The Legal System in the United Arab Emirates - Coursework Example

Section One (Civil Law) The primary source of law in the UAE is the sta y where both local and federal courts apply the federal laws for dispute resolution (Brendel, Barrette, & El-Riachi, 311). The Federal Law number 5 1985 Promulgating the Civil Transaction Code of the UAE addresses issues facing contractors seeking assistance for non-payment (Brendel, Barrette, & El-Riachi, 310). In the event a problem arises pertaining to a contract, where there is a lack of “specific legislation to the contrary and where specific legislation is silent on a point in issue” the civil code provisions will apply (Brendel, Barrette, & El-Riachi, 311). This provides a backup measure to cover the holes in the federal statutory codes when resolving a dispute. In the UAE, courts do not keep an accounting of cases gone to trial or decisions from those cases for building on previous case law. Building on case law benefits the person seeking relief from the courts as there is at least one other person who in a similar situation received a ruling in their favor. Case law would then support the argument made in the new case and provide a standard of proof necessary to make the original argument. In the UAE, this does not happen so every case must present with sufficient evidence and on its own merits before a judge. Judges have no expectation to render a decision based on previous decisions, meaning there is no precedent set outside of relying on the civil codes. Simply put, a judge can base his decision solely on the facts of the case in front of him and make a decision that is contrary to other decisions he or other judges have made in similar situations. For a contractor seeking relief in the UAE, understanding the civil codes and the federal laws is the best manner of protecting oneself. In the UAE Civil Law no. 2 of 1987 (the “civil code”) articles 870 to 896 specifically, provides the legal framework for the construction industry (Beamish, 2). The codes explain the expectations of both parties and the manner to find resolution without relying solely on a decision from the courts. In commercial transactions involving a contract, it is necessary for all parties to understand the significance this document has in their business dealings including the limitations of their agreement (Coburn). More importantly, both parties must understand what course of action is valid for them to undertake to ensure fulfillment of the contract including when one party will not pay for services rendered or materials provided. The UAE Commercial Transaction Law no. 18 of 1993 (the “CTL”), articles 6 and 11spell out the criteria required to become a party to a construction claim (Al Tammi & Company, 1). By familiarizing oneself with the statutes is the best manner to understand the elements a contract should contain and what course of action to take, such as arbitration and a mechanics lien when the other party refuses to pay for services and materials (Al Tammi & Company, 1). The Civil Procedure Law of 1992 (the “CPL”) articles 203-219 specifically discusses the use of arbitration and the manner in which the arbitral awards are authenticated (Al Tammi & Company, 1). The amount of unpaid contractors in the UAE has increased in recent years costing “hundreds of millions of dirhams to hundreds of millions of US dollars” (Delmar-Morgan). These cases had been clogging up the court systems when arbitration of these cases became popular. Now, the arbitration cases have increased to a point where it is difficult to tend to the client’s needs in a timely manner. These are not cases of a couple hundred or thousands of dollars or dirhams but millions. One case involving British consultants and engineers who were never paid equaled $636 million (Delmare-Morgan). WS Atkins, a company that designed Burj Al Arab waited for payment of $39.7 million (Delmar-Morgan). Through the arbitration process, WS Atkins expected payment by the first quarter of the next year, yet WS Atkins continued to wait for payment to occur. When threatening a lawsuit or forcing arbitration does not bring payment to the contractors and engineers, there is another option that is effective but not as widely used and that is a mechanics lien. A mechanics lien is an important option with respect to the Civil Laws of the United Arab Emirates. A mechanic lien offers protection to contractors seeking payment for failing or troubled projects in an effort to avoid the rising number of lawsuits and arbitrations in the courts (Coburn). A mechanics lien is easier, quicker in resolution, and nearly guarantees payment. This option applies to contractors, engineers, consultants, and architects seeking relief under the UAE Federal Law Number Five, offering a manner to secure payment for completed work or materials supplied (Coburn). The lien attaches to the property making it impossible to sell the property without paying the contractors with liens first. In