UAE Laws and Islamic Finance

Laws of the UAE and Islamic Finance

Archive for May 6, 2010

Contracting with the Dubai Government: Procedures Regarding Work Contracts



Law No. 6 of 1997 On Contracts of Government Departments in Dubai

Article 60:

The contractor shall be held responsible for maintaining order within the work site and for damages caused to public and private properties due to his works or to execution of the contract and he shall adhere to the laws and regulations applicable with regard to laborers and their rights as well as for ensuring their safety from hazards.

Article 61:

The contractor shall be considered as accepting the contract’s designs, drawings, specifications and bills of quantities and that they are sufficient for the safety of the contract subject works and the department shall have the right to correct any error or omission occurring in any specification, drawing, or design without compensating the contractor prior to execution of the contract or during execution provided that this shall not result in any change to the basic specifications or increase in the quantities, measurements or contract period and that the correction shall not cause cancellation of completed constructions, without prejudice to what is prescribed in Article 48 hereof.  In all cases the contractor shall make sure of the soundness and validity of the approved specifications, drawings, designs and quantities and shall inform the department or the consultant of his comments on them.

Article 62:

The contractor shall adhere to the following:

  1. To submit to the department or supervising consultant within the period fixed in the contract, a work schedule containing all execution stages up to final completion and shall obtain approval on said schedule from them.
  2. Not to enter into subcontracts with subcontractors except under written approval from the department or the supervising consultant and such approval shall not release him from the full responsibility for execution of the contract.
  3. To complete the contract subject works including variation orders issued thereto such that the preliminary handing over extension thereto due to variation orders.


Article 63:

If the contractor is late in commencing the work or is slow in an obvious manner that convinces the department of the impossibility of completing the work in due course, or ceases to work for a period exceeding (15) continuous days, or withdraws from work or violates the contract conditions, the department shall have the right to withdraw the work from him and take any of the following actions:

  1. To execute, through a direct instruction issued by it, all outstanding works without the contractor being entitled to claim any savings achieved.
  2. To negotiate with a contractor to complete the work.


The department shall, for ensuring execution of the work, seize the supplies and equipment of the negligent contractor at the site and use them for completion of the work without any responsibility for whatever damages occurring to said supplies or equipment.  The contractor shall as a result of withdrawal of the work from him bear all compensations due to the department for any damages caused to it and he shall also bear 10% of the value of the works which he failed to execute in order to cover administrative expenses borne by the department towards said works.  As security for recovery of said amounts, the department may seize contractor’s work supplies and equipment available at the work site after completion of the work. 

Article 64:

Payments shall be made to the contractor as follows:-

  1. Payments on account equal to 90% of completed works and 85% of materials supplied to work site according to execution lists and details of supplied materials submitted by the contractor.  Such payments shall be made after being financially and technically verified and approved by the supervising consultant and the technical authority of the department.
  2. Works final payment according to final completion statement submitted by the contractor and the payment certificate approved by the supervising consultant as well as the department’s approval.  The following shall be observed on payment:

a.)  To deduct the previous payments made on account for the works or materials.

b.)  To retain a sum equal to 5% of the final payment as security pending final taking-over of the project.  However, said retained sum may be returned to the contractor against submission by him of a bank guarantee for the same value.

Article 65:

The contractor shall complete all works stated in the contract according to the conditions and at the date specified in the contract and in the event of being late beyond date, a delay fine shall be imposed on him as per a certain amount to be specified in the contract for every day of delay up to a maximum of 10% of the contract value.  The said fine shall be calculated immediately on occurrence of the delay without need for notification or judicial proceedings and without need for proving the damage and also without prejudice to the department’s right in charging the contractor with the supervising consultant’s fees for his supervision during the delay period.  However, the provisions stated in Article 63 hereof may be applied if the imposed fee exceeds 10% of the contract value.  The contractor may also be exempted from the delay fine according to the provisions and procedures prescribed in Article 49 hereof.

Article 66:

If general exceptional incidents or circumstances which cannot be prevented or anticipated occurred and caused the execution of the works to be expensive and will expose the contractor to a grave loss beyond his control, he must continue execution and shall have the right to claim a fair compensation by a request to be submitted by him to the Tenders and Negotiations Committee which shall study it and submit its recommendation on it to the General Director for his approval.

Article 67:

The contractor shall notify the department and the consultant of his completion of the works and his request for handing them over.  The preliminary taking over shall be carried out in presence of the supervising consultant, by a committee to be formed by a decision from the General Director and said committee shall make sure of the contractor’s execution of the completed works as specified in the contract and its appendices, or take over with reservation on certain outstanding works making a list of them and fixing their completion date subject to implementation of the provisions of Article 63 hereof in the event of failure by the contractor to complete said outstanding works; and the minutes shall be submitted to the General Director to take the necessary actions.

Article 68:

The contractor shall after completion of work evacuate the site from all materials, earth and debris and shall level it.  However, the department shall have the right to execute said works on his account in the event of his failure to execute them and deduct their value from his dues. 

Article 69:

The contractor shall remain responsible for guaranteeing and maintaining the contract subject works for one year from date of preliminary taking over and shall undertake to repair any damages occurring as a result of poor execution.  He shall also remain responsible for a period of ten years for every major defect occurring to the constructions as a result of poor execution without revoking responsibility of the supervising consultant for said defect.

Article 70:

The final taking over of the works shall be carried out by the taking over committee in presence of the consultant after termination of the guarantee and maintenance period.  It shall be ascertained that the contractor has fulfilled all of his obligations and the final taking over certificate shall be issued by the committee and the consultant and shall be approved by the General Director and accordingly the value of the retained guarantees shall be released.

Article 71:

All provisions prescribed under this law shall be applied especially those pertaining to works in Turnkey projects and on taking over said projects contracts consideration shall be given to registration of the moveable items used for furnishing the project and they shall be stated in special lists to facilitate entering them in the Assets Record of the Department and applying the provisions regarding spatial supplies on them.

Article 72:

Work contracts must not be concluded for lump sum value (Lump Sum Contracts) except when so required by the nature of the works to be executed whose quantities and unit rates cannot be exactly determined.  However, the department shall endeavor to determine rates of certain major items in said contracts to refer to them in case of additions or omissions occurring on the works due to variation orders or any other reasons.

UAE Laws and Islamic Finance

Laws of the UAE and Islamic Finance