Enhancing Cash Flow and Payment Certainty in UAE Construction: The Role of Project Bank Accounts in Mitigating Disputes

Abstract

The foundation of construction as a business falls in its commercial nature, whether by exchanging a service, a product, or both for money. Therefore, nonpayment or delayed payment can and will affect transactions and the industry overall. Given that the construction industry occupies a big portion of the economy in the UAE and globally, negative implications extend beyond the industry itself to influence the broader economy. Therefore, solving payment issues is essential rather than a mere improvement. This dissertation evaluates the feasibility of implementing “Project Bank Accounts” (“PBAs”) to enhance payment certainty and cash flow within the UAE’s construction industry. First, the research analyses existing key payment legal frameworks and industry practices in the UAE and compares them with common law jurisdictions such as the United Kingdom, Australia, and New Zealand. Then, PBAs are introduced as a practical mechanism to close the identified payment security gaps in the construction sector in the UAE. PBAs are found to offer operational, legal, and administrative benefits to the industry due to their trust nature. PBA adoption can pave the way for future statutory adjudication introduction within the UAE legal framework. Also, PBAs can be merged with modern technologies such as blockchain to further advance efficiency, transparency, and accountability. Lastly, this dissertation provides findings and recommendations by ways of introducing PBAs through dedicated law reform within the UAE legal framework. It is found that this implementation would strengthen industry, support the economy, and back the UAE’s vision for innovation and a sustainable economy.

Keywords: Construction, payment delay, payment certainty, dispute, project bank account, cash flow, legal framework, transparency, simultaneous, contractor, employer, subcontractor, statutory, policy, legal, efficiency.