Construction disputes to rise in Middle East as cash tightens

Simon Palmer, the head of construction disputes at the law firm DLA Piper, believes that the fear of cash shortages further down the line is prompting many contractors to take action.

Arabtec, which is building the Louvre Abu Dhabi, is also taking a more aggressive approach towards getting paid for work it has already carried out. Antonie Robertson / The National

Arabtec's disclosure that it is "vigorously seeking full recovery of receivables" owed is yet another sign that construction disputes in the region are set to rise as cash becomes tighter.

“There’s definitely more disputes,” said Simon Palmer, the head of construction disputes at the law firm DLA Piper.

“What used to be the case is things would take their time to develop and it could be a number of years before anything actually came to a head. Parties are now prepared to do something about it.”

Faisal Attia, at DWF, another law firm, said that during the previous crisis, many contractors decided to wait after payments stopped as they did not want to spend even more money on litigation.

Within a year there was a rush of work “because people decided they couldn’t wait any more and decided to pull the trigger”.

Scott Lambert, the regional head of construction and infrastructure at the law firm Al Tamimi & Co, said that it is currently seeing the beginnings of potential cases, but not many full-blown claims.

“People are still having a look at their own situation and maybe not even telling the other side yet that there is a claim coming,” he said.

He expects this to change soon.

“There will be an increase in disputes coming forward in the second half of this year. Whether they get resolved or not depends on how much cash is around.”

Yet Mr Palmer believes that it is this fear of cash shortages further down the line that is prompting many contractors to take action.

“Things have definitely tightened and there’s an eagerness to take some action,” he said.

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