Delay Claims Under UAE Construction Law: A Comprehensive Guide for Contractors and Employers

Construction delays are inevitable. What separates contractors who recover their losses from those who don't is whether they understand and follow the claims procedures required by UAE law and their contracts. A contractor responsible for only 19 days of delay on a project can still lose millions in liquidated damages if it fails to issue timely notices — as the DIFC Court of Appeal confirmed in the landmark Panther v MESC case.

This guide explains how delay claims work under UAE construction law, what contractors must do to preserve their entitlements, and how employers can protect themselves from invalid or inflated claims.

What Is a Delay Claim?

A delay claim is an assertion by the contractor that completion of the works has been or will be delayed by events for which the employer is responsible, or for which the contract provides relief. The contractor seeks two things: an extension of time to the contractual completion date, and compensation for the additional costs incurred during the extended period.

Not all delays give rise to claims. Only delays that affect the critical path — the longest sequence of activities that determines the overall project duration — will delay completion. A delay to an activity with float (spare time) may extend that activity but not push back the completion date.

Types of Delay

Understanding delay categories is essential because entitlement depends on the type of delay:

Excusable vs Non-Excusable Delays

Excusable delays are caused by events beyond the contractor's control. These may entitle the contractor to an extension of time, relieving it from liquidated damages for the delay period. Examples include:

• Employer-caused delays (late access, late design, late instructions)
• Variations and changes to scope
• Force majeure events
• Exceptionally adverse weather
• Unforeseen ground conditions
• Delays by statutory authorities

Non-excusable delays are the contractor's fault. These include poor planning, inadequate resources, subcontractor failures, and inefficiency. The contractor has no entitlement to an extension of time and remains liable for liquidated damages.

Compensable vs Non-Compensable Delays

Compensable delays entitle the contractor to both time and money. These are delays caused by the employer or events for which the employer bears contractual risk. The contractor can recover its prolongation costs — the additional time-related costs incurred during the extended period.

Non-compensable delays entitle the contractor to time only, not money. Exceptionally adverse weather and neutral force majeure events typically fall into this category. The contractor avoids liquidated damages but absorbs its own extended costs.

Concurrent Delays

Concurrent delay occurs when employer-caused delay and contractor-caused delay affect the critical path during the same period. UAE law has no specific statutory rule on concurrent delay, but courts are likely to apportion responsibility under Articles 290 and 291 of the Civil Code.

This differs from English law, where concurrent delay typically entitles the contractor to an extension of time but not prolongation costs. Under UAE law, if concurrent delay is apportioned 50/50, the contractor may receive half the extension of time requested but also recover prolongation costs for that period.

The Legal Framework

UAE Civil Code

The UAE Civil Transactions Law (Federal Law No. 5 of 1985) provides the foundation for construction delay claims:

Article 246 (Good Faith): Contracts must be performed in good faith. An employer who causes delay and then levies liquidated damages may breach this duty. Courts may refuse to enforce liquidated damages where the employer's conduct contributed to the delay.

Article 247 (Reciprocal Obligations): A party may refuse to perform its obligation if the other party fails to perform. This supports a contractor's right to an extension of time when employer defaults prevent timely completion.

Article 249 (Exceptional Circumstances): If exceptional circumstances make performance excessively onerous, courts may reduce the obligation or terminate the contract. This provides limited relief for events like unprecedented cost inflation, but does not excuse performance that remains possible.

Article 273 (Force Majeure): If force majeure makes performance impossible, the corresponding obligation ceases and the contract is automatically cancelled. This is a high threshold — mere difficulty or increased cost is insufficient.

Article 290-291 (Apportionment): Where multiple parties are responsible for damage, liability is apportioned according to their respective degrees of fault. This is the basis for concurrent delay apportionment in UAE law.

Article 390 (Liquidated Damages): Parties may agree compensation in advance, but courts may adjust the amount to match actual loss. This power cannot be contracted out of.

