Dubai’s new law to regulate construction activities and encourage investment

While the main focus of the Law is contractors, employers should know that, for any projects or contractors they have operating in Dubai, the Law will require that contractors are properly registered with a newly formed registry and any works being performed are consistent with the contractor’s relevant classification. A code of conduct and ethics that contractors must follow will also be issued.

Key takeaways

Application

The Law applies to all contractors operating in Dubai and all contracting activities in Dubai, including free zones such as the Dubai International Financial Centre (DIFC).

The Law does not apply to airports, infrastructure, and associated facilities, which are expressly carved out of the Law's scope. Nor does it apply to contracting activities or contractors operating in Emirates other than Dubai.

The Law will become effective six months after its publication in the gazette and contractors will have one year from the effective date to ensure compliance with it.

Contractor registration

A Registry will be maintained by the Dubai Municipality for all contractors operating in Dubai in accordance with a new classification system. Contractors are also required to refrain from employing any technical staff that have not obtained a new professional competency certificate.

Subcontracting and joint ventures

Contractors must satisfy certain conditions to subcontract works, including obtaining approval from the competent authority. Similarly, contractors must obtain approval to form a coalition or joint venture for a particular project.

Turnkey projects

Article 19 of the Law specifically addresses “turnkey contracts,” where the contractor must deliver the project in a “ready-to-use” or “turn the key” condition. The competent authority will determine which types of projects may apply this model and there will be specific regulations and controls to govern them.

Retention of records

Contractors are required to retain original contracts, as well as data, records, documents and plans related to their contracting activities for at least ten years from the date of the completion certificate.

Code of conduct and ethics

A code of conduct and ethics will be adopted, which all contractors must follow. Contractors are also expressly required to comply with the terms of their contracts, as well as the instructions issued by the engineering office appointed by the employer.

Overall, the Law has the potential to have a significant impact on contracting activities in Dubai. Employers and contractors should ensure they monitor future developments, such as the forthcoming code of conduct, to ensure compliance.

For any questions or further details, please reach out to Kirsten O’Connell, Elliott Sawford, David Hume, Ciara Hickey, Cameron Griffiths, Eileen Loebig, or contact us.