JDMT-4029230523-0666

Claim No. CA 016/2022

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

In the name of His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Ruler of Dubai

IN THE COURT OF APPEAL

BEFORE: CHIEF JUSTICE TUN ZAKI AZMI, H.E DEPUTY CHIEF JUSTICE ALI AL
MADHANI, JUSTICE LORD ANGUS GLENNIE

BETWEEN

PANTHER REAL ESTATE DEVELOPMENT LLC

Claimant/Respondent/Cross-Appellant

and

MODERN EXECUTIVE SYSTEMS CONTRACTING LLC

Defendant/Appellant

Hearing: 1 and 2 March 2023

Counsel: Mr. Alexander Burrell instructed by MRP Advisory FZ LLC for the
Defendant /Appellant

Mr. Justin Mort KC instructed by Al Tamimi & Company for the

Claimant/Respondent/Cross-Appellant

Judgment: 12 May 2023

_________________________________________________________________________

JUDGMENT OF THE COURT OF APPEAL

_________________________________________________________________________

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UPON the Judgment of Justice Sir Richard Field dated 26 September 2022 in TCD-003-2019 (the
“Judgment”)

AND UPON the Defendant’s Appeal Notice dated 17 October 2022 (the “Appeal” or “MESC’s
Appeal”) and the Claimant’s Appeal Notice dated 8 November 2022 (the “Cross Appeal” or
“Panther’s Cross Appeal”) seeking permission to appeal against the Judgment (together the
“Permission Applications”)

AND UPON the Orders of Justice Sir Richard Field dated 20 December 2022 granting the
Permission Applications

AND UPON the Appellant’s Application No. CA-016-2022/1 dated 16 February 2023 seeking
permission to rely upon a supplementary skeleton argument dated 15 February 2023 and to
amend its Appeal Notice (the “Appellant’s Application”)

AND UPON hearing counsel for the Appellant and counsel for the Respondent at an appeal
hearing held on 1 and 2 March 2023 (the “Hearing”)

AND UPON reviewing the relevant submissions made in the case file

IT IS HEREBY ORDERED THAT:

1. The Appellant’s Application is granted.

2. The Appeal is dismissed.

3. The Cross Appeal is allowed in part, to the extent indicated in para. 73 of this Judgment.

4. The case is remitted to the trial judge to make all relevant findings of fact in relation to the
matter identified in that paragraph.

5. The Appellants shall pay the Respondent’s costs of this Appeal and Cross Appeal, to be
assessed by the Registrar on the standard basis, if not agreed.

Issued by:
Hayley Norton
Assistant Registrar
Date of issue: 12 May 2023
At: 9am

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 SCHEDULE OF REASONS

Introduction – the parties and the Contract

1. This is an appeal against the Judgment of Justice Sir Richard Field issued on 26
September 2022. The Appellant is Modern Executive Systems Contracting LLC (“MESC”
or “the Contractor”). The Respondent and Cross-Appellant is Panther Real Estate
Development LLC (“Panther” or the “Employer”), a developer of residential property in the
United Arab Emirates.

2. On 11 July 2017, Panther entered into a contract (the “Contract”) with MESC for the
construction and completion of the East 40 Building in Al Furjan, Dubai (the “Works”), a
residential tower building consisting of 112 residential units (the “Project”). In terms of the
Contract, Panther was the Employer and MESC was the Main Contractor. The contract
price payable to MESC for completion of the works was agreed to be AED 40,331,550.

3. The Contract included Part 1 – General Conditions of Contract, which comprised the FIDIC
Conditions of Contract for Construction for Building and Engineering works Designed by
the Employer (First Edition, 1999) (the “FIDIC Conditions”) as supplemented and
amended by Particular Conditions and other detailed provisions set out at Parts II and III
of the Conditions of Contract. The governing law of the contract was DIFC law and
disputes thereunder were agreed to be subject to the exclusive jurisdiction of the DIFC
Courts.

The dispute

4. The circumstances giving rise to the dispute are fully set out in the Judgment of Justice
Sir Richard Field. We summarise below those matters which are relevant to this Appeal.
In this summary reference is made to various provisions of the Contract. The relevant
provisions will be set out more fully later in this judgment.

5. The Commencement Date specified in the Contract was 11 July 2017 and the time for
completion was 16 months, giving rise to a Completion Date of 10 November 2018.
However, the Approved Baseline Programme Completion Date was 16 December 2018
and parties were agreed that this became the Completion Date under the Contract.

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6. Under Sub-Clause 8.7 of the Contract, in the event that MESC failed to comply with Sub-
Clause 8.2 (Time for Completion), MESC was liable to pay delay damages calculated at
a daily rate of AED 42,500, with a cap on the liquidated sum equal to the value of 10% of
the contract price.

7. Panther appointed NAGA Architects, Designers and Planners (“NAGA”) as the Engineer
for the Project. References below to “the Engineer” are references to NAGA in that
capacity.

8. Pursuant to Sub-Clause 4.2 of the Contract, MESC provided a performance security

consisting of an unconditional on-demand guarantee in the amount of AED 4,033,155.00,
equivalent to 10% of the Contract Price, issued by Emirates NBD and dated 24 May 2018
(the “Performance Guarantee”), which the Claimant was entitled to encash whenever it
considered that it had suffered loss arising out of the MESC’s breach of contract or if it
considered that sums were due from MESC to it in relation to the Contract. In addition,
pursuant to Sub-Clause 14.2 of the Contract, MESC provided an advance payment
guarantee (the “‘Advance Payment Guarantee”) in the like amount on which the Claimant
was entitled at any time to call in whole or in part if it considered that MESC was in breach
of contract or if any sums were due from MESC to it under the Contract. The Performance
Guarantee and the Advance Payment Guarantee are hereafter referred collectively as (the
“Security Guarantees”).

9. MESC commenced work on the Project in July 2017. By early July 2019 the delays in
achieving completion of the Works were such that the agreed Completion Date of 16
December 2018 had been overshot by about six and a half months. By this date, MESC
had made three Extension of Time Applications (“EOTs”) under Sub-Clause 8.4 of the
Contract. All three of those EOTs were rejected by the Engineer, the third on 22 July 2019.

10. Since the timing and rejection of MESC’s EOTs featured prominently in the arguments in
this Appeal, it is useful to summarise them in the manner set out by the judge below.

11. EOT No 1 was dated 18 February 2018. It cited five delay events, namely: Event No. 1 -
late receipt of the Civil IFC Drawings (Structural and Architectural) for which an extension
of 62 days was claimed; Event No. 2 - delay due to Etisalat/Du Cable inside the Plot Limit
(claiming 31 days); Event No. 3 – delay due to late issuance of Authority Approved Post

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 Tension Drawings for Podium (28 days); Event No. 4 – Changing Passenger Lift Supplier;
and Event No. 5 – delay in receipt of MEP IFC Drawings (70 days).

12. EOT No. 2 was dated 27 June 2018. This cited the Delay Events relied on in EOT No. 1,
save that: the two IFC Drawing delays were combined into one Delay Event; and Event
No. 4 – delay due to Changing Passenger Lift Supplier -- was deleted and replaced with
a new Delay Event No. 4 – late issuance of Post Tension Drawings for Typical Floor Slab
(7 days).

13. EOT No. 3 was also dated 27 June 2019. This cited 11 Delay Events, namely: Event No.
1 - delay in receipt of Civil IFC drawings (76 days); Event No.2 - delay due to Etisalat/Du
cable (107 days); Event No.3 - delay due to late issuance of Post Tension Drawings for
Podium Slab (125 days); Event No. 4 - delay due to late issuance of post tension drawings
for Typical Floor Slab (132 days); Event No. 5 - delay due to issuance of revised Kitchen
Layout drawings (139 days); Event No. 6 - delay in finalisation of 12th floor Structural
Design (100 days); Event No. 7 - delay in finalisation of 12th floor Architectural Design (120
days); Event No. 8 - delay in finalisation of 12th floor Pool Deck and Finishes Layout (161
days); Event No.9 – delay in approval of Full Ceiling Design (100 days); Event No.10 –
delay in Final Architectural and Structural Layout for roof (115 days); and Event No. 11 –
delay in receipt of Gym Design (298 days).