The New Civil Code: Federal Decree-Law No. 25 of 2025

Effective 1 June 2026, the new Civil Transactions Law introduces important changes for delay claims:

Hardship provisions enhanced: Courts are expressly empowered to extend completion periods, increase or decrease remuneration, or terminate contracts where exceptional circumstances cause contractual imbalance. This provides clearer relief for contractors facing unforeseen delays and cost increases.

Termination for convenience: Employers may withdraw from contracts before completion, provided the contractor is fairly compensated for expenses, completed work, and lost profit. Compensation is subject to mitigation.

Defective work remedies: If the contractor fails to remedy defects after warning, the employer may appoint another contractor at the defaulting contractor's expense — potentially without prior court approval. This may affect delay claims where defect rectification is disputed.

FIDIC Contracts

Most major UAE construction projects use FIDIC contracts, typically the 1999 Red Book (employer-designed projects) or Yellow Book (design-build). The 2017 editions are increasingly adopted.

Sub-Clause 8.4 (Extension of Time for Completion) lists the grounds for extension of time, including:

• Variations (unless an adjustment to the Time for Completion is agreed)
• Cause of delay giving entitlement to extension under any other Sub-Clause
• Exceptionally adverse climatic conditions
• Unforeseeable shortages in the availability of personnel or Goods caused by epidemic or governmental actions
• Any delay, impediment or prevention caused by or attributable to the Employer

Sub-Clause 20.1 (1999 edition) / 20.2 (2017 edition) sets out the claims procedure. The contractor must:

1. Give notice to the Engineer within 28 days of becoming aware of the event
2. Submit fully detailed particulars within 42 days (or as agreed)
3. Submit interim claims at monthly intervals if the claim is ongoing

Failure to comply with notice requirements can bar the claim entirely.

The 28-Day Notice Requirement

The notice requirement under FIDIC Sub-Clause 20.1 is the single most important procedural obligation for contractors pursuing delay claims. It operates as a condition precedent: miss the deadline and you lose the claim.

What the Contract Says

FIDIC 1999, Sub-Clause 20.1:

"If the Contractor considers himself to be entitled to any extension of the Time for Completion and/or any additional payment... the Contractor shall give notice to the Engineer, describing the event or circumstance giving rise to the claim. The notice shall be given as soon as practicable, and not later than 28 days after the Contractor became aware, or should have become aware, of the event or circumstance."

"If the Contractor fails to give notice of a claim within such period of 28 days, the Time for Completion shall not be extended, the Contractor shall not be entitled to additional payment, and the Employer shall be discharged from all liability in connection with the claim."

The Panther v MESC Case

The DIFC Court of Appeal decision in Panther Real Estate Development LLC v Modern Executive Systems Contracting LLC [2022] DIFC CA 016 is the leading authority on FIDIC time bars in the UAE.

Facts: The contractor (MESC) built a residential block in Al Furjan, Dubai under an amended FIDIC 1999 contract governed by DIFC law. The project was delayed by 325 days. At first instance, the Technology and Construction Division found that the employer (Panther) was responsible for 304 days of delay — 93% of the total. Only 19 days were attributable to the contractor.

The problem: The contractor failed to issue timely notices for its extension of time claims. It argued that because the employer caused the delay, the employer should not be entitled to liquidated damages — invoking the "prevention principle" and good faith.

The decision: The Court of Appeal upheld the time bar. The 28-day notice requirement was a condition precedent. Because the contractor failed to comply, its claims for extension of time and prolongation costs were dismissed. Liquidated damages were enforced against the contractor, despite the employer being responsible for the vast majority of the delay.

The Court rejected the prevention principle argument. Allowing the contractor to bypass the contractual claims procedure would enable it to "pick and choose" whether to make claims, safe in the knowledge that if the employer caused delay, liquidated damages would not apply. This would undermine the carefully constructed contractual process.

The lesson: Notice within 28 days. Every time. No exceptions.

