WEATHER-RELATED DISRUPTIONS IN UAE CONSTRUCTION: LEGAL INSIGHTS AND RIGHTS

22 April 2024

Manasi Dicholkar

Severe weather events have recently swept across the UAE, unleashing thunderstorms and prolonged rainfall, prompting red alerts from the National Centre of Meteorology.

Dubai: This extreme weather has wreaked havoc on numerous construction projects throughout the region, causing extensive flooding and wind damage, and subsequently leading to potential delays in scheduled activities.

While the peak of the storms may have subsided, the lingering impact on these projects remains a concern, with ongoing debates about whether contractors or employers should bear the cost of delays and associated financial losses.

Contractual Provisions for Weather Impacts

In the realm of construction, it's common for contracts to predefine the distribution of risks associated with adverse weather. The FIDIC’s Conditions of Contract are frequently employed, which generally allow contractors extensions due to delays caused by "exceptionally adverse climatic conditions." However, these contracts typically do not provide direct entitlements for financial compensation.

For instance, FIDIC's 1999 Red Book Clause 8.4 acknowledges the extension of completion times due to severe weather but does not promise monetary claims. Contrarily, Clause 17.4 mentions that unforeseen "forces of nature" might enable contractors to seek compensation for losses, designated as "Employer’s Risks."

In UAE practice, it's not unusual for parties to modify standard agreements or craft bespoke conditions that alter the default risk allocation, potentially reducing a contractor’s claims or omitting them altogether.

Legal Perspectives on Force Majeure and Weather Disturbances

UAE legislation, including Article 273 of the UAE Civil Code, addresses force majeure events, defining them as occurrences that render contract performance impossible. Typically, this results in the contract's termination—often an impractical resolution for both contractors and employers.

Article 249 of the Civil Code also plays a critical role, allowing for contractual adjustments in extreme cases where performance becomes unduly burdensome due to unpredictable, extraordinary events. This provision mandates a fair renegotiation of terms, reflecting the shift in circumstances affecting the general public, which could include severe weather scenarios.

Practical Steps and Strategic Considerations

Determining whether weather conditions were "exceptional" and "adverse" requires contractors to demonstrate a direct causation for project delays or to trigger specific contractual provisions for monetary recovery. The debate extends to scenarios where projects delayed by the employer coincide with adverse weather, potentially entitling contractors to additional time or compensation.

Ultimately, the construction contract is paramount in determining entitlements due to weather impacts. Absent explicit provisions, contractors might invoke Article 249 of the Civil Code under particular conditions.

Insurance Claims

Insurance is a binding agreement between the insured and the insurance provider to face risks, according to Article 1026 of the Civil Transactions Law. Damages caused by rain to homes and vehicles are covered by most insurance policies in the UAE. However, the ability to claim depends on the wording of your selected insurance policy's coverage and exclusions. This means that if the policy is comprehensive and includes damages from rain and natural disasters, these damages will be covered.

Insurance claims for rain-related damages involves understanding the specific coverage offered by different insurance policies. Automobile insurance typically covers rain damage, but the extent of coverage varies, so it's essential to review policy details carefully. In cases of injuries due to rain floods, seeking compensation through insurance claims, particularly with features like personal injury protection (PIP) and medical payments coverage, becomes crucial. Home insurance policies commonly include coverage for rain damage, safeguarding against property losses caused by adverse weather conditions, while car insurance policies often offer comprehensive coverage options against various perils, including rain damage to vehicles. Similarly, renters insurance provides protection for tenants against rain-induced damages to their rental properties, ensuring their interests are secured in unforeseen circumstances. Consulting with insurance professionals can provide clarity on available coverage options and ensure individuals are adequately protected against the financial impacts of rain-related damages.

Maximizing Protection

To maximize protection against rain-related damages, individuals can adopt the following strategies:

1. Regular Policy Review: Periodically reviewing insurance policies ensures that coverage aligns with current needs and circumstances. Updating policies to reflect changes in property value or lifestyle can help maintain adequate protection.
2. Enhanced Coverage Options: Exploring additional coverage options, such as umbrella insurance or riders for specific perils, can provide supplementary protection against rain-induced damages beyond standard policy limits.
3. Risk Mitigation Measures: Implementing risk mitigation measures, such as proper maintenance of vehicles and property upkeep, reduces the likelihood of rain-related damages and may qualify for premium discounts.
4. Consultation with Insurance Experts: Seeking guidance from insurance professionals enables individuals to gain insights into available coverage options and make informed decisions regarding insurance policies tailored to their unique requirements.

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In Conclusion

As the UAE continues to experience variable and severe weather patterns, understanding the legal landscape and preparing contracts to address these fluctuations is essential. Ensuring clear terms and proactive management can protect against unforeseen disruptions and secure both parties' interests in the volatile climate of construction and development. Individuals can optimize their insurance coverage for rain-related damages, ensuring comprehensive protection against the uncertainties of inclement weather conditions. By leveraging insights into the factors influencing coverage and adopting strategies to maximize protection, individuals can safeguard their interests against the financial repercussions of rain-induced damages effectively. In the ever-changing landscape of insurance, staying informed and proactive is paramount to ensuring peace of mind and financial security in the face of unforeseen events.

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