14. This Appeal primarily concerns disputes about extension of time and liquidated damages
for delay. However, it is worth noting, in outline at least, how the disputes developed and
the Contract was brought to an end. This again is taken from the Judgment. On 6 July
2019, in response to (a) the Engineer’s refusal to approve claims for an extension of time
and (b) his delay in instructing payment, MESC sent a letter to the Engineer serving a
notice of slowdown of the Works. Panther responded (through its lawyers) on 9 July 2019
stating that both it and the Engineer had been entitled under the Contract to take the
actions complained about and warning MESC that it would be a serious breach of contract
to slow down the works. This led to a top level management meeting on 15 July 2019 at
which the status of the Works was discussed and MESC undertook to provide a realistic
completion program. At Progress Meeting 104 held on 31 July, MESC’s Head of Projects
gave a commitment to increase manpower and supervision to comply with a newly
proposed Completion Date. There was also reference at this meeting to a proposal by
MESC for there to be a Memorandum of Understanding (“MoU”) to be agreed to by all

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 parties. By letter dated 8 August 2019, the Engineer instructed MESC to produce a realistic
program for the completion of the Contract; and he stated that MESC had no entitlement
to any extension of time. Sometime in August/September 2019 MESC submitted its
proposed MoU, which included a condition that the completion date for the Works would
be revised to 31 December 2019 and that any delay damages to date would be waived.
At the Management Meeting held on 27 October 2019 to try to reach agreement as to
handing over the Project by 31 December 2019 and to discuss the MoU, MESC gave a
commitment that it would complete handing over the Project by that date and use
maximum endeavours to meet this milestone subject, however, to all parties agreeing and
signing the MoU. MESC said that if the MoU was not signed this would lead to more
delays, the Project would be open-ended and MESC would not be committed to any
completion date. Panther expressed dissatisfaction with the MoU and proposed further
discussion on the proposed waiver of its rights. On 28 October 2019, MESC sent the
Engineer a copy of the proposed MoU, signed on behalf of MESC, requesting that the
document be forwarded to Panther for final endorsement. On the same date Panther
liquidated the Security Guarantees provided by MESC pursuant to sub-clause 4.2 of the
Contract, receiving AED 4,033,155.00 under the Performance Guarantee and AED
1,000,304.67 under the Advance Payment Guarantee. In a letter dated 3 November 2019
to Panther, headed “Slow Down the Rate of Work”, MESC protested at the encashment
of the Security Guarantees at a time when the parties had come to a mutual agreement
for the way forward. The letter stated that in view of this development, MESC had no option
other than to reduce the amount of work. On the same day, Panther, through its lawyers,
wrote to MESC describing the MoU as a crude and baseless attempt to deprive Panther
of its clear and legitimate entitlements: MESC was seeking to use its own failures to
perform under the Contract as leverage to absolve itself from liability for its breaches.
Panther said that it would not be executing the MoU under any circumstances. Also on
the same day, 3 November 2019, the Engineer confirmed that the Works had been
suspended by MESC, which had blocked all entrances to the Site and shut down the
electric power and instructed its subcontractors not to attend at the Site.

15. On 6 November 2019, by which time the Project had been delayed by 365 days according
to the Engineer and Panther, Panther sent a letter (the “Termination Letter”) to MESC,
terminating the Contract with immediate effect under Sub-Clause 15.2 (which provided
that Panther was entitled to terminate the Contract with immediate effect if, amongst other

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 things, the maximum amount of delay damages was exhausted, as they said it was). A
week later, MESC personnel tried to enter the Site. Violence ensued and order was only
restored once the police had been called in. Panther moved rapidly to conclude a contract
with another contractor, obtaining a building permit on 28 November 2019 and completing
the Works on 1 May 2020.

16. On 30 January 2020, MESC submitted a fourth EOT claim (EOT No.4) to the Engineer
contending that it was entitled to an extension to the end of February 2020 by reason of
late finalisation by the Engineer of the Balcony Glass Balustrade Design; this happened
in late August 2019, whereas MESC’s approved baseline programme showed that the
submission of the balcony design should have been completed no later than 22 April 2018.
The Engineer rejected this claim, noting that MESC had failed to submit the drawings and
calculations and to execute the mock-up and get approval for submission from the
Engineer to comply with the Project specifications and safety requirements which were
MESC’s responsibility. Further, the subcontractor (Petra) was not a nominated
subcontractor and MESC were liable to manage the subcontractor’s works. MESC was
fully responsible for: (i) the balustrade works delay as it was their scope of works; and (ii)
the delay of the subcontractor.

The main issues before the judge

17. In its claim at first instance, Panther sought liquidated delay damages, other delay
damages, damages for the cost of completion (including the cost of remedying defective
works) and damages for the loss of the opportunity to rent or sell the residential units within
the period of 16 December 2018 to 1 May 2020 (the “Takeover Completion Period”) which,
it was said, had resulted in lost proceeds from the potential sale of residential units or lost
rent and charges from the potential rental of the units. Panther also sought a declaration
that it was entitled to encash the Security Guarantees, as it had done, and was entitled to
retain the proceeds thereof.

18. MESC denied that it was liable to Panther as alleged or at all. MESC pleaded that it was
entitled to an extension of time, in total, of 292 days, which would deprive Panther of its
claimed right to terminate by reason of the exhaustion of the maximum amount of delay
damages. MESC’s expert witness on delay expressed a slightly different figure – in his
view there were 325 days of critical delay down to 6 November 2019, of which 306 days

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 were to be attributed to Panther and 19 days attributed to MESC – but the difference is
not material for present purposes. In advancing its pleaded case on delay, MESC relied
on 14 pleaded delay events, identified as DE01 – DE14 (MESC’s delay expert sought to
rely upon a further 9 delay events but these were not pleaded and can be disregarded).

19. In light of the above, MESC submitted that it was entitled to an extension of time of 306
(or 292) days, with the result that the primary ground for immediate termination stated in
the Termination Letter – the exhaustion of the cap on delay damages – was an ineffective
ground for termination. MESC also contended that the other contractual grounds for
immediate termination stated in that letter – abandonment of the Works and/or a repeated
and plainly demonstrated intention not to continue performance under the Contract – were
not good grounds for immediate termination (on the basis that termination on these
grounds had to be on 14 days’ notice) and that it was not open to Panther to rely on the
rights conferred by Articles 86 and 88 of the Contract Law to terminate on the grounds of
repudiatory and anticipatory breach because Panther’s Termination Letter did not make it
sufficiently clear that the termination was based both on the terms of the Contract and on
the general law of contract. On that basis MESC contended that it was Panther that was
in fundamental breach of contract and was liable to compensate MESC, inter alia, for
prolongation costs, the value of the work done as at the date of termination of the Contract,
insofar as remaining unpaid, and the cost of the liquidation of the Security Guarantees.

20. It was Panther’s case that, in the circumstances which occurred, the Engineer’s negative
determinations of MESC’s four EOT claims was fatal to MESC’s claim in these
proceedings. In developing this case Panther contended that all of the Defendant’s 14
delay events, except for DE-3 and D-4, were: (a) not notified to the Engineer within 28
days of the time when MESC became aware or should have become aware of the event
or circumstance relied on for the claimed EOT; and/or (b) not made the subject of a
detailed claim within 42 days of giving notice of the event as required by Sub-Clause 20.1.
Panther contended that all the conditions set out in Sub-Clause 20.1 were in the nature of
conditions precedent to MESC being entitled to an EOT. It followed that MESC was not
entitled to an extension of time in respect of DE-1 and DE-2 and DE-5 – DE-14; and in
consequence MESC was barred by Sub-Clause 20.1 from raising these alleged delay
events as a defence or in support of its counterclaim in the proceedings. Panther also
relied upon the requirement in Sub-Clause 3.5 that the Contractor and the Employer, as
the case might be, must give effect to a determination by the Engineer unless, within 14

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 days of receiving that determination, it notifies the other party of its dissatisfaction with it,
in which case either party may refer the dispute to be settled in accordance with Sub-
Clause 20. It was submitted that MESC had not given timeous notices in accordance with
that Sub-Clause.

The judge’s decision on these points

21. The judge found on the facts (see Conclusions para. 7) that completion of the Project was
delayed by 325 days, of which only 19 days were due to failings on the part of MESC, the
balance of 306 days being attributable to the actions of Panther. He went on (Conclusions
para. 8) to say that: “If it be held on appeal that MESC is not debarred from seeking an
EOT of 306 days by reason of a failure to comply with the time requirements under Sub-
Clause 20.1 ... MESC will be entitled to prolongation damages in the sum of AED
1,741,313.42.” It would also follow that Panther would not be entitled to liquidated delay
damages in the amount awarded by the judge, or possibly at all. The critical issues
relevant to this part of the case are therefore those relating to the proper interpretation of
Sub-Clause 20.1 (and possibly Sub-Clause 3.5).

22. The judge accepted the submission made on behalf of Panther that the requirement in the
first paragraph of Sub-Clause 20.1 for the Contractor to give notice to the Engineer of his
claim to an extension of time, with reference to the event or circumstance giving rise to
the claim, not later than 28 days after he became aware or should have become aware of
the event or circumstance (the “28-day notice requirement”), was a condition precedent to
the Contractor’s entitlement to be granted an EOT. Such a finding was not difficult; and,
in any event, as the judge pointed out (in para. 42 of his Judgment), that construction had
in fact been conceded by MESC, no doubt because of the plain language of the second
paragraph of Sub-Clause 20.1.

23. However, the judge went on to make three further findings which, taken in combination,
meant that MESC’s claim for an extension of time of failed.

24. First, he held (Judgment paras. 42-48) that compliance with the requirement in the fifth
paragraph of Sub-Clause 20.1 that the Contractor must, within 42 days after it became or
ought to have become aware of the event or circumstances giving rise to the claim, send
to the Engineer a fully detailed claim with supporting particulars of the basis of the claim
and the extension of time and/or the additional payment claimed (the “42-day detailed

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 claim requirement”) was also a condition precedent to the Contractor’s entitlement to an
extension of time.

