FIDIC vs Bespoke Contracts in the UAE: Where the Risk Actually Sits

Every construction project in the UAE starts with a decision about the contract form. Use a FIDIC standard form and you get a tested structure with predictable risk allocation, but one that may not reflect your commercial deal. Draft a bespoke contract and you get full control over the terms, but you also take on the cost of getting every clause right from scratch.

In practice, the choice is rarely that clean. Most UAE construction contracts sit somewhere between the two. Developers adopt FIDIC as a starting point, then amend it through Particular Conditions until the risk profile bears little resemblance to the published form. The result is a contract that looks like FIDIC but behaves like a bespoke agreement, often with gaps and contradictions that surface only when a dispute arises.

This article compares how FIDIC and bespoke contracts handle the risks that matter most on UAE projects: payment, delay, design liability, unforeseen conditions, variations, and disputes. It is written for developers, contractors, and project companies deciding which approach to take, and for those reviewing contracts where the choice has already been made.

The starting point: what "FIDIC" and "bespoke" actually mean in the UAE

The FIDIC suite published by the International Federation of Consulting Engineers is the most widely used set of standard form construction contracts internationally. In the UAE, the three main forms are:

• Red Book (1999): Traditional procurement where the employer provides the design and the contractor builds. The most common form on UAE residential and commercial projects.
• Yellow Book (1999): Design-and-build, where the contractor is responsible for both design and construction. Used frequently on infrastructure and industrial projects.
• Silver Book (1999): EPC/turnkey projects. The contractor takes on almost all risk, including unforeseen ground conditions. Used (less commonly) on process plants and power projects.

The 2017 editions introduced updates to claims procedures, dispute resolution, and the engineer's role, but the 1999 editions remain dominant in the UAE market. Abu Dhabi Government Conditions of Contract, mandatory for Abu Dhabi public projects, are based on the 1999 Red and Yellow Books but with significant employer-friendly amendments.

A "bespoke" contract is any contract drafted from scratch for a specific project, without a standard form as its base. Large developers, government entities, and international EPC companies often use their own templates. These contracts are tailored to the project but vary enormously in quality. Some are sophisticated, well-balanced agreements drafted by experienced construction lawyers. Others are cobbled together from precedent clauses, full of internal contradictions and silent on critical issues.

Then there is the hybrid that dominates the UAE market: a FIDIC form with Particular Conditions so extensive that they effectively rewrite the General Conditions. We deal with this separately below, because it carries risks distinct from both a clean FIDIC contract and a well-drafted bespoke agreement.

Risk allocation compared: clause by clause

Payment and cashflow

FIDIC approach: The Red and Yellow Books provide a structured interim payment mechanism. The contractor submits monthly statements, the engineer certifies the amount, and the employer pays within 56 days (1999 edition) or 42 days (2017 edition) of receiving the statement. If the employer fails to pay within 42 days after the due date, the contractor can give 21 days' notice and suspend work (Sub-Clause 16.1). Interest accrues on late payments.

Bespoke approach: Payment terms vary widely. Some bespoke contracts mirror FIDIC's certification process. Others tie payment to milestone completion, which gives the employer more control but creates cashflow risk for the contractor if milestones are delayed by employer-caused events. Many bespoke contracts extend payment periods to 90 or 120 days, remove the contractor's right to suspend for non-payment, or make suspension subject to conditions that are difficult to satisfy.

UAE-specific risk: Under Article 247 of the UAE Civil Code, a party can withhold performance if the other party fails to perform its obligations. The Dubai Court of Cassation has held that this right must be exercised proportionately. If the employer has paid most of the certified amount and only a small balance remains outstanding, a contractor who suspends the entire works may be found to have acted in bad faith under Article 246. This applies regardless of whether the contract is FIDIC or bespoke, but FIDIC's express suspension right provides a clearer contractual basis.

Bottom line: FIDIC gives contractors better payment protection out of the box. Bespoke contracts frequently strip this away. Contractors reviewing bespoke terms should check whether they retain any right to suspend, whether interest accrues automatically, and whether the payment certification process is genuinely independent.

