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Ways to Obtain Compensation for Project Delays

Ways to Obtain Compensation for Project Delays


Project delays are one of the most common issues in the construction sector in the UAE. In the country, contractors may file a claim for construction delay, depending on whether or not it's allowed by the agreement between parties involved. It is very important for investors to have a solid contract complete with provisions regarding compensation for project delays. Before going to the ways to seek compensation, let us understand the grounds allowed for a party to seek compensation for a project delay which are the following:

  • The developer has failed to complete a project within the estimated time of completion
  • Non-performance of obligation in the contract
  • Disability by the developer to perform a contact
  • Any illegal acts committed by the developer

In order for you to claim compensation for a delay in a project, here are what you should do:

Ask if the RERA has canceled or ceased the project development

Before taking any action against the developer you can check with Real Estate Regulatory Authority on whether the project is canceled for any reason. If any project is carried out with illegal activity or it is in a governmental land, then RERA may cancel the development of such.

Check contract provisions for claiming damages

Some of the contracts used for construction clearly include provisions for claiming for damages in case a project is delayed. UAE court has the right to reduce or increase the compensation of the damage as per the situation of the developer. If there is any clause in the contract for damages, then the developer is bound to pay for damages. If no such clause is stated in the contract, then the court has the authority to set compensation for claimed damages.

The purchaser can claim compensation for delays if such conditions are mentioned in the contract, provided the purchaser has evidence that such delay has caused any harm or any substantial loss to the purchaser of the property. As per UAE law, compensation may include expenses incurred by the purchaser including:

  • Deposit
  • Interest
  • Agent fees
  • Any additional amount accrued

Alternative dispute resolution or settlement for project delay compensation

The dispute can also be settled amicably with the use of any of the dispute resolution methods. The case can be transferred to the dispute resolution center in the emirate, which is Dubai Land Department. The DLD has access to all the records regarding construction in the region. An expert team from DLD handles all the disputes regarding properties in Dubai and their decision is binding on all the parties.

Filing a court case in Dubai property courts for claiming compensation

If the parties do not agree to the amicable settlement through arbitration, then the last and final resort is going for court litigation. Dubai property courts can deal with property-related cases. All the decisions taken by this court are binding on all the parties related to a dispute. Some of the remedies awarded are as follows: 

  • Provide injunction or to cover the damages
  • Award compensation for any loss occurred
  • The court may order for the Specific performance of the contract.

Mutual agreement between developer and investor

This is one of the best ways to avoid any legal procedures and settle all the differences in the contract. This mostly happens when all the obligation within the contract has been completed or when both parties no longer are able to perform the contract.

Property dispute lawyers in the UAE

There are several ways to seek compensation for a developer but before going for the filing of a case, it is very important to have a look into the provisions of your contract. In case you land into any such issues of property handover delays, then it is better to seek the legal opinion of experts which are property dispute lawyers. They can help you to review the contract and also provide options on how to go about the case. Click here for information.

What the remedies are given by the court in case of breach of contract by the developer?

The court may order any of the following:

  • Monetary damages: provide money or consideration for any loss occurred
  • Injunction: court may also order for an injunction, a temporary halting in the development of a property
  • Specific performance: the court may order to specifically perform a provision in a contract (in the case of an emergency)

Will I be able to sue for delays?

A contractor has to complete the work as agreed in a contract. If it is not able to, it is possible for the contractor to hire another professional in finishing the work. If the purchaser (entity or individual that hired the contractor) does not agree to this, the contractor may be sued.

Author: Sumeet   

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