25. Second, he held (Judgment para. 49) that Sub-Clause 3.5 amounted to a promise not to
challenge an adverse determination (by the Engineer) if that determination was not
challenged within 14 days of its issuance; combined with an agreement that, if a compliant
14 notice is given, then the determination may be challenged but only in accordance with
the dispute resolution provisions of Sub-Clause 20.

26. Third, he held (Judgment paras. 50-54) that, in respect of the 28-day notice requirement
(and the same construction must inevitably apply also to the case of the 42-day detailed
claim requirement), time ran from the date when the Contractor was aware or ought to
have been aware of an event or circumstance that could give rise to a claim for an
extension of time, regardless of whether there was or had been any actual delay by that
time. In coming to this view the judge was aware that he might be differing from the
construction placed on Sub-Clause 20.1 by Akenhead J in Obrascon Huarte Lain SA v
Attorney General for Gibraltar [2014] EWHC 1028 (TCC) at paras. 312-313.

27. MESC appeals against the judge’s decision of each of these points. It is convenient to
deal with this part of the Appeal at this stage. Before doing so we first set out the relevant
terms of the Contract, viz. the FIDIC Conditions as supplemented and amended by the
Particular Conditions set out at Part II to the Conditions of Contract.

The FIDIC Conditions (as supplemented and amended)

28. The relevant provisions for present purposes are Sub-Clauses 1.9, 3.5, 8.4, 8.7 and 21.1.
Parts of those provisions have been amended from the original FIDIC Conditions. We use
italics to indicate additions or deletions from the original.

“1.9. Delayed Drawings or Instructions

The Contractor shall give notice to the Engineer whenever the Works
are likely to be delayed or disrupted if any necessary drawing or
instruction is not issued to the Contractor within a particular time,
which shall be reasonable. The notice shall include details of the
necessary drawing or instruction, details of why and by when it should
be issued, and details of the nature and amount of the delay or
disruption likely to be suffered if it is late.

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If the Contractor suffers delay and/or incurs Cost as a result of a failure
of the Engineer to issue the notified drawing or instruction within a time
which is reasonable and is specified in the notice with supporting
details, the Contractor shall give a further 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 plus reasonable profit, which shall be
included in the Contract Price.

After receiving this further notice, the Engineer shall proceed in

accordance with Sub-Clause 3.5 [Determinations] to agree or
determine these matters.

However, if and to the extent that the Engineer's failure was caused
by any error or delay by the Contractor, including an error in, or delay
in the submission of, any of the Contractor's Documents, the
Contractor shall not be entitled to such extension of time, Cost or
profit.

3.5 Determinations

Whenever these Conditions provide that the Engineer shall proceed

in accordance with this Sub-Clause 3.5 to agree or determine any
matter, the Engineer shall consult with each Party in an endeavour to
reach agreement. If after 7 days following the commencement of such
consultations, agreement is not achieved, the Engineer shall make a
fair determination in accordance with the Contract, taking due regard
of all relevant circumstances.

The Engineer shall give notice to both Parties of each agreement or

determination, with supporting particulars. Each Party shall give effect
to each agreement or determination unless one Party notifies the other
of his dissatisfaction with a determination within 14 days of having
received it. Either Party may then refer the dispute to be settled in
accordance with Clause 20 [Claims and Disputes].
8.4 Extension of Time for Completion
[...] The Contractor shall be entitled subject to Sub-Clause 20.1
[Contractor’s Claims] to an extension of the Time for Completion if and
to the extent that despite using its best endeavours to preclude the
occurrence of any delay, and to minimise and mitigate the effects of
any such delay on the Works completion for the purposes of Sub-
Clause 10.1 [Taking Over of the Works and Sections] is or will be
delayed by any of the following causes:
...
If the Contractor considers himself to be entitled to an extension of the
Time for Completion, the Contractor shall give notice to the Engineer
in accordance with Sub-Clause 20.1 [Contractor’s Claims ] together
with appropriate evidence and detailed proposals consistent with the
Contract for overcoming such events and minimising any adverse

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effects on the time for completion and quality of the Works. The
Contractor shall implement such proposals unless the Engineer
instructs otherwise within 4 Business Days from the date of
notification, and the Contractor shall provide such additional
information as the Engineer may request. ...

8.7 Delay Damages

If the Contractor fails to comply with Sub-Clause 8.2 [Time for

Completion], the Contractor shall, subject to Sub-Clause 2.5
[Employer’s Claims), pay delay damages to the Employer for this
default. These delay damages shall be the sum stated in the Appendix
to Tender, which shall be paid for every day which shall elapse
between the relevant Time for Completion and the date stated in the
Taking-Over Certificate. However, the total amount due under the
Sub-Clause shall not exceed the maximum amount of delay damages
(if any) stated in the Appendix to Tender.

[...] These damages shall not relieve the Contractor from his obligation
to complete the Works, or from any other duties, obligations or
responsibilities, which he may have under the Contract and are strictly
without prejudice to the Employer’s other entitlements under the
Contract (and shall in no way preclude or restrict the Employer’s ability
to bring a general damages claim). In addition to the delay damages,
the Contractor shall fully compensate the Employer for any additional
fees that the Employer is required to pay to the Engineer or any other
third parties arising out of or in connection with the delay.

20.1 Contractor’s Claims

If the Contractor considers himself to be entitled to any extension of

the Time for Completion and/or any additional payment, under any
Clause of these Conditions or otherwise in connection with the
Contract, the Contractor shall give notice to the Engineer, describing
the event or circumstance giving rise to the claim. The notice shall be
given as soon as practicable, and not later than 28 days after the
Contractor became aware, or should have become aware, of the event
or circumstance.

If the Contractor fails to give notice of a claim within such period of 28

days, the Time for Completion shall not be extended, the Contractor
shall not be entitled to additional payment, and the Employer shall be
discharged from all liability in connection with the claim. Otherwise,
the following provisions of this Sub-Clause shall apply.

The Contractor shall also submit any other notices which are required
by the Contract, and supporting particulars for the claim, all as relevant
to such event or circumstance.

The Contractor shall keep such contemporary records as may be

necessary to substantiate any claim, either on the Site or at another
location acceptable to the Engineer. Without admitting the Employer’s
liability, the Engineer may, after receiving any notice under this Sub-
Clause, monitor the record-keeping and/or instruct the Contractor to

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keep further contemporary records. The Contractor shall permit the
Engineer to inspect all these records, and shall (if instructed) submit
copies to the Engineer.

Within 42 days after the Contractor became aware (or should have
become aware) of the event or circumstance giving rise to the claim,
or within such other period as may be proposed by the Contractor and
approved by the Engineer, the Contractor shall send to the Engineer
a fully detailed claim which includes full supporting particulars of the
basis of the claim and of the extension of time and/or additional
payment claimed. If the event or circumstance giving rise to the claim
has a continuing effect:

(a) this fully detailed claim shall be considered as interim;

(b) the Contractor shall send further interim claims at monthly

intervals, giving the accumulated delay and/or amount claimed,
and such further particulars as the Engineer may reasonably
require; and

(c) the Contractor shall send a final claim within 28 days after the end
of the effects resulting from the event or circumstance, or within
such other period as may be proposed by the Contractor and
approved by the Engineer.

Within 42 days after receiving a claim or any further particulars

supporting a previous claim, or within such other period as may be
proposed by the Engineer and approved by the Contractor, the
Engineer shall respond with approval, or with disapproval and detailed
comments. He may also request any necessary further particulars, but
shall nevertheless give his response on the principles of the claim
within such time.

Each Payment Certificate shall include such amounts for any claim as
have been reasonably substantiated as due under the relevant
provision of the Contract. Unless and until the particulars supplied are
sufficient to substantiate the whole of the claim, the Contractor shall
only be entitled to payment for such part of the claim as he has been
able to substantiate.

The Engineer shall proceed in accordance with Sub-Clause 3.5

[Determinations] to agree or determine (i) the extension (if any) of the
Time for Completion (before or after its expiry) in accordance with
Sub-Clause 8.4 [Extension of Time for Completion], and/or (ii) the
additional payment (if any) to which the Contractor is entitled under
the Contract.

The requirements of this Sub-Clause are in addition to those of any

other Sub-Clause which may apply to a claim. If the Contractor fails to
comply with this or another Sub-Clause in relation to any claim, any
extension of time and/or additional payment shall take account of the
extent (if any) to which the failure has prevented or prejudiced proper
investigation of the claim, unless the claim is excluded under the
second paragraph of this Sub-Clause. ...”

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 [Sub-Clauses 20.2 to 20.8 of the FIDIC Standard Form Conditions were deleted and
replaced by a short provision requiring parties to seek to resolve amicably any dispute or
difference arising between them, failing which either party could refer the dispute(s) to the
competent court of the DIFC for final resolution.]