Delay, extensions of time, and liquidated damages

FIDIC approach: FIDIC provides a structured claims process for extensions of time. Events entitling the contractor to additional time include employer-caused delays, variations, unforeseen physical conditions (Red and Yellow Books), and force majeure/exceptional events. The process is governed by strict notice requirements: 28 days to notify, then a detailed claim within 42 days (1999) or 84 days (2017).

Liquidated damages for delay are capped in the contract data. FIDIC's General Conditions do not specify a cap, but most Particular Conditions set one, typically at 10% of the contract price.

Bespoke approach: Bespoke contracts handle delay provisions inconsistently. Some provide detailed extension of time mechanisms. Others include vague language that creates uncertainty about what events qualify for an extension and what evidence the contractor must provide. Some bespoke contracts grant extensions of time only for force majeure, excluding employer-caused delays entirely. This is a significant trap for contractors.

Liquidated damages in bespoke contracts are sometimes set at levels that exceed any reasonable estimate of the employer's actual loss. Under Article 390 of the UAE Civil Code, courts have the power to adjust liquidated damages to match actual loss. But relying on this provision means going to court, which is expensive and uncertain.

UAE-specific risk: The enforceability of time bar clauses under UAE law is not settled. The DIFC Court of Appeal enforced FIDIC's 28-day notice requirement as a strict condition precedent in the 2023 Panther decision. But UAE onshore courts apply civil law principles, including the good faith obligation under Article 246 of the Civil Code, which may soften strict time bars where the employer was already aware of the delay event. A bespoke contract with an extremely short notice period (some require "immediate" notification) faces a higher risk of being found unenforceable or subject to equitable relief in onshore proceedings.

For a detailed analysis of FIDIC notice requirements and time bars in UAE disputes, see our article on FIDIC construction disputes and time bar rules.

Bottom line: FIDIC provides a clear (if strict) framework. Bespoke contracts range from reasonable to punitive. Contractors should be especially wary of bespoke clauses that remove extension of time entitlements for employer-caused delay, as this can trigger the prevention principle and render "time at large," removing the employer's right to liquidated damages altogether.

Design liability and fitness for purpose

FIDIC approach: The allocation depends on the book. Under the Red Book, the employer provides the design, and the contractor's responsibility is limited to workmanship and building to the design. Under the Yellow Book, the contractor designs and builds, and is responsible for ensuring the works meet the employer's requirements. The Silver Book goes further: the contractor accepts a fitness-for-purpose obligation, taking on risk for the design achieving a specified output.

Bespoke approach: Bespoke contracts often blur the line. A common issue in UAE projects is a bespoke contract that assigns design responsibility to the contractor but does not clearly define the employer's requirements, leaving the standard against which the design will be measured undefined. Another frequent problem is a contractor being asked to accept fitness-for-purpose obligations without the pricing or risk premium that would normally accompany a Silver Book engagement.

UAE-specific risk: Article 880 of the UAE Civil Code imposes mandatory decennial (10-year) liability on contractors and design consultants for structural defects. This liability cannot be excluded by contract (Article 882). It applies to any person who carries out the design or supervises the construction. Both FIDIC and bespoke contracts must account for this, but bespoke contracts sometimes attempt to limit or exclude it, creating clauses that are unenforceable as a matter of law.

The new UAE Civil Code (Federal Decree-Law No. 25 of 2025, effective 1 June 2026) preserves the decennial liability regime but introduces an express provision on recovery against subcontractors. The new Code confirms that a contractor's right of recourse against subcontractors is not based on strict decennial liability but requires proof of fault or breach of contract. This has implications for both FIDIC back-to-back subcontracts and bespoke subcontract arrangements.

Bottom line: FIDIC provides clearer design risk allocation because the different books correspond to different procurement models. Bespoke contracts require careful drafting to achieve the same clarity. If the contract does not match the actual procurement route (for example, imposing Silver Book risk in a design-bid-build scenario), the contractor is taking on risk it cannot manage.

Unforeseen physical conditions

FIDIC approach: Under the Red and Yellow Books, unforeseen physical conditions entitle the contractor to additional time and cost (Sub-Clause 4.12). The contractor must give notice, and the engineer assesses whether the conditions were reasonably foreseeable by an experienced contractor. Under the Silver Book, this risk shifts to the contractor entirely. Sub-Clause 4.12 of the Silver Book deems the contractor to have obtained all necessary information and accepted total responsibility for the conditions.