Practical Guidance on Notices

Issue notices immediately. Do not wait to assess the full impact of a delay event. A short email within 28 days is better than a detailed letter on day 29.

Describe the event, not the claim. The initial notice need only describe the event or circumstance. Full particulars come later.

Keep a notice register. Track every potential claim event and the date you became aware of it. Set reminders for the 28-day deadline.

Err on the side of caution. If in doubt whether an event may entitle you to time or money, give notice. You can always withdraw the claim later.

Use the correct form. Under FIDIC Sub-Clause 1.3, notices must be in writing. Verbal discussions or meeting minutes do not satisfy the requirement.

Extension of Time Claims

An extension of time (EOT) claim seeks to extend the contractual completion date. The benefit to the contractor is relief from liquidated damages for the period of the extension. The benefit to the employer is a defined completion date — without an EOT, time may become "at large" and the employer loses the right to liquidated damages entirely.

Elements of an EOT Claim

To succeed, the contractor must prove:

1. An event entitling it to an extension — one of the grounds listed in Sub-Clause 8.4 or elsewhere in the contract
2. The event caused delay to the critical path — only delays that affect completion trigger EOT entitlement
3. Compliance with notice requirements — the 28-day notice and 42-day particulars
4. Causation — the delay event actually caused the critical delay claimed

Critical Path Analysis

The critical path is the longest sequence of dependent activities that determines the minimum project duration. A delay to a critical path activity delays completion. A delay to a non-critical activity may be absorbed by float without affecting completion.

Methods of delay analysis commonly used in UAE arbitrations include:

As-planned vs as-built: Compares the baseline programme to what actually happened. Simple but may not accurately identify causes.

Impacted as-planned: Adds delay events to the baseline programme to show their theoretical impact. Does not account for actual progress.

Collapsed as-built (but-for): Removes delay events from the as-built programme to show what would have happened but for the delays. Retrospective analysis.

Time impact analysis: Analyses the impact of each delay event at the time it occurred, using the contemporaneous programme. The most reliable method but requires good programme records.

Windows analysis: Divides the project into time periods (windows) and analyses delay in each window. Good for complex projects with multiple causes.

The SCL Delay and Disruption Protocol (2nd edition) is widely referenced as best practice guidance. It emphasises that "irrespective of which method of delay analysis is deployed, there is an overriding objective of ensuring that the conclusions derived from that analysis are sound from a common sense perspective."

Float Ownership

Float is the spare time within an activity before it becomes critical. Who owns the float — the contractor, the employer, or the project — affects delay entitlement.

Under FIDIC, float generally belongs to the project. An employer-caused delay that consumes float does not automatically entitle the contractor to an extension of time unless completion is actually delayed.

Some contracts explicitly allocate float to the employer, which can disadvantage contractors.

Prolongation Costs

Where a delay is compensable (the contractor is entitled to both time and money), the contractor can claim its prolongation costs — the additional time-related costs incurred during the extended period.

What Costs Are Recoverable?

Site preliminaries: The time-related costs of maintaining the site during the delay period. These include:

• Site management and supervision
• Site accommodation and facilities
• Plant and equipment standing charges
• Temporary works
• Site security, cleaning, and utilities
• Insurance and bond premiums

Head office overheads: The proportion of head office costs attributable to the delayed project. Various formulae are used:

• Hudson formula: Head office overhead percentage × contract sum ÷ contract period × delay period
• Emden formula: Head office overhead percentage × contract sum ÷ contract period × delay period (using actual overhead percentage from accounts)
• Eichleay formula: Contract billings ÷ total billings × head office overhead ÷ contract days × delay days (common in US)

These formulae are guides only. UAE courts and arbitrators may prefer actual cost evidence where available.

Loss of productivity: Where delays cause disruption (working out of sequence, stacking of trades, overtime to recover time), the contractor may claim the resulting productivity losses. This requires detailed analysis comparing planned and actual labour productivity.

Finance costs: Interest on capital tied up due to delayed payments or extended project duration.

