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New firefighting code: who bears the risk? Heba Osman, Fenwick Elliott

In the last couple of years, there have been several notable building fires UAE, highlighting the need for certain actions that must be taken to ensure safety of constructed buildings, particularly high-rise towers.

Heba Osman, Fenwick Elliott talks about subcontractingThis has also prompted the Dubai Municipality to update its existing Fire Fighting Code by issuing on April 20, 2016, circular number 215 dealing with the protection from fire and prohibiting the use of any flammable materials in buildings or cladding (Circular 215). There is also talk of a new Federal Fire and Life Safety Code (Firefighting Code), which would apply to all buildings in the UAE.

This Circular 215 states to have come in effect on the date it was issued, and mandates that all consulting engineering firms, contractors, suppliers and developers abide by its new requirements. Circular 215 provides, inter alia, that it is not permissible to use:

1. Any flammable material or any material in which flammable material was used to manufacture or any systems that may reduce the ability of the material to fight fire. It is only permissible to use these materials if the ratings of such material are in accordance with the Dubai Firefighting Code or with certain chapters of the US Firefighting Code (NFPA 5000);
2. Exterior walls and cladding systems that are not fire proof in accordance with either of the aforementioned Firefighting Codes; which should also remain fire proof for at least 3 hours for any building or 2 hours for private villas; and
3. Any flammable material in painting, adhesives or other materials that are used within the building that have a firefighting rating less than aforementioned exterior walls.

Circular 215 also sets certain requirements in respect of the design of the false ceiling and other spaces within the building and its windows to ensure that in the event of fire, areas can be segregated to prevent it from spreading.

Similarly, the Firefighting Code appears to set various new requirements or enhancement that all parties and companies involved in the construction of any building are required to abide by these requirements. The question that this article deals with is, who bears the financial risk associated with these new or enhanced requirements?
The simple answer is: it depends.

Looking at the FIDIC 1999 New Red Book (which remains to be one of the most commonly used standard forms of contract in the region), it provides in Clause 1.13 that the Contractor is under an obligation to comply with all applicable “Laws”.

The word “Laws” is defined as “all national (or state) legislation, statutes, ordinances and other laws, and regulations and by-laws of any legally constituted public authority”. The main question here would be whether Circular 215 or the Firefighting Code fall within the remit of this definition? Arguably yes, as the definition includes ordinances which are, simply put, regulations issued by a governmental entity; which would include a circular issued by the Dubai Municipality or the UAE Directorate of Civil Defense both being legally constituted public authorities.

Therefore, the main position is that the Contractor is the party who bears the risk of these enhancements or new requirements and should price its tender or contract bearing in mind that it is under an obligation to comply with its provisions.

However, as these regulations are relatively new, it is important to consider whether it entitles a Contractor to claim an extension of time or additional cost. This is logically possible if the changes or enhancements were not specifically required under the Contract at the time of concluding it.

Turning again to the FIDIC 1999 Red Book, Sub-Clause 13.7 titled “Adjustment for changes in Legislation” may be of help in instances when Circular 215 has come into effect after the conclusion of the Contract. This Sub-Clause 13.7 reads:

The Contract Price shall be adjusted to take account of any increase or decrease in Cost resulting from a change in the Laws of the Country (including the introduction of new Laws and the repeal or modification of existing Laws) or in judicial or official governmental interpretation of such Laws, made after the Base Date, which affect the Contractor in the performance of its obligations under the Contract.

If the Contractor suffers (or will suffer) delay and/or incurs (or will incur) additional Cost as a result of these changes in the Laws or in such interpretations, made after the Base Date, the Contractor shall give notice to the Engineer and shall be entitled subject to Sub-Clause 20.1 [Contractor’s Claims] to:

(a) an extension of time for any such delay, if completion is or will be delayed under Sub-Clause 8.4 [Extension of Time for Completion]; and
(b) payment of any such Cost which shall be included in the Contract Price.

After receiving this notice, the Engineer shall proceed in accordance with Sub-Clause 3.5 [Determinations] to agree or determine these matters.

On a first reading this provision appears to set the risk of the changes or enhancements to the existing Firefighting Code on the Employer, which is somehow correct. However, this is subject that this new “Law” would have come to effect prior to the “Base Date”.

The FIDIC 1999 Red Book defines this “Base Date” as “the date 28 days prior to the latest date for submission of the Tender”. This means that for this provision to apply the change in legislation must have taken place within the 28 days prior to the closing of tender date. If it has occurred before it, the argument would be that the Contractor should have known of these legislations and taken account of it when preparing its tender.

The reason this “Base Date” is important as there have been many discussions in the media as to when the Circular 215 would come into effect. There are also several articles suggesting that this Circular 215 would come into effect after its translation to English. While the source of this suggestion is not clear however, this Circular 215 itself states in Arabic that it comes into effect on the date it has been issued being 20 April 2016. Accordingly, it would be logical to accept that this is the effective date unless the Dubai Municipality states otherwise.

Nonetheless, the Contractor’s right to receive an extension of time and/or additional payment is not automatic. The Contractor must send a notice stating how this is a change in the law and how exactly it affects the time for completion and/or cost.

Parties on all construction projects in the UAE, especially those in the tendering phase, must take note of the enhanced and new requirements regarding firefighting. On one hand, it is important that contractors, subcontractors and suppliers ensure that they price their tenders taking into account these requirements even if such is not specifically mentioned in the tender documents or the contract. On the other hand, designers and consulting engineers must ensure that their designs and specifications prepared for the project are in compliance with such new provisions and requirements.

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