many cases, a mechanics lien forces a judicial foreclosure to occur on the property. The lien removes the property from the owner’s sole possession, sold and the profits from the sale return to the creditors with first priority going to satisfy the mechanics lien. This is a better option than a lawsuit as contractor has the evidence of purchasing materials and completing service in or on the property. To illustrate, if the building has electricity or has the ability to use electricity, it provides evidence that the electrician completed his part of the contract. The electrician has satisfied the requirements necessary to file a lien against the property. A lien does not involve the debating of the issues in the court with other counter-suits and accusations towards the contractor as a method of shifting blame (Lawyers Monthly, 2). However, this federal law only applies to non-governmental contracts; it does not apply to contracts from the government (Brendel, Barrette, & El-Riachi). One question that arises when discussing the non-payment to a sub-contractor is whether the owner or contractor handling the construction is holding payment for poor quality workmanship or no future issue arises in the construction. The contract should address how the contractor and sub-contractors handle these types of situations including fixing any problems that arise within a specified and reasonable period. This is where the courts and arbitration apply for both parties to resolve the differences. However, a mechanics lien addresses the issue of failure to pay through ‘no fault’ of the sub-contractor. In the UAE, contractors seeking relief in a non-payment situation, working on non-government contracts begin the lien process by filing a lien against the entire project. The lien type is a priority lien, which gives the process a sense of urgency requiring immediate action. The lien filed against only the contractor by a sub-contractor limits their ability to obtain full restitution as the owner or owners may control the funding. To file against the entire project opens up the responsibility of repayment to everyone involved. The contractors may not have access to all the funds necessary to pay the sub-contractors as the owners of the property may hold the funds for a number of reasons. The two main reasons, the owners hold the money until the last moment often referred to as ‘tight-fisted’ or they do not have all the funds available to them for a number of explanations. The mechanics lien considers this allowing an opportunity to address this issue with everyone controlling the money and approval process. Filing for mechanics liens is relatively new and that makes venturing into this unfamiliar area difficult at times. There are many who are not aware of the legal support of this type of action in the federal laws. With the combination of ineffective arbitration and the priority placed in a mechanics lien, the recovery of unpaid money is increased. As mentioned previously, WS Atkins won in arbitration but the other party failed to deliver the money failed by the due date. If WS Atkins used a mechanics lien, it would have forced the payment through judiciary foreclosure. If the owners of Burj Al Arab did not want to lose the property, it would have encouraged quick payment. Conclusion (Add to the conclusion section in draft) The legal system in the United Arab Emirates receives influence through three distinct areas: Civil Laws, Criminal Laws, and Sharia Laws. Of these three areas, Civil and Criminal laws subjected to regular courts while Sharia is a separate court system, yet all three areas generally function simultaneously with one another. Recent court decisions in the UAE demonstrated Sharia Law takes precedence over Civil and Criminal Law when codified laws cannot supply missing provisions. Judges also find it necessary to decide which, Sharia Law or Civil or Criminal Law shall govern. This decision based on the judge’s discretion because of the dual nature of the legal system in the country can vary from case to case even if similar facts presented linking the cases together. This is a concern in each of the areas of law as demonstrated throughout this paper. Works Cited Al Tammi and Company. United Arab Emirates Construction Law and Dispute Resolution. DocStoc. 2011 Web. 6 January 2013. Beamish, Gary. Welcome Cices 20 February 2012 – Dubai UAE Constitution Contracts Formation. Cices. 20 February 2012. Web. 6 January 2013. Brendel Neal R., Amy L. Barrette, and Wadih El-Riachi. “The Availability in the UAE of Liens to Secure Payment under Construction Contracts.” Arab Law Quarterly 24 (2010): 309-317. Print. Coburn, Thompson. Managing Mechanics’ Liens. Nuwire Investor. 27 September 2012. Web. 6 January 2013. Delmar-Morgan, Alex. Legal firm sees sharp rise in UAE contract disputes. Arabian Business. 25 May 2009. Web. 6 January 2013. Lawyer Monthly. Legal Focus: Construction Laws UAE. Lawyer Monthly. 2002. Web. 6 January 2013. Read More