Bespoke approach: Most bespoke contracts in the UAE follow the Silver Book approach and place unforeseen ground conditions risk on the contractor, regardless of the procurement model. This is one of the most significant risk shifts in UAE construction contracting. Contractors pricing work on the basis of a site investigation report provided by the employer, but bearing the risk if conditions differ, are in a difficult position commercially.

Bottom line: This is an area where FIDIC (Red and Yellow Books) is materially more balanced than the typical bespoke contract used in the UAE market. Contractors should price unforeseen conditions risk explicitly if the contract does not provide relief, and should resist accepting this risk without adequate geotechnical data.

Variations

FIDIC approach: The employer (through the engineer) can instruct variations. The contractor is entitled to additional time and cost if the variation affects the programme or the contract price. Under the 2017 edition, a new "Value Engineering" provision allows the contractor to propose variations that reduce cost, with the savings shared.

Bespoke approach: Variation clauses in bespoke contracts are a frequent source of disputes. Common problems include: requirements for prior written approval that the employer's site team routinely ignores in practice; valuation mechanisms that do not work for the type of variation actually instructed; and clauses that allow the employer to omit work and give it to a third party without compensating the contractor for lost margin.

UAE-specific risk: Article 877 of the Civil Code requires the contractor to complete the work according to the contract conditions. Variations that materially change the scope may require a fresh agreement. If the variation clause is unclear or the employer instructs work outside the clause's scope, the contractor may struggle to recover the cost of additional work unless it can prove a separate agreement (written or implied).

Bottom line: FIDIC's variation mechanism is well tested and generally works in practice. Bespoke variation clauses need careful review to ensure they cover the full range of possible changes (additions, omissions, changes to sequence, acceleration) and that the valuation mechanism produces fair results.

Dispute resolution

FIDIC approach: FIDIC provides a tiered process: the engineer's determination, then a Dispute Adjudication Board (DAB) or Dispute Avoidance/Adjudication Board (DAAB in the 2017 edition), then arbitration (typically ICC). The tiered approach is designed to resolve disputes at the lowest level possible and keep the project moving.

However, the DAB/DAAB mechanism is frequently deleted or neutered through Particular Conditions in UAE projects. When it is removed, disputes jump directly from the engineer's assessment to arbitration, removing an important intermediate step.

Bespoke approach: Dispute resolution in bespoke contracts ranges from sophisticated (tiered negotiation, mediation, and DIAC or DIFC-LCIA arbitration) to problematic (jurisdiction of "the courts of Dubai" with no further specification). Some bespoke contracts contain unilateral jurisdiction clauses giving only the employer the right to choose the forum. UAE courts have held such clauses unenforceable.

UAE-specific risk: The Dubai Court of Cassation has held that incorporating FIDIC's arbitration clause by general reference (rather than expressly setting it out in the Particular Conditions) may not be sufficient to establish arbitration jurisdiction. If arbitration is intended, the clause should be express and detailed, regardless of whether the contract is FIDIC-based or bespoke.

For guidance on choosing between court proceedings and arbitration for construction disputes, including the payment order route for certified but unpaid amounts, see our article on recovering unpaid contractor invoices.

Bottom line: FIDIC's tiered approach is well designed but only works if the Particular Conditions preserve it. Bespoke contracts should include a properly drafted dispute resolution clause specifying the institution, seat, language, number of arbitrators, and governing law. A vague clause creates jurisdiction disputes before the substantive dispute is even addressed.

The hybrid problem: FIDIC with Particular Conditions that rewrite the deal

This is the most common scenario on UAE projects, and arguably the riskiest.