MESC’s Appeal

29. As noted in para. 27 above, MESC challenges the judge’s interpretation of the contractual
provisions, viz.: the 42-day detailed notice requirement (Ground 1); the Sub-Clause 3.5
14-day notice requirement (Ground 2); the interpretation of the provisions of Sub-Clause
20.1 relative to determining when the 28-day notice had to be given (Ground 4); and his
rejection of MESC’s argument concerning the “prevention principle” (Grounds 5 and 6).
Ground 3 related to a procedural matter and does not arise for decision.

Extension of time and additional payment – overview

30. It is convenient to start with an overview of the contractual provisions governing time for
completion, extensions of time and liquidated damages for delay.

31. The Commencement Date under the Contract was 11 July 2017: see Sub-Clause 8.1 and
Part III Appendix to Tender. Time for Completion, nominally 16 months from the
Commencement Date (see Part III Appendix to Tender), was in fact agreed by the parties
to be 16 December 2018 (see para. 5 above). “Time for Completion” means, in this case
(since the Works were not divided into Sections), the time for Completing the whole of the
Works: see Sub-Clauses 1.1.3.3 and 8.2. Sub-Clause 10.1 provided for the taking over of
the Works by the Employer when they had been completed in accordance with the
Contract. The Contract Price (Sub-Clause 14.1) was AED 40,331,550.

32. The Contract contains a number of provisions dealing with delay suffered by the
Contractor as a result of failures on the part of the Employer or the Engineer or by reason
of circumstances beyond the control of any of the parties. Sub-Clause 1.9, for example,
deals with the case of the Contractor suffering delay because of late issue of drawings
and/or instructions by the Engineer. Sub-Clause 2.1 deals similarly with delay caused by
the Employer’s failure to give access to or possession of the site by the required time.
There are numerous other provisions to like effect. Each of them contains a provision
stating that if the Contractor suffers delay or incurs cost as a result of such failure by the

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 Engineer or the Employer, the Contractor shall give notice to the Engineer and shall be
entitled, subject to Sub-Clause 20.1, to (a) an extension of time under Sub-Clause 8.4 for
any such delay, if completion is or will be delayed, and (b) payment of any such cost plus
reasonable profit. The Engineer will then proceed in accordance with Sub-Clause 3.5 to
agree or determine those matters.

33. Two points in particular are to be noted. First, the entitlement to an extension of time arises
under Sub-Clause 8.4, which makes it clear that it is dealing with “an extension of the Time
for Completion if and to the extent that completion for the purposes of Sub-Clause 10.1
[Taking Over of the Works and Sections] is or will be delayed.” In other words, such an
entitlement is not triggered simply by showing some actual or anticipated delay to a
particular activity – it is only if the delay has or might have the effect of delaying Completion
of the Works that the Contractor will be entitled to an extension of time. It follows that in
many, perhaps most, cases the claim for an extension of time will be presented on the
basis that the event or circumstance relied on will (or might) delay Completion of the Works
beyond the Contractual Completion Date, a date which may be months or years down the
line. Second, Sub-Clause 8.4 makes it clear that a Contractor claiming to be entitled to an
extension of Time for Completion must give notice to the Engineer in accordance with
Sub-Clause 20.1, and indeed that any entitlement to an extension is subject to compliance
with Sub-Clause 20.1.

34. Clause 20 is headed “Claim, Disputes and Arbitration”. Of the whole clause as it appears
in the FIDIC Standard Form, only Sub-Clause 20.1 is relevant here, the remainder of
Clause 20 having been deleted by the parties and replaced by a reference to disputes
being decided in the courts of the DIFC. The structure of Sub-Clause 20.1 is instructive. If
the Contractor considers himself entitled to an extension of the Time for Completion, he
must, within 28 days of the time when he became aware or should have become aware
of the event or circumstance giving rise to the claim for an extension, give notice to the
Engineer describing that event or circumstance (the “28-day notice requirement”). He must
then, within 42 days of that same time, follow that up with a detailed claim, supported by
such material as is available (the “42-day detailed claim requirement”). There is allowance
within Sub-Clause 20.1 for the provision of further information, but within a relatively short
period (a further 42 days unless a longer period is agreed) the Engineer must proceed in
accordance with Sub-Clause 3.5 to agree or determine the claim for extension of time and
any additional payment to which the Contractor may be entitled.

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35. Sub-Clause 3.5 has been heavily amended, but in essence it provides for the Engineer,
after consulting each party, to endeavour to reach agreement, failing which he is to issue
his determination in accordance with the Contract. It goes on to say that each party shall
give effect to such determinations unless within 14 days they give notice to the other of
their dissatisfaction, in which case the dispute may be settled in accordance with Clause
20.

36. Against this background it is convenient to discuss particular issues arising in this Appeal.

Sub-Clause 20.1 – the 28-day notice requirement

37. There is no doubt that the 28-day notice requirement in Sub-Clause 20.1 is a condition
precedent to the Contractor’s entitlement to obtain an extension of time, however strong
his claim to an extension of time might be otherwise. Failure to serve that notice in time
means that the claim for an extension of time (and/or additional payment) will fail. This is
made absolutely clear in the second paragraph of Sub-Clause 20.1: if the Contractor fails
to give notice of a claim within the 28-day period, time for completion shall not be
extended, the Contractor shall not be entitled to additional payment and the Employer
shall be discharged from all liability in respect of the claim. The language could not be
clearer. The judge accepted this and, save for the point about timing, the Contractor did
not argue to the contrary.

Sub-Clause 20.1 – the 42-day detailed claim requirement (Ground 1)

38. The position is quite different when it comes to the 42-day detailed claim requirement. The
second paragraph of Sub-clause 20.1 sets out the consequences of a failure to give the
28-day notice, but by the word “otherwise” in the last sentence of that paragraph
(“Otherwise, the following provisions of this Sub-Clause shall apply”) makes it clear that
that draconian regime does not apply to what follows. In fact, specific and very different
provision is made for any other relevant failures on the part of the Contractor. The
Contractor must keep records necessary to substantiate its claim, it must permit inspection
of such records, and it must comply with the 42-day detailed claim requirement. The
penalty for failing to do some or all of this is spelled out in the last paragraph of Sub-Clause
20.1: “any extension of time and/or additional payment shall take account of the extent (if
any) to which the failure has prevented or prejudiced proper investigation of the claim,

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 unless the claim is excluded under the second paragraph of this Sub-Clause.” Thus, for
example, the failure to keep proper records, or to permit inspection, or to send a fully
detailed claim may hamper proper investigation of the claim for an extension of time or for
additional payment; and if that is the case then the Engineer is given the right to take
account of such difficulties created by the Contractor in arriving at his determination. In
other words, he could reduce the period of extension of time to take account of the
difficulties of investigating the claim caused by the Contractor’s failure to comply with its
obligations under this (or any other) Sub-Clause.

39. It must be borne in mind that the purpose of the two notices is quite different, as Sub-
Clause 20.1 makes clear. The 28-day notice is designed to give the Employer notice that
a claim for an extension (or additional payment) will or may be made and to identify the
event or circumstances giving rise to the claim. It can be short and to the point. As
Akenhead J pointed out in Obrascon (supra) at para. 313, no precise form is specified for
the notice, nor is there any requirement for a massive amount of detail or analysis at that
stage. It gives notice to the Employer (through the Engineer) that there will be or may be
a claim, with a reference to the relevant circumstances so that it can be investigated. The
42-day detailed claim is quite different and serves a different function. It has to be “fully
detailed” with “full supporting particulars”. It is intended to be a claim ready for
determination by the Engineer. In the case of an on-going delay, the detailed claim is
considered as interim, to be supplemented by further interim claims at monthly intervals
ending with a final claim after the effects resulting from the event or circumstances have
come to an end. On receipt of the claim (or final claim), the Engineer responds with his
determination – approval, disapproval or other comments, including requesting further
particulars. It may trigger a dialogue between the Contractor and the Engineer. The
amount of information given in the 42-day detailed claim is likely to differ from case to
case. The longer the Contractor leaves it, and the sparser the detail given in the claim, the
more difficult it may be to prove entitlement to an extension of time or additional payment.
So too, the less detail given in the detailed claim, the more difficult it may be for the
Contractor to argue that the claim complies with the 42-day detailed claim requirement.
But this will often be a matter of degree. It is neither necessary nor appropriate to construe
Sub-Clause 20.1 in a way which leaves it open to argue that what was put forward as a
42-day detailed claim did not in fact contain sufficient detail to meet the requirements of
the clause, with the result, in an extreme case, that the Contractor could be said not to

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 have sent such a claim and therefore was barred from any relief by way of extension or
additional payment. Such a construction would give rise to the risk of satellite litigation and
is both undesirable and unnecessary.

40. The wording at the end of Sub-Clause 20.1 (“unless the claim is excluded under the
second paragraph of this Sub-Clause”) is also instructive. It draws a clear distinction
between the draconian regime introduced in the second paragraph of Sub-Clause 20.1,
referable only to the 28-day notice requirement, and the remainder of Sub-Clause 20.1
which is not subject to that regime.

