If you have worked in a civil code jurisdiction, such as UAE for example, the construction contract is in line with the country’s legal system. However, the parties involved onsite conduct their businesses fairly autonomously. The issue we have is understanding how empowering the principle of good faith is in the event of a dispute.
A good place to start is perhaps the condition precedent to many claims under construction contracts in the region: that is the building contractor’s requirement not to arouse contractual time-bar mechanisms.
Time-barring is the rejection of a claim based on the failure to submit a notice of intent to claim, followed by its detailed particulars within a prescribed number of days. The notice serves as the employer’s liability to the contractor; so if you work for a contractor, this notice is your friend.
Each circumstance is different, so the parties and their conduct, the value at stake and the complexity of the claim will have a big say in whether the execution of a time-bar clause as defence to a claim is considered to uphold the principle of good faith. For example, if a claim based on complex calculations is presented a few days late, and a reasonable valuation could fairly compensate the contractor, it would be difficult to suggest good faith has been honoured by the employer in refusing to consider the contractor’s claim.
Likewise, the employer could not reasonably reject a claim which was not submitted on time, particularly if he was timeously aware of any reason giving rise to a claim and did not suffer any great loss because of it.
Let us consider the Sharia Law informed Egyptian Civil Code as a tool in evaluating the reasonableness of enforcing a time-bar. The Egyptian Civil Code states it is unlawful to exercise a legal right if:
(a) the sole aim is to harm another person,
(b) the benefit is disproportionate to the harm caused to the other party, or
(c) the benefit is unlawful.
If you are contemplating enforcing a time-bar, or have had a claim rejected on the basis of a time-bar, consider the above as a practical barometer of good faith. This is because in the majority of civil law jurisdictions, the court can, taking stock of the circumstances, engage its own judgement as to whether the contractual mechanism to time-bar a claim has been exercised in good faith, or not.
Ultimately, despite the civil codes requiring good faith, it is very difficult to convince a court or arbitral tribunal that it would be fair to award additional time and/or money to the contractor despite him not complying with the written terms of the contract. And that is the kind of complex legal argument one would have to succeed with in order to over-come a time-bar clause on the basis of good faith.
So, back to my comment that the notice is the contractor’s friend: The contract will hold the employer liable to his contractor for claims he can substantiate if presented on time. But relying on good faith at civil law level is ones last option; best practice is to uphold your side of the contract and not worry about how faithful the other side is. As a contractor, this provides for more time to substantiate your claim, which is much more important. Industry professionals will help guide you with all of the above.