Construction Decennial Liability in GCC member countries (Qatar, UAE, Kuwait, Oman, KSA and Bahrain).

By Fawzan Rafeek MRICS MCIArb

The concept of responsabilité décennale originated in the French Civil Code (Article 1792 -1) and evolved from a desire to protect building owners, who could not ordinarily be expected to possess the technical expertise required to identify defects in design or construction at the point of delivery of a project, particularly where such defects are latent.

Decennial liability is an important mandatory law provision in GCC member countries, affecting architects, engineers and contractors. It cannot be waived, assigned, limited or excluded.

UAE

Decennial liability covers any total or partial collapse or defects discovered within 10 years following handover of a project. Articles 880 to 883 of the UAE Civil Code contain the key provisions.

Article 880 (1) provides that a contractor and a supervising architect (which where the context permits, can mean the supervising engineer) are jointly liable to compensate the employer for a period of ten years from the date of delivery of the work, if the building suffers (a) total, or (b) partial collapse, or (c) there is a defect that threatens the stability and safety of the building. Parties may not agree to a shorter period as this is a mandatory obligation.

Article 880 (2) provides that the remedy to the employer is compensation, which obligation arises despite the defect or collapse arising out of a defect in the land, or that the employer consented to the erection of buildings or installations that have proved to be defective.

Article 880(3) provides that the liability commences on delivery of the work, usually taken to be the issue of the Taking Over Certificate. The starting date can however be contentious and evidence should be sought as to the date of delivery or deemed delivery.

Article 881 makes a distinction between where the architect both produces the design and supervises the works (in which case he shall be liable for both structural defects and design defects) and where he produces the design, without supervising the works (in which case he shall be liable for design defects only).

Article 882 makes it clear that it is not possible for a supervising architect or contractor to contract out of decennial liability or to limit his liability. This is a strict liability matter and no proof of negligence is needed. They can instead only deny liability on the basis of force majeure, or they can seek to show that the failure is due to an external cause, perhaps due to the actions of the employer or a third party in relation to the building, after handover.

Finally, Article 883 provides that no claim for such liability shall be heard after the expiration of three years from the occurrence of the collapse or the discovery of the defect. This is counter to the general limitation period in the UAE of 15 years.

Qatar

Article 711 of the Civil Code (Law No. 22 of 2004) provides for decennial liability as follows: “The contractor and the engineer shall jointly guarantee events occurring during ten years for any destruction or defect, total or partial, in such buildings as they have constructed or fixed installations as they have erected, even if such destruction or defect is the result of a fault in the actual land or the employer has approved defective buildings or installations. Such liability will cover any defects appearing in the buildings or installations that threaten their stability and safety.”

A Ministerial Resolution in 1989 issued by the Qatar Minister for Municipal Affairs and Agriculture and setting out the Executive Regulations for the Qatar Building Permit Law No. 4 of 1985 imposes a strict liability on the contractor and the architect/engineer in relation to this decennial liability.

Specifically, Article 711 provides that: contractors and engineers are jointly and severally liable (Article 711 (1)) – noting that the Civil Code does not define contractors and engineers, but in the original Arabic text of the Civil Code, the word Engineer comprises ‘designers’ and ‘architects’. Contractor does not include ‘subcontractor’ for the purposes of decennial liability While contractors and engineers will be jointly and severally liable to others, between themselves they will be responsible to the extent of their failures (see Articles 712 and 713). Article 713 (2) only allows sole liability to be assumed by the contractor in circumstances where the engineer is essentially an employee of the contractor (i.e. where the contractor uses his own internal engineering department to provide the designs/drawings).

Article 711 (1) liability arises upon either the identification of a defect that threatens a building’s stability and/or safety or its partial/total collapse, liability arises despite the fact that a fault in the sub-surface conditions caused the defect or partial/total collapse or that the building’s owner approved the completed work.

Article 711 (2) liability is attached to buildings, with a life cycle of less than 10 years, for the duration of its life cycle.

Article 711 (3) a main contractors’ or engineers’ right to seek recourse against a subcontractor is not affected but the liability is not strict and remains one of breach of contract and/or negligence.

Article 714 provides that any claim under the decennial liability provisions must be brought within 3 years from the date of destruction or the defect being discovered.

Kuwait

Decennial liability provisions are in Articles 692 to 697 of Kuwait Law No.67 of 1980, the Architect / Engineer and Contractor liable for total or partial destruction or damage and any defect that threatens the strength and safety of a building or fixed construction for 10 years and 3 years from collapse or discovery of defect.