41. The judge took the view (Judgment para. 48) that if the 42-day detailed claim requirement
was not a condition precedent it would be merely exhortatory. We disagree. Sub-Clause
20.1 gives teeth to the requirement to serve such a claim and to do so within the required
time; any failure or delay in complying with the detailed claim regime can be taken into
account by the Engineer in arriving at his determination. So, we differ from the judge on
this point. We prefer MESC’s construction of this provision. But success on this point alone
does not assist MESC; MESC needs to succeed on other points as well.

Sub-Clause 21.1 – when time begins to run for the purpose of the 28-day notice
requirement (Ground 4).

42. We next consider the question of when time begins to run under Sub-Clause 20.1 for the
purpose of the 28-day notice requirement (and, as indicated earlier, the 42-day detailed
claim requirement). The judge, differing from Akenhead J at paras. 312-313 of his
judgment in Obrascon (supra), said this (Judgment para. 53):

“In my opinion, the effect of the first paragraph of Sub-Clause 20.1 is

that, if a contractor is aware or ought to have been aware of an event
or circumstance that could give rise to an EOT claim, he must give
notice of that event or circumstance within 28 days after he became
so aware or ought to have been so aware.”

We agree with this analysis for the reasons set out below.

43. Sub-Clause 20.1 is concerned with two things, extension of time and additional payment.
Those two things may be inter-related or they may be quite separate. We are here
concerned only with a claim for extension of time. In terms of Sub-Clause 8.4 – and other
Sub-Clauses similarly link with Sub-Clause 20.1 – the Contractor is entitled, subject to

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 Sub-Clause 20.1, to an extension of time if and to the extent that completion of the Works
is or will be delayed by one or more of a number of factors listed therein, such as variations,
adverse weather or delays etc caused by the Employer. The relevant delay is not delay to
any particular activity but delay to completion. The use of the future tense (see the
underlining above) is also instructive; the particular factor relied upon may cause some
immediate delay to a particular activity, but whether it will in fact delay completion of the
Works will often depend on a whole range of factors. Hence the Contractor is expected to
put in a claim for an extension of Time for Completion if he considers that the particular
factor or factors relied upon has/ have caused or will cause Completion to be delayed.

44. In Obrascon, Akenhead J referred to Sub-Clause 8.4 which sets out the basis, in that case
as in this, for claiming an extension of time. Sub-Clause 1.9 is also relevant – in turn it
refers to both Sub-Clauses 8.4 and 20.1. But as those other provisions make clear, the
claim for an extension itself is made under Sub-Clause 20.1 – see e.g. the last paragraph
of Sub-Clause 8.4. Consistently with Sub-Clause 8.4, the claim is for an extension of the
Time for Completion, on the basis that Time for Completion either is or will be delayed by
one or more of the events or circumstances giving rise to the claim, i.e. one of the causes
listed in Sub-Clause 8.4. Notice of the claim must be given as soon as practicable and not
later than 28 days after the Contractor became aware, or should have become aware, of
the event or circumstances relied on as giving rise to the actual or likely delay. The focus
is not so much on the delay but on the event or circumstance giving rise to the delay; and
the 28 days for giving notice of the claim runs from the time the Contractor becomes
aware, or ought reasonably to have become aware, of that event or circumstance and its
potential to delay completion.

45. At the beginning of para. 312 of his judgment in Obrascon (supra), Akenhead J says this:

“Properly construed and in practice, the ‘event or circumstance giving

rise to the claim’ for extension must first occur and there must have
been either awareness by the Contractor or the means of knowledge
or awareness of that event or circumstance before the condition
precedent bites.”

We have no difficulty with that part of his analysis which correctly focuses on when the
Contractor becomes aware (or should have become aware) of the relevant event or
circumstance giving rise to the claim so as to start time running. But later in his judgment
Akenhead J appears to say that time can start to run from the moment, usually later in

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 time, that delay to completion of the works in fact occurred or started to occur. We see
difficulties with this analysis. Delay to the contractual Time for Completion only occurs in
fact when the works are not completed by the contractual completion date. The
construction advanced by Akenhead J would mean that in, say, a three year project, if an
event occurred during the first year which resulted ultimately in the works overrunning by
a month or two after the Time for Completion in year three – and there would be no actual
delay to the Time for Completion until then – then the 28-day notice under Sub-Clause
20.1 would only have to be given within 28 days of the moment in year three when Time
for Completion passed without the works being completed. That would render Sub-Clause
20.1 – which is designed to ensure that claims are notified and dealt with swiftly – entirely
ineffective for its purpose.

46. For these reasons, we agree with the judge’s analysis of this part of Sub-Clause 20.1. The
28-day notice requirement is triggered when the Contractor becomes aware (or ought to
have become aware) not of the delay or likely delay but of the event or circumstance giving
rise to the claim for an extension of the Time for Completion. We would only add this. We
were referred in the course of argument to the contra proferentem rule. It was suggested
that any ambiguities should be resolved in favour of the Contractor. We need not go into
this – in our view there is no ambiguity in the provision and the rule does not come into
play. The proper interpretation of that part of the clause is quite clear. We agree with the
judge.

Sub-Clause 3.5 (Ground 2)

47. Sub-Clause 3.5 sets out a critical stage of the dispute resolution process. It is referred to
in Sub-Clause 8.4, for example, and is applicable to the stage after both the 28-day notice
and the 42-day detailed claim have been given in accordance with the notice provisions
in Sub-Clause 20.1. If agreement cannot be reached between the parties, then it is for the
Engineer to make a “fair determination” of the extension of time (if any) to be granted to
the Contractor and of any additional payment to which the Contractor may be entitled. In
terms of Sub-Clause 3.5, the engineer is required to give notice of any such determination
to the parties, with supporting particulars. Each party is then required to give effect to each
determination “unless one Party notifies the other of his dissatisfaction with a
determination within 14 days of having received it”. Either Party “may then refer the dispute
to be settled in accordance with Clause 20 [Claims and Disputes].” The key to

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 understanding this provision lies in the use of the word “then” underlined in the last
sentence quoted from Sub-Clause 3.5. The word has both a sequential and a conditional
meaning: sequential in that a party wishing to dispute an Engineer’s determination in
accordance with Clause 20 can do so only after one or other party has already expressed
his dissatisfaction with the determination within 14 days of having received it; and
conditional in that the right to refer the dispute to be resolved in accordance with Clause
20 is conditional upon the 14-day notice provision having been complied with. It follows,
on this analysis, that service of the 14-day dissatisfaction notice is a condition precedent
to the right to refer any dispute about the Engineer’s determination to the contract’s dispute
resolution procedure. Unless the 14-day dissatisfaction notice is given within that 14 days,
the Engineer’s determination stands.

48. The judge adopted this construction in his Judgment (at para. 49). In his written Skeleton
Argument filed in advance of the hearing of this Appeal, counsel for MESC appeared to
accept this construction of the clause, subject to a point to which we shall return shortly.
However, in the course of his submissions he sought to resile from this: emboldened by a
suggestion from the court, he advanced an argument to the effect that Sub-Clause 3.5 did
not present a bar to a claim in the final accounting between the parties but only regulated
the immediate consequence of a failure to notify dissatisfaction within a short period of 14
days. Upon reflection we are satisfied that the suggestion was a bad one. The language
of Sub-Clause 3.5, in its amended form, does not admit of any qualification or nuance of
this sort: it states clearly that unless the dissatisfaction notice is given within 14 days of
that determination being communicated then that determination stands and cannot be re-
litigated by the dispute procedure stipulated for in Clause 20 (which in the present case,
because of amendments to Clause 20, means by litigation in court). We note that in its
unamended form Sub-Clause 3.5 does provide for Engineer’s determinations to be given
effect during the currency of the Contract under reservation that they can be revised later
under the dispute resolution provisions in Clause 20; the introduction by amendment of a
14-day time limit for expressing dissatisfaction with the determination can only have been
intended to limit the right of either party to seek to revise the determination later.

49. The main argument advanced on behalf of the Contractor in relation to Sub-Clause 3.5
assumed that it did make the 14-day dissatisfaction notice a condition precedent to being
entitled to challenge the determination in court. The argument was that such a provision

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 was invalidated by Article 123(1) of the DIFC Contract Law (DIFC Law No 6 of 2004) which
is headed “Limitation” and provides as follows:

“123 Limitation
(1) An action for breach of any contract must be commenced
within six years after the cause of action has accrued or
in the case of fraud, when the aggrieved party becomes
aware of the fraud. By the original agreement the parties
may reduce the period of limitation to not less than one
year but may not extend it.”

We are not persuaded that this argument has any merit. Article 123 of the Contract Law
deals with limitation in so far as it applies to actions for breach of contract. Sub-Clause 3.5
has nothing to do with actions for breach of contract. It simply limits the time within which
a party may challenge an engineer’s determination. In the course of argument, we raised
the question why, if this argument was sound, it did not also apply to the 28-day notice
provision in Sub-Clause 20; but we received no satisfactory answer. It was, we were told,
a policy decision for the court. That is not a proper basis for deciding the point. The short
answer to the submission is that Article 123 of the Contract Law has nothing to do with
notice provisions such as are found in Sub-Clauses 3.5 and 20.1 of the Contract.
Accordingly, this argument is rejected.