Extended bond and insurance costs: The cost of extending performance bonds, advance payment guarantees, and insurance policies.

Calculating Prolongation Costs

The accepted approach is to calculate a daily "burn rate" — the average daily cost of time-related resources — and multiply by the period of compensable delay.

Key principles:

• Costs should be actual costs, not contract rates (unless the contract provides otherwise)
• Assess costs at the time of delay, not at the end of the project
• No double recovery — ensure prolongation costs do not duplicate other claims
• Mitigation — the contractor must mitigate its losses; costs that could reasonably have been avoided are not recoverable

Documentation

Prolongation claims require detailed supporting documentation:

• Contemporaneous cost records (payroll, invoices, plant logs)
• Resource histograms showing staff and equipment on site
• Head office management accounts
• Bond and insurance renewal notices
• Programme updates showing delay impact
• Correspondence demonstrating notice and mitigation

Concurrent Delay Under UAE Law

Concurrent delay is one of the most contested issues in construction disputes. It arises where both employer-caused delay and contractor-caused delay affect the critical path during the same period.

The English Law Approach

Under English law (Malmaison approach), if there is "true concurrency" — two causes of delay operating at the same time, each independently capable of causing delay to completion — the contractor is entitled to an extension of time but not prolongation costs. The rationale is that the contractor cannot prove that but for the employer's delay, it would have completed on time.

The UAE Law Approach

UAE law has no specific rule on concurrent delay. However, the Civil Code provides a framework for apportionment:

Article 290: A judge may reduce damages where the injured party contributed to the harm.

Article 291: Where multiple parties are responsible for damage, each is liable in proportion to their responsibility.

Article 106: A party may not abuse its rights. An employer who caused delay may be barred from enforcing liquidated damages.

Article 246: Good faith requires parties not to benefit from their own wrongdoing.

Based on these provisions, UAE courts and arbitrators are likely to apportion liability for concurrent delay rather than follow the English winner-takes-all approach.

Example: A project is delayed by 100 days. Analysis shows 60 days were caused by the employer (late design) and 60 days were caused by the contractor (insufficient resources), with 20 days of overlap (true concurrency). A UAE tribunal might:

• Grant the contractor an EOT for the 60 days of employer delay
• Deduct the 20 concurrent days, apportioning 50/50 (10 days to each party)
• Result: 50-day EOT (60 - 10) plus prolongation costs for 50 days
• Liquidated damages: 50 days (100 total delay minus 50-day EOT)

The exact apportionment depends on the facts and the tribunal's assessment of relative culpability.

Scottish Law Comparison

The Scottish approach in City Inn v Shepherd Construction [2010] supports apportionment where there is true concurrency and neither cause is dominant. UAE law's emphasis on proportionate liability aligns more closely with this approach than with English law.

Liquidated Damages

Liquidated damages (LDs) are pre-agreed damages payable by the contractor for each day of delay beyond the completion date. They provide certainty and avoid the need for the employer to prove actual loss.

Enforceability in the UAE

Liquidated damages are enforceable in the UAE. Article 390 of the Civil Code permits parties to agree compensation in advance. However, courts retain discretion to adjust the amount:

"The contracting parties may fix the amount of compensation in advance by making a provision therefor in the contract or in a subsequent agreement, and the provisions of the following articles shall apply in such case."

"The judge may, upon the application of either party, vary the agreement so as to make the compensation equal to the damage, and any agreement to the contrary shall be void."

This means:

• Courts can reduce LDs if the actual loss is less than the agreed amount
• Courts can increase LDs if the actual loss exceeds the agreed amount (though this is rarely pursued)
• Parties cannot contract out of this judicial power

Practical Implications

For employers:

• Document your actual losses from delay (lost rent, additional financing costs, consultant fees, reputational damage)
• If challenged, be prepared to prove actual loss
• Cap LDs at a reasonable percentage of contract value (10% is market standard)

For contractors:

• Challenge excessive LDs by proving actual loss is lower than the agreed sum
• The burden of proof is on you
• Consider whether EOT claims could eliminate or reduce the delay period

LDs After Termination

If the contract is terminated before completion, liquidated damages may not survive. The LD clause compensates for late completion, not non-completion. If the employer terminates, its remedy is damages for breach of contract, not LDs.