Kingdom of Saudi Arabia (KSA)

Article 76 of the Government Tenders and Procurement Law of the Kingdom of Saudi Arabia provides that, decennial liability is a strict liability imposed on contractors and/or design consultants whereby they are held liable to compensate an owner or employer of a construction project in the event of defective design, workmanship, and/or material in built structures. Decennial liability applies to the total or partial collapse of a structure on account of a construction defect, and applies for a period of 10 years.

Bahrain

This position is mirrored in Articles 615 to 620 of the Bahraini Civil Code; Bahrain is unique in that even though its Code refers to decennial liability generally, the liability is specified to extend only to 5 years as opposed to 10, so it is not really decennial at all.

Bahraini Civil Code Article 615 (a) provides that, the architect and contractor are jointly and severally responsible for the total or partial demolition of constructions or other permanent works erected by them for a period of five years from the date of completing the building or construction subject always to the following articles.

Oman

This position is mirrored in Article 636 of the Omani Civil Code as both the engineer and the contractor shall be jointly liable for a period of ten years for any total or partial collapse of the buildings or other fixed facilities constructed thereby, and for any defect which threatens the stability or safety of the building, unless the contract specifies a longer period.

Related Case Laws

In Dubai Court of Cassation 150/2007, it was underlined that “the liability to pay the said indemnity will remain notwithstanding that the defect or collapse arises out of a fault in the ground itself, or if the employer has consented to the erection of faulty installations. The effect of that is that is that the contractor or the engineer will be liable to pay an indemnity by way of contractual liability towards the employer and it is not open to any third party who has no contractual relationship with either of them to rely on such liability.” Thus, for example, adjoining building owners who suffer loss as a consequence of an event that gives rise to decennial liability will be left to pursue a tort claim direct against the owner and most likely also against the contractor and architect/engineer.

The decision of the Abu Dhabi Court of Cassation 721/Judicial Year 3 casts some light on the compensation that flows from such liability: “The liability of the contractor and the engineer who has supervised the construction of the building is restricted to a total or partial collapse in the building or to any defects that come to light that threaten the solidity and stability of the building”.

In a decision of the Abu Dhabi Court of Cassation 293/Judicial Year 3, the court make it clear that the risk of liability only comes into effect after delivery. If a fault develops during construction, the decennial liability provisions will be of no effect. Further, even with a defect that arises after delivery, “liability does not extend to every defect that may be discovered in the building, unless such defect threaten the soundness and stability of the building.”

Common Defects Clauses

Contractual Defects Clauses are express clauses within the general conditions of contracts limited in application to the works performed, obliges the Contractor to remedy defective work during the defects liability period (DLP) or maintenance period (typically 12/24 months) and can cover any defect but not commonly found in design consultant’s appointment. Contractual Liability for defects exist 6/12 years in the UK; 15 years in UAE, Kuwait, KSA, Oman and Qatar. After the defects liability period (DLP) or maintenance period, only remedy against a contractor is to bring a claim for defective work, not strict liability, must establish causation, damages subject to remoteness test and only remedy against a design consultant is to bring a claim.

Decennial liability can be Insurable but not ordinarily covered by PI insurance or CAR insurance at the same time not compulsory to carry insurance in GCC member countries unlike in France or Egypt. So, not a common practice to take out decennial liability insurance in GCC member countries, but now that Saudi Arabia has made decennial liability insurance mandatory, other GCC countries are expected to follow suit soon. FIDIC general conditions of contracts does not expressly deal with decennial liability other than compliance with laws provision.

Finally, decennial liability is a strict liability applied to construction projects whereby the Contractor and/or the design consultant will be held liable (in the absence of any evidence of breach of contract or negligence), to compensate an Owner or Employer in the event of defective works in built structures. Liability on a joint and several basis. The liability is for 10 years from “handing over” (i.e. completion) of the works (Repairs – may restart the 10 years period), prescribed period is 3 years from discovery of defect, this could mean a 13 years period to bring a claim. The legal position is generally the same across the various GCC member countries, other than Bahrain including the UAE, Kuwait, Oman, KSA and Qatar. Decennial liability is to be distinguished from contractual liability, which in, general terms, exists under law for a period of 15 years (completion date + 2 years DLP + 10 years decennial liability period + 3 years from discovery of defect) and decennial liability will not be covered by a standard Professional Indemnity (PI) policies held by Engineers.

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Fawzan Rafeek MRICS MCIArb

Construction Law Professional

Chartered Quantity surveyor

Project Commercial Auditor