The “prevention principle” (Ground 5)

50. The “prevention principle”, as it has come to be known, derives from the basic common
law principle that a party should not benefit from his own wrongdoing. This principle has
application in the field of construction contracts where the contract usually provides for
liquidated damages to be payable by the Contractor in the event that he fails to complete
by the contractual completion date. If his failure to complete by that date is caused, even
in part, by some action or inaction on the part of the Employer, whether that be legitimate
(for example, by instructing a variation which prolongs the work) or illegitimate (for
example, by delaying the provision of access necessary for the Contractor to carry on with
the work) then the Contractor will no longer be held to his agreement to complete by the
contractual completion date and instead will be required to complete within a reasonable
time; the liquidated damages clause, which depends for its efficacy upon there being a
fixed date for completion, will no longer apply; and damages for failure to complete within
a reasonable time will be “at large”. Parties are free to contract out of the prevention
principle, but for obvious reasons clear words are needed for this to be effective. In many

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 construction contracts parties will have agreed a clause entitling the Contractor to an
extension of time and/or extra money in the event that construction is delayed by such
circumstances. This too can be effective to displace the prevention principle since the
operation of the extension of time provisions result in a new revised completion date for
the purpose of the liquidated damages clause. But such clauses often make compliance
with notice requirements a precondition to the grant of an extension of time, as is the case
here with the 28-day notice requirement stated in Sub-Clause 20.1 to be a condition
precedent to any such relief. What happens when the Contractor fails to give the relevant
notices within the required time? That is the question raised in this Appeal. Before the
judge, MESC argued that in such a case the extension of time provisions in the contract
did not operate so as to exclude the prevention principle. The argument relied on the
judgment of Bailey J sitting in the Supreme Court of the Northern Territory of Australia in
Gaymark Investments Pty Ltd v Walter Construction Group Ltd [1999] NTSC 143. The
judge in this case rejected this argument (see paras. 57-69 and 72 of his judgment).
Having failed to give the proper notices within the time permitted by Sub-Clause 20.1 –
and the same argument would presumably apply to Sub-clause 3.5 – the Contractor was
not entitled to an extension of time; with the result that the original contractual completion
date stood, and the Contractor was liable in liquidated damages for the period by which
the work continued beyond the contractual completion date.

51. In Gaymark the judge, upholding the Award of the arbitrator, held that, in the absence of
strict compliance by the Contractor with the notice requirements in the contract (which
were framed as a condition precedent to an extension of time being granted), there was
no provision in the contract allowing for an extension of time for completion; and, as a
result, the clause failed to preserve the Employer’s right to liquidated damages where it
was shown that some or all of the delay was caused by the Employer. This decision has
not been greeted with universal approval. The judge in Gaymark did not follow dicta in two
earlier Australian decisions, Turner Corporation Ltd (Receiver and Manager Appointed) v
Austotel Pty Ltd (2 June 1994) (1997) 13 BCL 378 (Turner No.1) and Turner Corporation
Ltd (in Provisional Liquidation) v Co-ordinated Industries Pty Ltd (26 August 1994) (1994)
11 BCL 202 (“Turner No.2”); and his own decision in Gaymark was itself the subject of
criticism by the New South Wales Court of Appeal in Peninsular Balmain Pty Ltd v
Abigroup Contractors Pty Ltd [2002] NSWCA 211. No authority was cited which supported
the decision in Gaymark. In City Inn Ltd v Shepard Construction Ltd [2003] SLT 885 the

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 Inner House of the Court of Session in Scotland confirmed that the Contractor could not
obtain an extension of time if it did not comply with the condition precedent notice
provisions in the contract, though it appears that the Australian cases were not cited, nor
was it argued that in the absence of an extension of time in those circumstances time
became “at large”. In Multiplex Constructions (UK) v Honeywell Control Systems [2007]
BLR 195, at paras 95-105, Jackson J reviewed the authorities (and an article by Ian
Duncan Wallace: “Prevention and Liquidated Damages: a Theory Too Far” (2002) 18
Building and Construction Law 82) and concluded, though he did not ultimately have to
decide the point, that he had “considerable doubts” that Gaymark represented the law of
England. He concluded, in para. 105, that if it was possible to comply with the notice
provisions but the contractor simply failed to do so, then time was not thereby set at large.

52. In renewing his argument for the Contractor on this Appeal, and in addition to relying on
Gaymark, counsel for the Contractor referred to an Article by Tony Marshall entitled “The
Prevention Principle And Making The Contractor Pay For Employer Delay: Is English Law
Departing From Its Roots?”, published in two parts in The International Construction Law
Review: [2020] ICLR 325 and [2021] ICLR 88. Mr Marshall’s argument is essentially this.
There are only two routes by which the operation of the prevention principal can be
excluded. The “first route” is to state in very clear language that the Contractor agrees to
complete the work by the agreed date and accepts responsibility for delay to the
completion of the works even in cases where the delay is attributable wholly or in part to
the actions of the Employer. The “second route” is to include in the contract a provision
entitling the Contractor to an extension of time for completion (i.e., a revised completion
date) in circumstances where progress on the works is delayed by the actions (legitimate
or otherwise) of the Employer. In both cases, the liquidated damages provisions in the
contract will continue to apply, except that in the second route they will bite only from the
revised completion date if the work is not completed by then. A problem arises, however,
where the Employer insists on including a “notice-as-condition-precedent provision” into
the contract. If the Contractor fails to operate the extension of time provisions as required
by the contract, he is not entitled to an extension of time. This has implications not only
for the Contractor’s claim for an extension of time (and corresponding additional payment)
but also on his liability under the contract for liquidated damages, which will be based on
the original completion date notwithstanding that the delay may have been caused by the
Employer; so that he may end up paying damages for delayed completion even where the

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 delay was caused in whole or in part by the actions of the Employer. How can this be
justified as a matter of fairness? The solution, in analytical terms, he suggests, is to regard
the extension of time mechanism as “disabled” in such circumstances; no extension of
time can be achieved by this means; it therefore cannot serve as the second route to
overcome the prevention principle and preserve the Employer’s right to liquidated
damages; time for completion is abrogated, the Contractor must complete the works within
a reasonable time, and damages for delay, if any, are at large. Mr Marshall criticises the
decisions referred to above, and others which we have not mentioned, on the ground that
they failed properly to observe the distinction between the first and second routes to
avoiding the application of the prevention principle; and allowed the first route (very clear
wording) to blur the issue when the second route (extension of time provision) was
disabled by the contractor’s failure to comply with the notice provisions which operated as
a condition precedent to the award of an extension.

53. We are not persuaded by this argument. The judge was right to reject it. We have three
main reasons for coming to this view.

54. The first reason relates to the use – we would say misuse – of the word “disabled” in
describing the extension of time provision when not operated correctly by the Contractor.
It is wrong to say that the extension of time provision is disabled, simply because it has
not been operated according to its terms. The meaning and effect of a contractual
provision must be capable of being ascertained at the time the contract was entered into.
At the time it was entered into, the contract contained a clause entitling the Contractor to
an extension of time in certain circumstances if he gives the appropriate notices in
accordance with the clause. There is no question here of those circumstances or
requirements being unreasonable or incapable of being performed by the Contractor. The
clause is therefore effective to extend time for completion in the circumstances described
therein and to preserve the Employer’s right to claim liquidated damages for delay after
the original or revised completion date. Nothing that happens after the contract is
concluded can affect this construction. If the Contractor, whether by design or accident,
fails to give notice in accordance with the clause he must take the consequences. The
clause is not “disabled” – it simply has not been operated. But it is important to note that
the consequence of his failure to operate the clause is that he cannot get an extension of
time to cover the delay caused by the Employer’s fault. It is not a case, as it has on
occasion been (somewhat unfairly) characterised, of the failure to give notice becoming in

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 some way the cause of the delay (see Professor Doug Jones, “Prevention, Time Bars and
Multiplex Constructions ...” in Construction Law, Costs and Contemporary Developments:
Drawing the Threads Together”, Julian Bailey (ed), Chapter 19). The cause of the delay
remains the act or default of the Employer; the failure to comply with the notice
requirement simply (but crucially) means that the Contractor does not avail himself of the
contractual remedy for such delay given to him by the contractual terms.

55. Second, the effect of Mr Marshall’s argument would be to enable the Contractor to pick
and choose whether or not to invoke the extension of time provision, knowing that if he
did not give the proper notices then he would be free of any obligation to complete the
works by a specified date and of having to pay liquidated damages for delay. The power
to choose would lie entirely in his own hands. As was held in City Inn Ltd v Shepard
Construction Ltd (supra), the Contractor is not in breach of contract by not invoking the
extension of time provisions. He is therefore left to pick and choose what suits him best.
That does not make any commercial sense and is at odds with the carefully formulated
structure of the contract.

