The previous blog on this topic considered the potential for liability to be unwittingly assumed by parties to construction contracts. This was highlighted by the example of decennial liability under the UAE Civil Code. This blog considers another perhaps unknown liability: strict liability for harmful acts under UAE law, and considers whether parties are able to exclude such liability by contract.
THE LAW OF TORTS IN THE UAE
Extent of Liability
The UAE law of tort is set out in Articles 124 and Articles 282 – 298 of the Civil Code. These articles appear to impose strict liability on an “actor” in respect of any harm done (it seems accepted by all commentators that this is whether by act or omission). This position accords with the general principle of Islamic law of censorship for harm regardless of fault, negligence or illegality. This position can be contrasted with with the common law concept of liability for negligence under which liability only arises where a party owes a duty of care to another party and fails to exercise such duty.
However, as with all good general principles, there are exceptions:
Exercise of Reasonable Care
In certain circumstances, it is likely that an “actor” will not be liable to make good harm where that person has exercised reasonable care. Those circumstances are where: “that which is required of an obligor is the preservation of a thing, or the management thereof, or the exercise of care in the performance of his obligation“. However the exercise of reasonable care is no excuse for fraud or gross negligence.
It may suffice for the purposes of this exception if the obligation to take reasonable care is contractual – as would most likely be the case under a contract for professional services and most construction contracts in respect of design obligations at least.
It is also understood that a person is not liable to make good harm where a “natural disaster, unavoidable accident, force majeure, act of a third party, or act of the person suffering loss” caused the relevant harm.
Plenty of room for argument in this exception it would seem!
Finally, there is a potential limitation of “the actor’s” liability for consequential harm to circumstances where “the actor” has acted in a wrongful and deliberate way.
However, it seems the only time that this exception would apply is where there is consequential harm, but no direct harm. In the context of liability between contracting parties, it is difficult to envision circumstances where this exception would be useful.
Prohibition on Exempting Liability
Having identified that subject to limited exceptions, UAE law incorporates the general principle of strict liability for harmful acts, is it possible for a party to a contract to exclude or limit such liability?
Article 296 of the Civil Code states that:
“Any condition purporting to provide exemption from liability for a harmful act shall be void.”
This appears to be an unequivocal prohibition on any contractual provision seeking to exempt liability for “harmful acts”.
Yet, when considering the Civil Code, it is always worth checking the original arabic (or, as in my case to my shame, asking your arabic reading colleague to check the original arabic!) In this case, I am reliably informed that the arabic equivalent of the word “exemption” means a total or full exclusion rather than a limitation.
Accordingly, it may be possible to develop an argument that one should differentiate between a clause that excludes this liability and a clause that limits this liability, with the prohibition applying only to the former.
This view is supported by express provisions in the Civil Code (Articles 389 and 390) which are universally regarded as authority for the principle that parties to a contract can limit their liability to each other.
It is true to say that other commentators hold a different view, and consider that a purported limitation of liability for a harmful act is also prohibited. If any readers of this blog are one of those then please post here….
In addition there are issues around the effectiveness of limitation clauses, such as liquidated damages and caps on liability, which would also apply to a clause limiting liability for harmful acts….these will be considered in the next blog.
In the meantime, keep a careful watch for unseen liability…..