based on the FIDIC Conditions of Contract for Works of Civil Engineering Construction (usually referred to as the “Red book”), either the 1987 or the 1999 edition.

It is also common for far too many amendments to be made to Part I of the Red book – that is, its General Conditions – usually by adding rider clauses in Part II (the Conditions of Particular Application, also known as the “Particular Conditions”).

This practice, so prevalent in the UAE, renders it quite difficult to navigate between the General Conditions that come as part of a FIDIC contract and the Particular Conditions, which far too often not only supplement but entirely delete and replace the pre-drafted standard wording of the FIDIC General Conditions.

From a practitioner’s perspective, it barely pays to be familiar with the standard FIDIC clauses in the UAE, because it may lead to presumptions about what has been agreed upon.

Such presumptions are very often contradicted by what has actually been agreed upon in heavily amended Particular Conditions.

Most amendments are carried out by employers and are usually heavily skewed in their favour, placing additional onus onto contractors.

This tendency to carry out excessive amendments, rider clauses and deletion of standard clauses within the FIDIC General Conditions is exacerbated by the use of previously amended contracts, applicable to one type of project, replicated with further amendments to suit the needs of another project.

It is far too common for such amendments to be carried out by the commercial teams of contracting parties who have either minimal legal training or very little, if any, localised legal training, with the result that they do not adequately address the requirements of the jurisdiction where the heavily amended FIDIC contract is intended to apply.

Whilst all this may seem rather unorthodox, and possibly defeat the purpose of using a standard contract in the first place, it is nevertheless compliant with the general freedom of contracts applicable to most jurisdictions, including the UAE.

However, if the purpose of using a FIDIC contract is to imbue parties with an advance familiarity of the contract, with well-established clauses, without the need to read, each time, their exact letter, then this benefit is almost certainly lost due to the practice of relentless contractual alterations.

The same applies to an intention that a mere reference to a clause would denote the universally understood contents of that clause by all parties familiar with FIDIC.

This again would be an unfulfilled intention, because in an ecosystem where FIDIC contracts are heavily amended, a very careful reading of each clause, with a cross-reference to both the Particular Conditions and the accompanying Appendix, would be necessary in order to determine what the parties actually agreed.

This cross-reference is often disjointed, and when parties amend the original text of the General Conditions, they create contradictions that make it difficult to understand what their true intentions were at the time.

Perhaps the most vulnerable area for such unintended contradictions is anything related to dispute resolution, which is a part of the FIDIC contract that may make very little sense at all, if it is heavily tampered with.

As a result, unskilfully amended FIDIC-based dispute-resolution clauses often border on being either incomprehensible or simply unenforceable as drafted.

The result of this would be that the parties end up being forced to resolve their dispute before the local federal courts – the default capture arena of any deficient dispute-resolution clause – which were almost certainly not their intended forum.

Further complications may arise when the parties rearrange the priority of documents. This is, in itself, exacerbated, if the said documents themselves already contain amendments and deviations from the original FIDIC text.

This unnecessary, perplexing and often convoluted rearrangement of clauses, documents, riders and Particular Conditions that undo random parts of the FIDIC General Conditions ultimately results in more time and effort being applied to efficiently resolve any disputes.

This, in turn, results in more costs being incurred, more issues up for debate as to what the parties actually intended and more disgruntled litigants, if one interpretation is adopted by a given court or tribunal over another.

To conclude, there seems to be little purpose in adopting a FIDIC contract if the amendments to it are substantial.

It may be best for all parties concerned to simply draft one final document where everything that is agreed upon can flow out of a continuous text, leaving only technical appendices, bills of quantities, drawings and specifications outside the main body of the contract.

In doing so, parties could ensure that no cross-references are required to pre-drafted standard texts that have, through heavy amendments, in any event, been de-standardised. They could also avoid redundant priority of documents clauses that normally aim to address potential contradictions, though often ineffectively.

In short, by creating one continuous custom-made text – rather than a patchwork of extracts from a once-upon-a-time standard contract – the margin for errors and inadequate drafting could be minimised.

Finally, as is common in any article that is intended to provide some form of guidance to the public, it has become almost mandatory to include a reminder that industry-specific legal advice and consultation should at all times be sought before parties commit to a document, the details of which they do not always understand or the intent of which they may incorrectly presume.