56. Third, it is in our view wrong to insist on maintaining a clear bright line between first and
second routes. The typical “notice-as-condition-precedent provision” makes it crystal clear
to the Contractor what he has to do to be awarded an extension of time and thereby reduce
or eliminate the liquidated damages payable by him in the event of delay. The clause could
equally be written in a way which committed the Contractor to completing the works by the
contract completion date come what may, unless he was delayed by certain events and
he gave notice that he wanted an extension of time on that account. There is nothing
complicated or unclear about that, and it would satisfy the “first route” described by Mr
Marshall in his Article. In this respect we respectfully disagree with the observations of
Prof Doug Jones (ibid) to the effect that one cannot imagine any commercial party
agreeing to such a provision. MESC did so in the instant case, since there is no difference
in substance between that formulation and a formulation such as exists in Sub-Clause
20.1 making service of the 28-day notice a condition precedent to the grant of an extension
of time.

57. Gaymark stands alone. We were not referred to any authority in which Gaymark has been
applied or approved. In our view it does not represent the law as applied in the DIFC.

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Principles of good faith (Ground 6)

58. It was argued on behalf of the Contractor that the law required the Employer to act in good
faith towards the Contractor. It was unconscionable for the Employer to claim liquidated
damages for a period of delay for which he was largely responsible. Reliance was placed
on Articles 57 and 58 of the DIFC Contract Law which provide as follows:

“57. Implied obligations

Implied obligations arise from:
(a) the nature and purpose of the contract;
(b) practices established between the parties and usages;
(c) good faith and fair dealing; and
(d) reasonableness.
58. Co-operation between the parties
Each party is bound to co-operate with the other party when such co-
operation may reasonably be expected for the performance of that
party’s obligations.”

It was not clear whether this was a stand-alone submission or intended to bolster the
argument on the prevention principle discussed above. But either way we reject this
submission for the same reason as given by the judge in para. 71 of his Judgment. The
Contractor was a willing party to a contract which included the 28-day notice requirement
in Sub-Clause 20.1 and the 14-day notice of dissatisfaction requirement in Sub-Clause
3.5. Those provisions are clear in their words and in their effect. They admit of no scope
for the postulated implied term or obligation of good faith. There is no reason why the
overriding principle of pacta sunt servanda should be circumscribed in this way.

A reformulated prevention principle

59. In a second supplementary skeleton argument the Contractor advanced what it called a
“Reformulated Prevention Principle” argument, whereby in circumstances where the
Contractor had not properly served notices in accordance with the terms of Sub-Clauses
20.1 and 3.5 and therefore was not entitled to an extension of time, time for completion
would not be extended; but the Employer should nonetheless be debarred from claiming
liquidated damages for such part of the delay as was attributable to his own actions. The
focus in this argument shifts from the question of whether, having failed to give the proper
notices within the required time, the Contractor is entitled to an extension of time – he is

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 not – to one of whether the Employer can (or should be able to) recover liquidated
damages for delay beyond the (unrevised) completion date in circumstances where, by
his own actions or inaction, he has caused the delay. It was submitted that the principles
of good faith mentioned above allow the Court a discretion not to award liquidated
damages in circumstances where the Employer was responsible for the delay or to reduce
the amount of such liquidated damages if they are grossly excessive to the harm resulting
from the non-compliance with the notice provisions in the contract; the two are not the
same, the former looking to the cause of the delay, the latter looking to the amount of the
loss, but we put that to one side for present purposes. Reliance was placed on Article 122
of the DIFC Contract Law which provides as follows:

“Article 122
(1) Where the contract provides that a party who does not perform is
to pay a specified sum to the aggrieved party for such non-
performance, the aggrieved party is entitled to that sum
irrespective of its actual harm.
(2) However, notwithstanding any agreement to the contrary the
specified sum may be reduced to a reasonable amount where it is
grossly excessive in relation to the harm resulting from the non-
performance and to the other circumstances.”

Support for this approach was to be found in the Articles by Mr Marshall and Prof Jones
(supra).

60. This was not a submission made to the judge below, so we have not had the benefit of his
views on it. We are, however, prepared to allow the argument to be canvassed on this
Appeal – and we formally grant permission to MESC to raise this argument – and we have
had the benefit of written submissions on it by both parties. Having considered the matter
carefully, we have come to the view that this additional argument must also be rejected.
We give our reasons briefly below.

61. The obligation of good faith in Articles 57 and 58 of the DIFC Contract Law is concerned
with the implication of terms into a contract and the mode of performance by the
contracting parties. Nowhere does it suggest that the contracting parties should not be
held to their bargain, as set out in the Contract, or that the courts should get involved in
re-writing the Contract for the parties so as to achieve some balancing or re-balancing of
equities between them or to redress what one party claims to be an unfair consequence
of the terms which have been agreed. The provisions of Sub-Clause 20.1, making the 28-

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 day notice requirement a condition precedent to the grant of an extension of time, are
clear. If the Contractor fails to give the appropriate notice within the stipulated time, he
cannot get an extension of time. The contractually agreed time for completion remains in
place. Sub-clause 8.7 provides for (liquidated) delay damages to be paid by the Contractor
in the event that he fails to complete by the (unrevised) time for completion. Those
liquidated damages are payable in an agreed amount (AED 42,500) per day, up to a
maximum of 10% of the contract price. To accede to the Contractor’s argument that delay
damages for such delay should not be payable if and to the extent that the delay or some
of it is caused by the Employer’s actions or inaction would mean reaching a decision in
flat contradiction to what the parties have agreed. The obligation of good faith neither
requires nor permits such a course.

62. So far as concerns Article 122 of the DIFC Contract Law, this begins by emphasising that
in general a liquidated damages clause will be enforced “irrespective” of the actual loss
suffered by the aggrieved party. It then goes on, in Article 122(2) to provide that the
amount of liquidated damages may be reduced to a reasonable amount “where it is grossly
excessive in relation to the harm resulting from the non-performance” of the contract. The
Contractor’s argument appears to assume that the relevant "non-performance” is its own
failure to give the required notices under Sub-Clause 21. If that were the case, there would
be a respectable argument for saying that the obligation to pay up to 10% of the contract
price as liquidated damages for that failure would be grossly excessive. But this would be
to mischaracterise the position. The liquidated damages are payable not for the failure to
serve the required notices within the required time but for failing to complete by the
contractually agreed completion date. There has been no attack on the amount of
liquidated damages payable for that failure, nor could there be without detailed
investigation into and evidence of the cost of that delay to the Employer.

63. For these reasons this ground of appeal fails.

Disposal of MESC’s Appeal

64. We have accepted MESC’s argument on the 42-day detailed claim requirement in Sub-
Clause 20.1 (Ground 1), but this has no financial consequence on its own. We have
rejected the other arguments advanced by MESC in support of his appeal. In those
circumstances MESC’s Appeal falls to be dismissed.

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Panther’s Cross Appeal

The Grounds of Appeal

65. Panther advances 5 grounds of appeal. These relate to: (a) the way in which the judge
dealt with MESC’s failure to disclose programme material relevant to the delay claim
(Ground 1); (b) the judge’s refusal of Panther’s claim for general damages for delay
despite the clear terms of Sub-Clause 8.7 (Ground 2); (c) the judge’s failure to award
Panther the cost of professional fees incurred both prior to and after termination despite
the clear terms of Sub-Clause 8.7 (Ground 3); (d) the judge’s failure to award legal costs
incurred by Panther as a direct result of MESC’s breach of contract (Ground 4); and (e)
error on the part of the judge in assessing the value of the loss of the guarantee or warranty
that would have been provided by MESC had it completed the contract but in the event
was not provided by MESC as a result of the contract being terminated (Ground 5). Ground
1 was stated to arise only if MESC was successful in its appeal – since MESC has not
been successful, we do not need to deal with it.

Background facts

66. Relevant background to these grounds of appeal is set out in paras. 14-15 above. In
addition, the judge found (in para. 73 of his Judgment) that:

“... Panther was entitled: (a) to terminate the Contract without notice
pursuant to Sub-Clause 15 (2) (h) as it did on 6 November 2019 on
the ground that the maximum amount of delay damages stated in the
Appendix to Tender was exhausted”

and also (para. 81) that by its termination letter of 6 November 2019

“Panther lawfully terminated the Contract by reason on MESC’s

abandonment of the Works”.

These findings are not challenged and form the basis on which Panther’s claims fall to be
considered.

General damages for delay – Sub-Clause 8.7 (Ground 2)

67. As noted above, the judge found that MESC abandoned the Project and that Panther was
entitled to terminate the Contract for this reason, in addition to its entitlement to terminate
on the ground that the maximum amount of liquidated damages for delay had been

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 exhausted. It is Panther’s case that, as a result of what happened, there was both
Contractor’s delay up to the time of termination and some further delay after termination
as the Employer completed the project with a number of replacement contractors. MESC
is responsible for all delay occurring after and consequent upon termination. The effect of
MESC’s Appeal being dismissed is that MESC is also responsible for all delay which
occurred before termination.

