We have secured a successful litigation outcome on behalf of our client, a UAE-based marine contracting company, in a construction payment dispute arising from works carried out at a major island development project in Dubai.
Dispute
Our client was engaged as a subcontractor to perform marine infrastructure works under a subcontract valued at AED 4,300,000. Upon completion of all assigned works, confirmed by the project owner’s Final Completion Certificate, the main contractor failed to honour three outstanding payment certificates totalling more than AED 700,000, despite having acknowledged the debt in writing and proposing an instalment plan, which it never implemented.
Outcome
The Court of First Instance ruled entirely in our client’s favour, ordering full payment plus 5% statutory interest. The main contractor appealed, raising an arbitration clause defence and challenging the court-appointed expert’s findings. The Dubai Court of Appeal dismissed the appeal in its entirety, upheld the Court of First Instance judgment, and ordered the appellant to bear all appeal costs, including attorney’s fees, with its security deposit forfeited.
Key Lessons
- Issued payment certificates are binding and enforceable, even where the main contractor later disputes the amounts.
- A Final Completion Certificate issued by the project owner effectively counters unsubstantiated delay claims against a subcontractor.
- An arbitration clause does not automatically bar court proceedings where it is not properly and timely invoked.
The matter was handled by Reda Hegazy, Partner and Head of the Litigation Practice Group and Ahmed Elaghoury, Associate, both of whom specialise in commercial and construction litigation and execution matters before the UAE courts.