Good Faith addressed in DIFC Courts

STUART JORDAN* provides an insight into a recent DIFC Courts decision, where the court upheld a time bar in a construction contract dispute, rejecting the argument that Good Faith required that the agreed-upon terms be disregarded.

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IF we could point to one thing that encapsulates the difference between Middle Eastern legal principles and common law principles, it is the central importance of 'Good Faith' in the former. Some common law jurisdictions acknowledge a version of it but English Law, in particular, is a long way from that position in its recognition only of narrow principles of waiver and estoppel.

So, it was interesting to see the way this question was dealt with recently in a dispute brought to the DIFC Courts, as DIFC Law contains elements of both traditions.

And to make it even more interesting, the Good Faith argument was deployed in connection with enforcement of a contractual time bar on presentation of claims for extensions of time and additional cost.

Here's the background: In 2017, Panther Real Estate Developments LLC (Panther) entered into a contract with Modern Executive Systems Contracting LLC (MESC) as main contractor for the construction and completion of a residential tower in Dubai. The contract was on an amended version of FIDIC Red Book (Construction Conditions for Building and Engineering Works Designed by the Employer) First Edition 1999. The governing law was DIFC Law and disputes were agreed to be resolved under the exclusive jurisdiction of the DIFC Courts.

The required completion date for the works was December 16, 2018 and the contract provided for delay liquidated damages to be paid at a rate of AED42,500 ($11,570), capped at 10 per cent of the contract price.