Practical tip for employers: Claim accrued LDs before terminating, or ensure the contract provides for LDs to survive termination.

Force Majeure

Force majeure provides relief where exceptional events beyond the parties' control prevent performance. Under UAE law and FIDIC contracts, the requirements and entitlements differ.

UAE Civil Code — Article 273

Force majeure under Article 273 requires:

• An event that makes performance impossible (not merely more difficult or expensive)
• The event was unforeseeable and beyond the party's control
• The party could not have prevented or avoided the event

If these conditions are met, the obligation ceases and the contract is automatically cancelled. This is a high threshold — rarely satisfied in delay claims.

FIDIC Force Majeure — Clause 19

FIDIC defines force majeure more broadly. Sub-Clause 19.1 requires the event to be:

• Exceptional
• Beyond the party's control
• Such that the party could not reasonably have provided against it before entering the contract
• Such that, having arisen, it could not reasonably have been avoided or overcome
• Not substantially attributable to the other party

Importantly: FIDIC does not require the event to be unforeseeable. A known risk can still be force majeure if the other conditions are met.

Entitlements under Sub-Clause 19.4:

• Extension of time for any force majeure event
• Cost recovery only for events "of the kind" listed in Sub-Clause 19.1 (war, hostilities, rebellion, terrorism, riot, munitions of war, radioactivity) that occur in the country of the works
• Natural catastrophes (including pandemics) entitle the contractor to time but not cost

Notice Requirements

Force majeure claims are subject to the same notice requirements as other claims. The contractor must give notice within 28 days of becoming aware of the event. Failure to provide timely notice may waive the right to relief.

Disruption Claims

Disruption is distinct from delay. A project may be disrupted without being delayed — for example, if the contractor works overtime to maintain the programme despite employer interference.

Disruption claims compensate the contractor for loss of productivity caused by employer actions. The contractor worked less efficiently than planned, incurring additional costs for the same output.

Proving Disruption

Disruption claims are notoriously difficult to prove. The contractor must:

1. Identify the employer's disruptive acts
2. Show these acts caused loss of productivity
3. Quantify the productivity loss

Methods include:

• Measured mile analysis: Compares productivity in an unimpacted period to productivity in the impacted period
• Earned value analysis: Compares planned value of work to actual cost
• Industry studies: Uses published productivity factors for various disruption scenarios (though less reliable)

Documentation

Disruption claims require contemporaneous records of:

• Labour allocation and hours worked
• Work sequences and out-of-sequence working
• Overcrowding and stacking of trades
• Weather conditions
• Instructions and variations received
• Correspondence highlighting disruption as it occurred

Global Claims and Rolled-Up Claims

A global claim (or total cost claim) is one where the contractor claims its total costs exceeded its total revenue without allocating specific losses to specific causes. These are disfavoured because they do not establish causation.

When Are Global Claims Permitted?

UAE law permits global claims in limited circumstances:

• It is impossible or impractical to separate the effects of individual events
• The employer's conduct has created the impossibility
• The contractor has given proper notice of the events

However, if the contractor's own conduct contributed to the loss, the global claim will fail.

Best Practice

Avoid global claims where possible. Quantify each delay and disruption event separately. Where events interact, use contemporaneous records to apportion effects as accurately as possible.

If a global claim is unavoidable, explain clearly why particularisation is impossible and ensure all notice requirements have been satisfied for each contributing event.

