Introduction
In the United Arab Emirates, the construction and infrastructure sectors continue to flourish, with large-scale projects underpinning the country’s economic vision. The legal frameworks governing these projects are evolving to support efficient dispute resolution, robust contractor protections, and fair risk allocation. Central to these frameworks are the FIDIC (Fédération Internationale des Ingénieurs-Conseils) contracts, widely used for engineering and construction works both in the UAE and globally.
This article examines the suspension of works under FIDIC-based contracts, exploring the lawful grounds for suspension, the intricacies of cost recovery, and how recent updates in UAE law—particularly Federal Law No. 6 of 2018 (the Civil Transactions Law), Federal Decree-Law No. 42 of 2022 Concerning Civil Procedure, and sector-specific Cabinet Resolutions—impact these processes. We draw on official sources, such as the UAE Ministry of Justice, the Government Portal, and the Federal Legal Gazette, to ensure accuracy and relevance.
Understanding the intersection of FIDIC clauses and UAE legal requirements is not simply a matter for the legal department; it touches every aspect of project management and corporate strategy in the Emirates’ competitive market. As the regulatory landscape is updated in 2025 and beyond, companies that proactively align their contracts and on-site practices with evolving legal norms will be best positioned to mitigate risks and protect their commercial interests.
Table of Contents
- Overview of FIDIC Contracts and UAE Law
- Lawful Grounds for Suspension of Works
- Cost Recovery Mechanisms for Suspension
- Impact of Recent UAE Law on FIDIC-Based Suspensions
- Practical Insights and Case Studies
- Risks of Non-Compliance and Compliance Strategies
- Conclusion and Best Practices
Overview of FIDIC Contracts and UAE Law
Introduction to FIDIC and Its Role in the UAE
FIDIC contract forms, such as the Red, Yellow, and Silver Books, have long formed the backbone of contractual relationships in the UAE construction sector. The government mandates their use in many projects, and most private sector employers adopt them to instill international standards of predictability and fairness. Critical clauses—most notably those related to the suspension of works, variations, and payment—are supplemented by UAE-specific legal requirements.
The legal enforceability of FIDIC clauses in the UAE is underpinned by the Civil Transactions Law (Federal Law No. 6/1985) and the Commercial Transactions Law (Federal Law No. 18/1993), alongside project-specific regulations issued via Cabinet Resolutions (latest updates monitored via the UAE Government Portal and the Federal Legal Gazette).
Key FIDIC Clauses Relevant to Suspension and Cost Recovery
| FIDIC Clause | Description | UAE Law Reference |
|---|---|---|
| Clause 8.8 (Suspension of Work) | Outlines contractor’s rights if instructed to suspend work | Civil Transactions Law Art. 246 & 872 |
| Clause 16.1 (Contractor’s Right to Suspend Work) | Lists events entitling the contractor to suspend | Civil Transactions Law Art. 247 & 380 |
| Clause 19 (Force Majeure / Exceptional Events) | Allows suspension in extreme events | Civil Transactions Law Art. 273 |
Visual suggestion: Insert a process flow diagram showing the contractual suspension workflow under FIDIC and the overlay of UAE legal requirements.
Lawful Grounds for Suspension of Works
FIDIC Suspensions: Employer and Contractor Perspectives
Under the standard FIDIC suite, both employers and contractors narrowly define lawful grounds for suspension. The employer may instruct suspension (typically for technical, design, or administrative reasons), whereas the contractor’s right to suspend is more limited—often triggered by non-payment or force majeure.
UAE Legal Grounds for Suspension
The UAE Civil Transactions Law (Federal Law No. 6 of 1985) establishes fundamental principles relating to contract performance and suspension. Notably:
- Article 246: Contracts must be performed in accordance with their contents and in a manner consistent with the requirements of good faith.
- Article 247: Where reciprocal obligations exist, a party can refuse to perform if the other party has failed to satisfy its obligations—subject to court discretion.
- Article 273: Provides for automatic termination or partial suspension where performance becomes impossible due to force majeure.
Recent practice and court decisions show that the UAE courts interpret FIDIC suspensions in light of these statutory rules, often requiring strict compliance with notice requirements and good faith obligations.
Comparative Table: Old vs. Updated Grounds for Suspension
| Aspect | Pre-2022 Law | 2022-2025 Legal Updates |
|---|---|---|
| Notice Period | Flexible, often based on contract | Stricter application; late or insufficient notice may invalidate claim |
| Payment-Related Suspension | Permitted, but often litigated | Judicial support for suspension when certified payment is overdue (Federal Decree-Law No. 42/2022) |
| Force Majeure | High threshold, limited recognition | Broader interpretation post-pandemic, but still strictly construed |
Government Guidance and Notable Judicial Decisions
The UAE Ministry of Justice regularly issues clarifications on contractual suspensions, emphasizing that:
- The contractor must document cause for suspension and comply with formal notice requirements under both FIDIC and the law.
- Courts favor detailed contemporaneous records (letters, emails, site diaries).
- Suspensions based solely on “anticipatory” breaches or commercial pressures are rarely upheld unless clearly permitted by contract and law.
Cost Recovery Mechanisms for Suspension
FIDIC Clauses on Cost Entitlement
FIDIC contracts (Clause 8.9 and 16.1) allow contractors to recover costs and seek extensions of time if suspensions are not due to the contractor’s default. Cost recovery typically covers:
- Idle resources (labour and plant)
- Extended site overheads
- Remobilisation/demobilisation costs
- Prolongation costs
However, for such claims to succeed in the UAE, strict evidence and procedural standards apply as set out in recent Cabinet Resolutions (particularly Cabinet Resolution No. 57 of 2018 as amended by Resolution No. 75 of 2021).
