Construction and Decennial Liability
The muqawala chapter under Federal Decree-Law No. 25 of 2025, article by article

On 1 June 2026 the statutory basis of every construction contract performed onshore in the UAE changed. Federal Decree-Law No. 25 of 2025 issued a new Civil Transactions Law; its Article 2 repealed Federal Law No. 5 of 1985 in full and Article 3 brought the new Law into force. The muqawala provisions that practitioners have cited as Articles 872 to 896 for forty years are now Articles 812 to 838, and the decennial liability article every construction lawyer knows as Article 880 is now Article 821.

Renumbering is the visible change and the least important one. This note sets out what the new chapter actually requires of contractors, engineers and employers, identifies the provisions whose wording repays a second reading, and explains why Article 4 means the old Code still governs a large part of the live dispute population.

1. What changed, and what did not

The architecture survived. The new Law keeps muqawala as a nominate contract, keeps decennial liability, keeps the prohibition on contracting out of it, and keeps the three-year window for a warranty action. A practitioner who knows the 1985 chapter will recognise the 2025 chapter immediately.

What changed is the numbering, and in places the drafting. The table below is the working concordance for construction work. Each mapping was taken by reading the operative text of the new article and matching it to the doctrine — not from a heading, and not from an English rendering.

2. Decennial liability: Article 821

Article 821 applies where the subject of the contract is the erection of buildings or other fixed structures designed by an engineer to be executed by the contractor under his supervision. Where it applies, the engineer and the contractor are jointly and severally liable for any total or partial collapse occurring within ten years.

Four features of the drafting decide most disputes:

• A defect in the land is no defence. Liability stands "even if the collapse arose from a defect in the land on which they were erected".
• The employer's authorisation is no defence. It stands even where "the employer authorised their erection despite being defective".
• Collapse is not the only trigger. Article 821(2) extends the warranty to defects "that threaten the solidity and safety of the construction". A building that has not fallen down can still engage the article.
• The clock starts at delivery. Article 821(3): the period runs "from the time the employer takes delivery thereof" — not from practical completion, not from the certificate, not from the making of the contract.

There is one express carve-out: the parties may intend the structure to stand for less than ten years, and the article yields to that intention. It is a narrow exception for genuinely temporary works, not a drafting route out of the regime — see Article 823.

Article 821(4) preserves the contractor's recourse against subcontractors. The warranty binds the contractor to the employer; it does not disturb the chain behind it.

3. The engineer's exposure: Article 822

Article 822 splits the engineer's liability by reference to the scope of the retainer:

The practical consequence is that the scope clause in the consultant's appointment is doing statutory work, not just commercial work. A design-only appointment under which the engineer in fact attends site, issues instructions and signs off stages will be characterised by what happened, and 822(2) brings joint and several liability with the contractor on execution defects. Consultants who want the 822(1) position should be able to show that the retainer and the conduct match.

For employers the point runs the other way: where both limbs engage, Article 821 gives a single claim against two solvent defendants rather than a contest about allocation. Allocation between them is their problem, not the employer's.

4. You cannot contract out: Article 823

Article 823 is one sentence and it is absolute:

Note the breadth. It voids a stipulation intended to limit the warranty, not only one that excludes it. On its face that reaches:

• an aggregate liability cap expressed to cover decennial exposure;
• a net-contribution clause that would reduce joint and several liability under Article 821;
• a defects-liability period drafted as the employer's exclusive remedy;
• a time bar shorter than Article 824's three years;
• an entire-agreement or sole-remedy clause used to displace the statutory warranty.

Clauses of this kind are standard in international forms and in amended FIDIC particular conditions. They are not void for all purposes — they continue to operate on contractual claims — but to the extent they are aimed at the Article 821 warranty, Article 823 takes them out. A liability cap drafted without a decennial carve-out is the single most common defect in UAE construction documents, and the new Law has not changed that.

5. Time: Article 824, and the Article 7 transitional rule

Article 824 is short: a warranty action "is not heard after the lapse of three (3) years from the occurrence of the collapse or discovery of the defect".

Two periods therefore run together and must not be conflated:

• The ten-year warranty period (Article 821) — runs from delivery and defines the window in which a collapse or defect engages the warranty at all.
• The three-year action period (Article 824) — runs from the collapse or from discovery of the defect, and defines how long the claimant then has to sue.

A defect discovered in year nine gives a claimant until year twelve to issue. A collapse in year eleven engages neither.

The transitional rule most parties will miss

Article 7 governs limitation across the change of statute. Where the new Law sets a shorter period than the old, the new period runs from the date the new Law came into force — 1 June 2026 — even if the old period had already started. But if what remained of the old period is shorter than the new one, that remainder governs.

Anyone holding a construction claim that was already running on 1 June 2026 has to work both calculations and take the earlier date. That is a diary exercise, not a drafting one, and it should be done now rather than when a limitation defence is pleaded.

Article 4(1) completes the picture: the Law "shall not apply to facts and transactions preceding it, unless the Law stipulates otherwise". A handover in 2023 and a collapse in 2024 remain a 1985 Code matter on the substance, even though the proceedings are issued today.

6. Delay damages: Article 340, and a genuinely new ground

Agreed compensation moves from Article 390 to Article 340. The familiar position survives: the parties may fix compensation in advance, and the court may reduce it where the debtor proves the assessment was exaggerated or the obligation has been partly performed.

