Sources of disputes in construction contracts in the Middle East

Construction contracts in the Middle East often suffer from delays and cost overruns. This can be attributed to many factors, such as the modifications carried out by project owners on standard contract conditions, lack of understanding of basic contractual issues by the contract parties, the never ending changes in legislation and regulations, poor documentation during contract administration, and the influence of local culture on the performance of the contract parties. Dependence on foreign firms to handle contractual issues in large projects has not helped in building up local experience in this field. This paper concentrates on these issues and their impact on contract balance and legalities. Also, due to the sluggish legal system in the Middle East, other methods to settle disputes including arbitration and amicable settlements have become a necessity. Sometimes, settlements are enforced on unfair bases, creating injustice and continuing problems in the confidence and future relationships between the parties. These elements have contributed to the escalation of construction problems; examples of the sources of these anomalies are presented. Finally, conclusions and suggested remedies were reached to improve the situation.

Keywords:

• Construction Industry
• Disputes
• Local Culture
• The Middle East
• Arbitration
• Contract
• Administration