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Law in the Gulf

Construction law, for the purpose of this book, comprises the laws of the United Arab Emirates and the Arab Gulf states of Bahrain, Kuwait, Oman, Qatar and Saudi Arabia as applied to the issues commonly arising out of construction projects. An overview of the applicable legal regime of these jurisdictions is the purpose of this introductory chapter.

But the applicable legal regime is not merely an interesting backdrop to construction law. An appreciation of the legal systems of the United Arab Emirates and the Gulf states is critical not only to an understanding of the application of construction law in these jurisdictions but also to overcoming preconceptions based on academic and judicial contributions to construction law in jurisdictions where this has been a recognised branch of law for many years. Although the disputes and differences that arise on projects in the Gulf are essentially the same as those that arise in other jurisdictions, the applicable laws, although in some respects similar to those elsewhere, have their own unique heritage, resulting not only in differences of emphasis and analysis but also, in some cases, a departure from what might be considered elsewhere to be orthodox principles of construction law.

1.1 Basis of Government

Following the British government's announcement on 16 January 1968 of its intention to withdraw from the Gulf by the end of 1971, Bahrain, Qatar and the seven Trucial states1 embarked on a process to establish themselves as independent sovereign states. Oman and Saudi Arabia had already been independent sovereign states for many years by the time of this announcement, Kuwait since 1961.

Bahrain issued a declaration of independence from the United Kingdom on 14 August 1971 and Qatar on 3 September 1971. Uniquely amongst the Gulf states, the UAE Constitution when it was signed on 2 December 1971 brought into existence a new, federal state.

Each of Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates has a written constitution from which the authority of all legislative and judicial bodies derives.2 Although Saudi Arabia does not have a written constitution in a conventional sense, the Saudi Basic Law of Government serves a similar purpose but provides that the constitution is the Qur'an and the Sunna.3

Each constitution declares the existence of an independent sovereign state and that state's part in a broader Arab nation. In the case of Saudi Arabia this is expressed as a commitment to 'the aspirations of the Arab and Muslim nation to solidarity'.4

The UAE Constitution is, in effect, an agreement between the rulers of the emirates of Abu Dhabi, Dubai,5 Sharjah, Ajman, Umm Al Quwain and Fujairah. Ras Al Khaimah joined the other six emirates in adopting the UAE Constitution the following year.6 The UAE Constitution, uniting the seven constituent emirates, declares the United Arab Emirates a federal state, paving the way for the creation of a Federal or Union Government to which the seven rulers ceded part of the sovereignty recovered from the United Kingdom.

Each of the other Gulf states is governed by a constitutional monarch, albeit with varying degrees of consultative and representative input. In Bahrain the constitutional monarch formally operates alongside a democratic form of government.7

1.2 Federal Jurisdiction in the UAE

The powers of the UAE Federal Government are defined in and limited by the UAE Constitution which lays down guidelines for legislation required to establish the machinery of government, including the administration of justice. Except insofar as the rulers of each emirate ceded power to the Federal Government pursuant to the Constitution,8 they retained for themselves and their successors power over the internal affairs of their respective emirates:

Each emirate exercises, in accordance with Article (3) of the Constitution, sovereignty over its territorial land and water in all affairs in which the Federation is not competent pursuant to the Constitution, including court jurisdiction which is an act of sovereignty. Each emirate is obliged, pursuant to Article (10) of the Constitution, to respect the independence and sovereignty of the other emirates in regards to their internal affairs within the scope of the Constitution.9

In consequence, there are two tiers of government in the United Arab Emirates: the Federal Government and each government of the seven emirates.

Both tiers of government have their own legislative authority, the Federal Government by virtue of the UAE Constitution and the governments of each emirate by virtue of their retained sovereignty. As a result, there are also two tiers of laws: Federal laws which apply in all emirates, and emirate laws which apply only in the emirate by which such laws are enacted.10

The UAE Federal Government is represented by the Supreme Council,11 which is composed of the rulers of each emirate and which elects a president and vice president, each for a five-year term.12 The ruler of each emirate represents that emirate and exercises both legislative and executive authority to the extent not ceded to the UAE Federal Government pursuant to the UAE Constitution.13

The UAE Federal Government's authority covers not only areas of national interest such as foreign affairs, defence and internal security but extends to domestic affairs, covering specified industries such as banking, insurance and publishing. Significantly for the construction industry, the UAE Federal Government has authority over the introduction of laws pertaining to civil and commercial transactions, in effect, submitting the law of contract to the jurisdiction of the UAE Federal Government. Construction law in the United Arab Emirates is, in consequence, predominantly a matter of Federal law.

Nevertheless, power over construction and related activities was not ceded to the Federal Government except for the construction, maintenance and improvement of union roads.14 Each emirate retains power, therefore, to enact legislation covering the construction industry, provided that such legislation does not conflict with any Federal laws of general application. Given the significance of the construction sector in the development of a young country it will come as no surprise that each emirate has exercised this residual power to regulate the industry within their respective territories. The Emirates of Abu Dhabi and Dubai in particular, have taken the opportunity to introduce a large number of laws regulating the construction industry within their respective borders.

1.3 Role of Islamic Shari'ah

The Islamic Shari'ah, in essence, is the law of the Islamic religion as derived principally from the Holy Qur'an and the Sunna, the code of conduct established through example by the Prophet Mohammed.15

The Islamic Shari'ah plays a central role in the legal system of all the Gulf states. Thus, for example, the UAE Constitution records the status of the Islamic Shari'ah in the following terms:

Islam is the official religion of the Union. The Islamic Shari'ah shall be the main source of legislation in the Union.16

By virtue of the UAE Constitution and those of Bahrain, Kuwait, Qatar and Oman,17 it is a guiding principle in the formulation of all legislation that the main source for such legislation shall be the Islamic Shari'ah. The Islamic Shari'ah provides the inspiration for the legislation that applies within these Gulf states, and principles derived from the Islamic Shari'ah are adopted in the primary legislation of the Gulf states.18

Notwithstanding its constitutional status, the Islamic Shari'ah is not the exclusive source of legislation, which may be supplemented by or draw on sources other than the Islamic Shari'ah.19

In contrast, the Saudi Basic Law of Government expresses the role of the Islamic Shari'ah in the following terms:

The Kingdom of Saudi Arabia is a sovereign Arab Islamic state with Islam as its religion. The Constitution [of the Kingdom of Saudi Arabia] is the Quran and the Sunna of His Prophet, peace be upon him.

The centrality of the Quran and the Sunna reflects the history and culture of the Kingdom. Notwithstanding this, the Saudi Basic Law of Government has many characteristics in common with the constitutions adopted in the other Gulf states.

The influence of the Islamic Shari'ah is evident in the region's Civil Codes which typically provide that in the absence of any express provision, the principles of the Islamic Shari'ah shall be used to fill the void20 and by legislation requiring the domestic courts to apply its provisions alongside applicable laws, customs and principles. Thus, it is provided in relation to UAE Federal Courts:

Federal courts shall enforce the provisions of the Islamic Shari'ah and the Federal Laws and other laws in force and shall enforce customary rules and general legal principles that are not in contradiction of the Islamic Shariah.21

Likewise, in Saudi Arabia:

Courts shall apply the provisions of Sharia to cases brought before them, as derived from the Quran and Sunnah, and State laws not conflicting therewith.22

This requirement finds expression in the reliance of judges on one of the four schools of Islamic jurisprudence: Hanbali, Hanafi, Shafi'i and Maliki. Precedence is given in the United Arab...