Dealing with Late Payments - A Challenge for UAE Small Scale Subcontractors?

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The British University in Dubai (BUiD)
The small scale subcontractors provide an extremely important service to the construction industry in UAE and they carry out more than 50% of the actual execution of the works at site in major projects as direct subcontractor to the main contractor or as a sub-subcontractor. It has been reported that the small scale subcontractors in UAE are severely affected by the late payment issues. Although several researches were conducted on the late payment issue faced by subcontractors in general, the researches with special focus to small scale subcontractors are very limited in numbers. This research focused on identifying various challenges faced by small scale subcontractors in UAE with respect to the late payment issues, examining the legal and contractual aspects of the late payment issues under various jurisdictions with a particular focus to UAE law and to find out feasible solutions for the late payment issue. The methodologies adopted were questionnaire survey, literature review and face-to-face interviews. The research reveals that dealing with late payment is a challenge for small scale subcontractors in UAE and foremost reason for the late payment is „main contractors wrongfully withholding due payments‟. The research further shed light in to various provisions, concerning late payment to small scale subcontractors, available in the UAE law as well as other jurisdictions and found that UAE law is lacking several provisions which are available in other jurisdictions that protect small scale subcontractors. To conclude, the late payment issue faced by the small scale subcontractors is an issue to be dealt with great concern as it has severe economic as well as social impacts. Further, it is recommended to adopt a quick and affordable statutory adjudication and a protection to subcontractors‟ payment through the project escrow account in UAE as a solution to eliminate this issue.
scale subcontractors, United Arab Emirates (UAE), construction industry