A developer starts with the FIDIC Red Book because it is market-standard and familiar to lenders, insurers, and project participants. Then the developer's legal team or commercial team amends it through Particular Conditions that:

• Delete the contractor's right to suspend for non-payment
• Remove or cap the contractor's entitlement to additional cost for employer-caused delay
• Shorten notice periods from 28 days to 7 or 14 days
• Remove the DAB/DAAB mechanism
• Shift unforeseen ground conditions risk to the contractor
• Cap the contractor's total liability at the contract price (or sometimes below it)
• Introduce "no damage for delay" clauses limiting the contractor to time extensions only

The result is a contract that carries the FIDIC name but redistributes risk heavily in the employer's favour. For contractors, this creates two problems. First, the team pricing the project may assume standard FIDIC risk allocation without reading every Particular Condition amendment. Second, the interaction between amended and unamended clauses can create contradictions that only become apparent during a dispute.

Example: The Particular Conditions delete the contractor's right to additional cost for employer-caused delay but leave the extension of time provisions intact. The contractor gets more time but no money. If the delay is prolonged, the contractor is stuck on site with running costs but no contractual remedy. Under a pure FIDIC form, those costs would be recoverable. Under this hybrid, they are not.

For contractors, the takeaway is straightforward: read the Particular Conditions more carefully than the General Conditions. The General Conditions are published and well understood. The Particular Conditions are where the risk sits.

Our construction law team regularly reviews FIDIC contracts with extensive Particular Conditions and advises contractors on which amendments to accept, which to negotiate, and which to reject.

Risk comparison summary

When each approach works best

Use unamended (or lightly amended) FIDIC when:

• The project involves international lenders or investors who expect a recognised standard form
• The procurement route matches the FIDIC book (design-bid-build for Red Book, design-and-build for Yellow)
• Both parties want a tested framework with established case law and arbitral precedent
• The project is bank-financed and the lender requires a standard form

Use a bespoke contract when:

• The project structure does not fit any standard form (hybrid procurement, PPP/concession, phased delivery)
• The employer has a strong internal legal team and a tested template from previous projects
• The contract needs to integrate with specific regulatory requirements (ADNOC contracts, DEWA requirements, free zone rules)
• The parties want to address risks that FIDIC does not cover well (technology transfer, intellectual property, specific performance standards)

Avoid the heavily amended FIDIC hybrid unless:

• Both parties have reviewed every Particular Condition amendment and understand its effect
• The amendments are internally consistent and do not create contradictions with the unamended General Conditions
• The contractor has priced the additional risk that the amendments create
• Independent legal review has been carried out before tender submission

For guidance on managing construction contract risk at the pre-contract stage, or for contract review before signing, contact our construction law team. We advise developers, contractors, subcontractors, and project companies on both FIDIC and bespoke contracts across the UAE and the wider GCC.

FAQ

Which FIDIC form is most commonly used in the UAE? The 1999 Red Book remains the most widely used FIDIC form for building and civil engineering projects in the UAE. The 1999 Yellow Book is common for design-and-build projects, particularly in infrastructure and energy. The 2017 editions are gaining adoption but have not yet replaced the 1999 forms as market standard.

Can a UAE court adjust the liquidated damages agreed in a construction contract?Y es. Article 390 of the UAE Civil Code gives courts the power to increase or decrease liquidated damages to match the actual loss suffered. This applies to both FIDIC and bespoke contracts. The burden of proof lies with the party seeking the adjustment.

Are FIDIC time bar clauses enforceable under UAE law? The position is not settled for onshore UAE courts. The DIFC Court of Appeal enforced the 28-day notice requirement as a condition precedent in the 2023 Panther decision. Onshore courts may apply the good faith obligation under Article 246 of the Civil Code to soften strict time bars in certain circumstances. Contractors should comply with notice requirements regardless, as relying on a court to excuse late notice is a high-risk strategy.

Is the Abu Dhabi Government Conditions of Contract a FIDIC contract? It is based on the 1999 FIDIC Red and Yellow Books but has been significantly amended to shift risk towards the contractor. It is mandatory for construction projects procured by Abu Dhabi government entities. Contractors should treat it as a heavily amended FIDIC form and review the amendments carefully.

Should contractors accept unforeseen ground conditions risk? Under the FIDIC Red and Yellow Books, unforeseen physical conditions risk sits with the employer. Many bespoke and amended FIDIC contracts in the UAE shift this risk to the contractor. If you accept this risk, it should be priced explicitly. Without adequate geotechnical data, accepting ground risk at a fixed price is one of the most significant commercial exposures a contractor can take on.

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