Article 340(3) adds a further ground that construction practitioners should read carefully: the court may reduce the agreed compensation where the creditor, by their own fault, contributed to the occurrence of the harm.

In a delay claim the creditor is the employer. Employer-caused delay — late access, late instructions, late approvals, variations issued without a corresponding extension — is now expressly a route to reducing liquidated damages, independent of the extension-of-time machinery in the contract. In practice:

• Contractors should keep the contemporaneous record of employer-side delay as a statutory argument, not only a contractual one, and should not assume that failing an EOT claim closes the point.
• Employers should expect Article 340(3) to be pleaded in answer to an LD deduction, and should run their own delay analysis before deducting rather than after.
• Neither side should treat the agreed rate as a ceiling-and-floor. Article 340 is a judicial power to reduce; it is not a power to increase, and the drafting choice still matters.

7. The obligations the chapter actually imposes

On the contractor (Articles 814–823)

• 815 — where the contractor supplies materials, it warrants their quality to the employer; absent contract terms, prevailing custom sets the standard.
• 816 — where the employer supplies materials, the contractor must preserve them with the care of an ordinary person, observe technical principles, and return the surplus. It is liable for loss or damage from a cause attributable to it.
• 817 — plant and tools are at the contractor's expense unless the contract or custom says otherwise.
• 818(1) — complete in accordance with the contract and within the agreed period; absent either, to customary principles within a reasonable period for the nature of the work.
• 818(2) — where it becomes apparent during the works that performance is defective or contrary to the terms, the employer has a remedy without waiting for completion.
• 819 — the contractor is liable for damage from its act and workmanship "whether by his wrongdoing or negligence or otherwise", and escapes only through an accident that cannot be guarded against. That is a strict formulation, and narrower than a general force majeure plea.
• 820 — a lien, but only where the work has an impact on the property. Retaining goods the work did not affect exposes the contractor to liability for usurpation.

On the employer (Articles 825–830)

• 825 — take delivery once the work is complete and placed at the employer's disposal. An employer who refuses without lawful cause, after formal notice, carries the risk of loss in the contractor's possession.
• 826 — pay on taking delivery unless otherwise agreed.
• 827 — where the work is in parts or the rate is per unit, pay proportionately as parts are completed.

Subcontractors (Articles 831–833)

Article 833 preserves privity: a subcontractor may not claim from the employer what is owed to the main contractor unless the main contractor assigns the entitlement. Direct payment arrangements therefore need a documented assignment, not a side letter and a practice.

8. Ending the contract: Articles 834 to 838

Article 834 states the ordinary routes — completion, consensual rescission, or judicial rescission. Two further provisions matter commercially.

Article 835: where an excuse arises preventing performance or its completion, either party may request rescission or termination according to the circumstances. This is a court-supervised route rather than a self-help one, and it sits alongside, not instead of, any contractual termination machinery.

Article 836 is the one to check against your standard form. The employer may withdraw from the contract and stop execution at any time before completion, on terms that it compensates the contractor for:

• all expenses incurred;
• the work completed; and
• what the contractor could have earned had it completed the works.

The third limb is loss of profit on the unperformed balance. A termination-for-convenience clause that limits the contractor to costs and work done is therefore less generous than the statutory default, and parties should decide deliberately whether they are displacing Article 836 or relying on it. Employers using convenience termination in the UAE should price the profit element rather than assume the clause disposes of it.

9. What to do now

Contract templates

• Replace every citation to Articles 872–896 with 812–838, and Article 880 with 821. A contract citing a repealed article is not void, but it invites an argument about what the parties intended to incorporate.
• Check that liability caps and sole-remedy clauses carve out the Article 821 warranty, because Article 823 voids a stipulation intended to limit it, not merely to exclude it.
• Check that no contractual time bar for defects is shorter than the three years in Article 824.
• Decide whether a termination-for-convenience clause is displacing Article 836's loss-of-profit limb, and say so.
• Confirm the consultant's scope clause matches what the consultant will actually do on site — Article 822 allocates by role.

Live matters

• Date the facts. If the handover, collapse or discovery predates 1 June 2026, Article 4 keeps the substance under the 1985 Code and the old numbering is correct in your pleading.
• Run the Article 7 limitation calculation both ways on every running claim and take the earlier date.
• In delay disputes, plead Article 340(3) where employer-side fault contributed, and preserve the contemporaneous record that supports it.
• Verify every article number against the Arabic Official Gazette text, including the April 2026 corrigendum, before it goes into a pleading.

Primary sources

Every provision quoted above is taken from the instruments below. Links go to the official consolidated text, not to secondary commentary.

• Federal Decree-Law No. 25 of 2025 issuing the Civil Transactions Law — the Law in force since 1 June 2026; Arts 812–838 contract agreements, 821 decennial, 823 void exemption, 824 limitation, 836 withdrawal
• UAE Ministry of Justice — laws and legislation — search the consolidated Arabic text, which governs over any English rendering
• UAE Government Portal — justice, safety and the law — publication of federal legislation, including the corrigendum in the Annex to Gazette No. 821 of 14 April 2026

Questions we are asked

Related guides in the library

• UAE Construction Defects, Snagging and Handover Disputes
• UAE Commercial Agency Law
• Arbitration vs Litigation in the UAE

Published 2026-10-03. General information only — not legal advice. Contact us for matter-specific advice.