Termination of Construction Contracts under UAE Law: Overlooked Risks for Contractors Using the 2017 FIDIC Red Book

Construction is among the industries that play the most key role in the economy of the United Arab Emirates (UAE). Like all other industries, construction recently faced exceptional critical challenges due to the pandemic, which caused an extensive inability, or at least a substantial hardship, for innumerable parties to comply with their contractual obligations. Eventually, this resulted in an increase in the number of delays in project deliveries and, in numerous cases, resulted in the dissolution of contracts. Consequently, the importance of the concept of contracts termination gained considerable attention compared with the prepandemic era because the relevant clauses and legal provisions were a lifeline to some parties, while they were calamity to many others. This paper provides an overview of the concept of the termination of contracts under the UAE law and under the International Federation of Consulting Engineers (FIDIC) Red Book and focuses on the risks that the contractor might oversee when a contract is terminated. The paper concludes that a contract can be lawfully terminated under both UAE law and the FIDIC Red Book 2017 under specific conditions and subject to certain requirements. Therefore, it is essential for the contractor to be cautious and to be fully aware of the law, the contractual rights, obligations, and procedures, while drafting the contract and prior to taking such a termination decision and declaring it officially to the employer.