Practical Checklist for Contractors

Before Signing the Contract

• Review the extension of time provisions — what events give entitlement?
• Check notice periods and form requirements
• Identify any amendments to FIDIC that shift risk or shorten time bars
• Understand the float ownership position
• Review liquidated damages rates and caps
• Confirm the arbitration clause is express and detailed

During Project Execution

• Maintain a detailed baseline programme in native format
• Update the programme regularly to reflect actual progress
• Keep contemporaneous records of events, instructions, and delays
• Issue notices within 28 days of becoming aware of any potential claim event
• Submit fully detailed claims within 42 days (or as required)
• Submit monthly interim claims for ongoing events
• Respond to Engineer's determinations within the specified period
• Document mitigation efforts

When a Delay Occurs

• Issue notice immediately — do not wait to assess full impact
• Identify whether the delay affects the critical path
• Classify the delay (excusable/non-excusable, compensable/non-compensable)
• Begin gathering supporting documentation
• Consider the need for acceleration to mitigate delay
• Preserve the as-planned programme and progress records for delay analysis

Before Completion

• Ensure all claims are submitted and particularised
• Check that no notice deadlines have been missed
• Prepare delay analysis using appropriate methodology
• Quantify prolongation costs with supporting documentation
• Apply for Taking Over Certificate promptly

Practical Checklist for Employers

Contract Administration

• Ensure the Engineer acts impartially in assessing claims
• Respond to contractor notices and claims within required timeframes
• Challenge claims that lack proper notice or substantiation
• Document all instructions, variations, and decisions

When the Contractor Claims Delay

• Verify the notice was given within 28 days
• Assess whether the event actually entitles the contractor to an extension
• Check whether the delay is to the critical path
• Consider whether concurrent delay applies
• Review the contractor's delay analysis methodology
• Challenge costs that are not adequately substantiated

Liquidated Damages

• Document actual losses caused by delay
• Ensure the LD rate is reasonable and supportable
• Follow the contractual procedure for levying LDs
• Consider whether EOT should be granted before levying LDs

Frequently Asked Questions

What happens if I miss the 28-day notice deadline?

Under FIDIC, your claim is barred. The Panther v MESC case confirms that UAE courts enforce this strictly. Some civil law arguments may provide limited relief, but you should never rely on this — issue notices on time.

Can I claim for delays caused by force majeure?

Yes, but entitlement depends on the contract and the nature of the event. Under FIDIC, force majeure entitles you to an extension of time. Cost recovery is only available for specific events (war, terrorism, etc.) occurring in the country of the works. Natural disasters and pandemics typically give time but not cost.

How is concurrent delay handled in the UAE?

UAE courts are likely to apportion liability based on Articles 290 and 291 of the Civil Code, rather than follow the English Malmaison approach. The contractor may receive a partial extension of time and partial cost recovery, proportionate to the employer's responsibility.

Can liquidated damages be challenged?

Yes. Under Article 390 of the Civil Code, courts may adjust liquidated damages to match actual loss. The burden is on the contractor to prove the agreed sum is excessive.

What if the employer caused 90% of the delay but I missed my notices?

As Panther v MESC demonstrates, you will likely lose your EOT claim and face liquidated damages for the full delay period. Procedural compliance is not optional.

Do I need a delay expert?

For significant claims, yes. Delay analysis requires specialist skills and software. An expert delay analyst can prepare the critical path analysis, identify delay events, and present findings in a format courts and tribunals understand.

Delay claims can determine whether a project is profitable or catastrophic. Getting the procedure right from day one is essential.

Need help with a delay claim?

Our Construction Law team advises contractors and employers on claims management, delay analysis, and dispute resolution across the UAE.

Contact us to discuss your project.

Related Practice Areas: Construction Disputes and Claims | FIDIC and Standard Form Contracts | Construction Contracts | Arbitration and Dispute Resolution | Litigation

Related Insights: FIDIC Claims and Time Bar Rules | Liquidated Damages in the UAE | Taking Over Certificate Guide | Construction Contract Risk Management | Terminating a Contractor for Default | Bank Guarantees in Commercial Contracts

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