UAE: One Month Later – Impacts of recent Rains and Floods on Contract Performance in the United Arab Emirates (part 2)

published on 16 May 2024 | reading time approx. 2 minutes

On 16 April 2024, the UAE have seen the heaviest recorded rainfall for 75 years, causing floods and damages to major infrastructure in the country. Properties across the UAE faced the onslaught of natural elements – rain, wind, and flood – causing severe flooding, structural damage, and disruption. This includes rising groundwater causing floods within buildings, and water flowing into flats and buildings trough walls, windows and roofs. These events have introduced a new determinant in UAE real estate valuation - the ability to withstand vulnerability to rain, wind, and flood, encompassing factors like elevation, drainage, access, and waterproofing.

This article discussed who of the involved parties may be held liable for the damages so caused.

Landlords

According to the provisions of Dubai Law No. 26/2007 (Dubai Tenancy Law), landlords bear the primary responsibility for maintaining the property and rectifying any damages that impede the tenant's enjoyment of the premises, unless otherwise stipulated by mutual agreement between the parties in the tenancy agreement. In the absence of lease provisions to the contrary, such liability extends to damages resulting from severe weather conditions, including heavy rainfall and other natural phenomena, such as structural impairments, plumbing and sanitary issues, and electrical system malfunctions.

It is noteworthy to mention that where the tenancy agreement refers to a clause excluding the landlord’s liability entirely, this will hardly be held valid before the competent Rental Dispute Committee or the UAE courts. Hence, tenants are well advised to enforce their rights notwithstanding the existence of an exclusion clause; nevertheless, the tenancy agreement may include obstacles towards the tenants to serve written notice to the landlord within a specific timeframe, which may be considered justified and hence, valid.

Developers, Architects and Contractors

Under specific circumstances of defective workmanship, developers, contractors and consultants are subject to a stringent liability framework under the provisions of Federal Law No. 5/1985 (“Civil Code”). Under Articles 880-883, developers, architects and other subcontractors involved in the design and construction of the building are held liable towards property owners for at least 10 years for structural defects and broader design flaws, commonly known as “Decennial Liability”.

Similar liability falls under Article 40 of Law No. 6/2019 on Ownership of Jointly Owned Properties in the Emirate of Dubai (“JOP Law”), under which developers bear responsibility for structural defects for ten years from the issuance of the project's completion certificate. Additionally, they are accountable for rectifying defective installations within one year of unit handover. Property owners may invoke these warranties, alongside any other warranties provided by developers, to hold them accountable for construction and maintenance deviations, including inadequate drainage provisions.

The UAE courts have been following a proactive approach in awarding compensation to property owners under the above provisions. Consequently, this may have elucidated the commitment demonstrated by numerous developers nationwide, wherein they have undertaken to restore flood-impacted residences at no expense to property owners, thereby preemptively addressing potential litigation escalation.

Building Management

For most properties and developments, either the developer or an appointed management company assumes responsibility for overseeing the management, operation, and maintenance of the premises. This maintenance encompasses sewerage and drainage systems. Additionally, management companies are mandated to procure sufficient insurance coverage to address maintenance and reconstruction needs arising from fire, damage, or destruction, irrespective of the cause. Property owners are expected to contribute to the insurance premiums through their service charges. Article 41 of the JOP Law stipulates that the managing entity must secure insurance for the JOP to ensure its ongoing maintenance or reconstruction.

Conclusion

The UAE law imposes various liability and affected parties are well advised to assess the potential for seeking redress for incurred damages or potential liability toward aggrieved counterparts.