UAE Law and Judicial Approach to Cost Recovery
The UAE Civil Transactions Law supports compensation for actual, proven losses resulting from a lawful suspension. Article 386 and Article 390 provide that damages are recoverable where a party establishes actual loss and causality. Fixed or ‘penal’ clauses in a contract will be enforced if reasonable and not manifestly excessive.
Procedure for Calculation and Substantiation
To maximize chances of recovery, contractors and counsel should:
- Keep detailed, contemporaneous records of all resources affected by suspension
- Ensure timely and compliant notices are submitted
- Reference government-mandated templates where relevant (available via the UAE Government Portal)
- Engage forensic quantum experts where claims are substantial or complex
Visual suggestion: Insert a compliance checklist for contractors when preparing cost recovery claims under FIDIC/UAE law.
Case Study: Suspended School Project in Abu Dhabi (Hypothetical Example)
Facts: A contractor working on a government school project receives a suspension instruction due to a major design change. After two months, work resumes.
Actions Taken: The contractor:
- Served written notice within 7 days, enclosing details of resources allocated at the time of suspension.
- Maintained daily records of idle machinery, labor costs, and site overheads.
- Submitted a consolidated claim with supporting documentation and expert reports.
Outcome: The claims were largely upheld by arbitration, as the contractor met both FIDIC clause and UAE legal requirements.
Impact of Recent UAE Law on FIDIC-Based Suspensions
Federal Decree-Law No. 42 of 2022 (Civil Procedure Code)
This pivotal decree introduced enhanced clarity and structure to dispute resolution in the construction sector. Changes affecting suspensions include:
- Recognition of “payment default” as a valid ground for contractor suspension—with enhanced judicial support for well-evidenced claims.
- Mandatory advance notice periods and prescribed documentation (aligned with FIDIC notice requirements).
- Promotion of mediation and negotiation before litigation, as directed by specialist Courts and panels.
Other Regulatory and Industry Updates (2022–2025)
Recent Cabinet Resolutions and Ministerial Circulars, such as Ministerial Decision No. 24 of 2024 (regarding major infrastructure projects), highlight increased scrutiny on suspension practices. The emphasis is shifting toward:
- Transparency in contract administration
- Expedited dispute resolution and cost assessment
- Greater accountability through digital records and e-Government reporting
Comparative Table: Recent Legal Changes Impacting Suspension and Cost Recovery
| Provision | Before 2022 | After 2022/2025 Updates |
|---|---|---|
| Recognition of Contractor’s Right to Suspend for Non-Payment | Case-by-case (uncertain) | Broadly recognized if contractually specified & notice compliant |
| Notice and Documentation Requirements | Often vague or disputed | Codified; clear guidance from Ministerial Circulars and FIDIC clauses |
| Role of Expert Evidence | Limited reliance in courts | Expert quantum analysis strongly encouraged in significant claims |
Practical Insights and Case Studies
Insights for Employers
- Employers must understand that arbitrary suspension instructions may expose them to significant cost claims, especially under strict new documentary requirements.
- Internal procedures for issuing instructions should be reviewed to align with updated FIDIC and legal protocols.
Insights for Contractors
- Contractors should maintain detailed records, give timely and precise notices, and proactively seek clarification when instructions are ambiguous.
- Suspension for non-payment is best exercised with legal counsel’s advice—courts scrutinize compliance closely.
Case Study: COVID-19 Related Suspension (Real Scenario)
During the COVID-19 pandemic, several contractors submitted suspension claims citing government-mandated site closures. While some claims succeeded, others failed due to late or insufficient notice, or lack of detailed cost evidence.
Key lesson: Proving the causal link between suspension and loss is essential under UAE law—generic claims or backdated notices are seldom upheld.
Risks of Non-Compliance and Compliance Strategies
Risks Associated with Unlawful Suspension
- Loss of cost recovery: Contractors may forfeit compensation if notice or evidence is inadequate.
- Risk of counterclaim: Employers may pursue damages for wrongful suspension, delay, or disruption.
- Potential termination: Persistently unlawful suspensions can trigger project termination clauses under both FIDIC and UAE law.
Visual suggestion: Insert a penalty comparison chart outlining the consequences of unlawful vs. lawful suspension under UAE law and FIDIC.
Compliance Strategies for Organizations
- Review contract terms to ensure alignment with current UAE legal updates to FIDIC-related suspension rights and obligations.
- Implement robust internal record-keeping—ideally supported by digital project management platforms.
- Train project management and legal teams on updated notice and documentation procedures.
- Engage legal counsel promptly before issuing or acting on suspension instructions.
- Monitor the Federal Legal Gazette and UAE Ministry of Justice communications for sector-specific changes.
Conclusion and Best Practices
The legal landscape surrounding suspension of works and cost recovery under FIDIC in the UAE is undergoing rapid, sophisticated change. As Federal Decree-Law No. 42 of 2022 and related Cabinet Resolutions tighten standards across the sector, all parties must embrace a proactive, evidence-based strategy for contract administration.
Key takeaways include:
- Lawful suspension must rest on clear contract and statutory grounds, with documented notice and justifiable cause.
- Cost recovery requires meticulous substantiation and compliance with evolving procedural rules.
- Keeping pace with 2025 updates in UAE law is no longer optional—corporate and project-level policies must embed these new requirements.
- Legal counsel’s early involvement and robust training can mean the difference between successful cost recovery and costly litigation.
As the regulatory regime continues to modernize, businesses that invest in compliance and digital record management will remain competitive and resilient—turning potential disputes into collaborative, contractually sound outcomes.