68. The judge held (para. 210) that Panther was entitled to recover: (i) liquidated delay
damages up to the contractual maximum for such damages; (ii) damages for those losses
that arose from breaches of the Contract which were not delay related, whether those
losses occurred prior to or after termination of the Contract, such as the cost of rectifying
defective work and dealing with the failure of MESC to vacate the site in breach of Sub-
Clause 15.2 of the Contract; and (iii) damages in respect of the additional cost of
completing the Project beyond what it would have cost if the Contract had not been
terminated. In para. 5 of his Conclusions, he dismissed Panther’s claim for damages for
the lost opportunity to sell or rent the units constructed under the Contract. That was
because such damages were, in his view, “delay related”. He construed Sub-Clause 8.7
of the Contract as excluding such recovery in addition to liquidated delay damages. His
reasoning appears at paras. 93-98 of his Judgment. In short, he took the view that Sub-
Clause 8.7, which was focused on delay, allowed the Employer to claim, in addition to
liquidated damages for delay, general damages but excluding any damages resulting from
pre-termination delay. The claim for damages for the loss of opportunity to sell or rent units
for the period between the contractual completion date and the date when Work was in
fact completed all arose from the failure to complete on time, i.e. delay, which was covered
by provision for liquidated delay damages and was not saved by the revisions to Sub-
Clause 8.7.

69. We have set out above (para. 28) the terms of Sub-Clause 8.7. In its form as incorporated
into this Contract the clause is heavily amended from the Sub-Clause as it appears in the
FIDIC Conditions. The first sentence of the second paragraph of the FIDIC text (“These
delay damages shall be the only damages due from the Contractor for such default ...”,
i.e. for failing to complete by the agreed contractual completion date) has been deleted.
Instead the parties have added text stating that the delay damages “are strictly without
prejudice to the Employer’s other entitlements under the Contract (and shall in no way
preclude or restrict the Employer’s ability to bring a general damages claim).” Panther

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 argues that the effect of the deletion and the additional wording is that delay damages are
not the only damages recoverable from the Contractor “for such default”, i.e. for delay.
MESC, on the other hand, submits that Sub-Clause 8.7, construed in the context of the
Contract as a whole, provides for liquidated delay damages to the stated maximum to be
the sole remedy for delay down to the date of termination of the Contract; and that the
saved entitlement to claim general damages is limited (a) to claims for breaches of contract
occurring pre-termination, other than delay and/or (b) to all claims, including claims for
delay, occurring post termination.

70. The judge found the construction of Sub-Clause 8.7 to be “a difficult one” but came down
in favour of MESC’s construction (see para. 97). We too have found the question difficult.
But we have come to the view that the judge was correct in his analysis. As the judge said
(para. 97) liquidated damages are designed to avoid what would otherwise be a difficult
task of establishing the quantum of loss consequent upon delay. Any pre-estimate of loss
likely to be suffered by reason of delay will, at least notionally, take into account a myriad
of factors related to the completion date and the consequences of failure to complete by
that date. Delays in the sale or rental of units which are to be built as part of the Project
will be among such factors. It will be difficult, if not impossible, to separate out the different
strands. Why should delay in sale or rental of units be regarded as outwith the ambit of
the liquidated damages provision and therefore capable of being presented as a separate
delay claim? If this was to be permitted, then an enquiry would be necessary to see
whether the total of the liquidated delay damages provided ample compensation for all of
the consequences of the delay. One particular feature of the loss suffered by the Employer
in consequence of the delay cannot be taken in isolation. The amendments to Sub-Clause
8.7 are not happily worded, but in our view the construction of the Sub-Clause advanced
by Panther would cut across the benefits conferred by including a provision for liquidated
delay damages. The parties are not to be taken as having deprived themselves in this way
of the benefit of a liquidated damages clause.

71. The judge was right to reject this claim.

The cost of professional fees incurred both prior to and after termination (Ground 3)

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72. Panther claimed Engineer supervision fees for the entire period of delay and for some
months following termination. It relied on Sub-Clause 8.7, particularly the last sentence,
brought in by amendment to the standard form FIDIC Condition, that:

“In addition to the delay damages, the Contractor shall fully

compensate the Employer for any additional fees that the Employer is
required to pay to the Engineer or any other third parties arising out of
or in connection with the delay.”

Panther’s case is simple. The Contract specifically provides that it can recover any
additional fees incurred “arising out of or in connection with the delay”.

73. The judge appears to have rejected this claim, in part at least because of his construction
of Sub-Clause 8.7. In so far as that applied to the claim for additional fees prior to
termination, we agree with him, for the reasons set out in relation to Claim 2 (see para. 70
above). But so far as concerns such fees incurred after termination, we consider that the
position is covered by the last sentence of the clause quoted above. We would therefore
allow the Cross Appeal on this Ground in so far as, and only in so far as, it relates to
Engineer supervision fees incurred after termination. The judge made no findings as to
quantum of this claim. From para. 263b of his Judgment it appears that the amount
claimed under this head for the period after termination is relatively small. Unless parties
are able to agree the relevant figure, this part of the claim will have to be remitted to the
judge for determination.

Legal costs incurred by Panther as a direct result of MESC’s breach of contract (Ground
4)

74. The background to this claim is that the MESC refused to accept the Panther’s termination
of the contract and tried to force its way back onto the site. Panther incurred significant
legal costs arising from those events and sought to recover those costs. Those legal costs
fell into two categories: (i) obtaining legal advice; and (ii) obtaining relief from the onshore
Dubai courts. The judge allowed recovery of the former, i.e. the cost of obtaining legal
advice, but refused the latter, i.e. the cost of obtaining relief from the onshore Dubai courts.
His reasons for refusing the latter category are set out at paragraph 261 of his Judgment
in the following terms:

“Panther ran the risk that it might not succeed in those courts or that
the Dubai court in question would be of the opinion that there were
other good reasons for not awarding Panther its costs”.

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75. Panther says that these are illegitimate reasons. We disagree. There is, of course, no bar
in principle to the recovery as damages of legal costs incurred in proceedings in another
jurisdiction. But all depends on the circumstances and, in particular, the reasons why costs
were not recovered in that other jurisdiction. It is a question of fact, to be determined on
the evidence. Questions may arise as to the reason why costs were not awarded: was it
a matter of policy in that jurisdiction not to award costs to the successful party – we are
aware that in some jurisdictions costs are not awarded – or was it linked in some way to
the perceived reasonableness or otherwise of the Employer’s recourse to the courts or the
manner in which the litigation was conducted? We have no information as to this. We do
not know what evidence, if any, was led on this point. The passage quoted from the
Judgment certainly discloses no legal error. The judge did not, for example, hold that such
costs can never be recoverable as damages. His reasoning quoted above suggests that
the judge, correctly, treated the question he had to decide as one of fact. It is not
suggested that the judge ignored relevant evidence or failed to take relevant facts into
account. In those circumstances this ground of Cross Appeal must fail.

Loss of the guarantee/warranty that would have been provided by MESC (Ground 5)

76. Panther contends that, but for the matters complained of, it would have had the benefit of
a 10-year latent defect guarantee owed to it by MESC. Instead, because of the
termination, it had to engage a number of replacement contractors directly to complete the
work left undone by the MESC. Those replacement contractors were not under the same
warranty or guarantee obligations. If defects start to appear in the Work within the 10-year
period, the Panther will not be able to resort to MESC – MESC only guaranteed its own
work. Panther claims, therefore, to have suffered a loss which needs to be evaluated.

77. Panther says that the judge accepted all of this. Panther’s expert put forward a valuation
– he suggested a figure of 2% of the original contract price. The judge held the element of
work that had been carried out by MESC did not give rise to any claim of this kind, because
MESC would remain liable for that work, just as it always would have been. Accordingly,
the proper claim was limited to the lack of a guarantee or warranty in respect of work
carried out by replacement contractors in the period after termination. Panther now
accepts that that approach is correct. However, the judge sought to give effect to this by
awarding 3% of the figure Panther was going to receive in respect of the “additional

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 completion costs” resulting from termination, i.e. 3% of the additional cost, but not 3% of
the value of the work done after termination.

78. Panther contends that this was wrong. The judge clearly understood the point and must
have intended to award 3% of the value of the work carried out post-termination.

79. We see the force of that submission but we are not persuaded that the judge fell into error.
Assessment of damages is largely a question of fact. It is not a precise science. As the
judge observed, the expert for Panther made an assessment based on his own experience
and made certain unwarranted assumptions. That expert used a figure of 2% of the
original Contract Price. The judge (correctly) did not accept that that percentage was to
be applied to the original Contract Price. He may have thought that the base figure for
calculating the recoverable claim should be the cost of the work post termination. He in
fact awarded a percentage not of this figure but of the additional completion costs. At the
same time, however, he chose a higher percentage than suggested by Panther’s expert.
He may have done this because the figure for additional completion costs was readily to
hand and he may have thought that applying to that figure a higher percentage than
suggested by Panther’s expert was a way of arriving at a fair assessment of the damages
to which Panther was entitled.

80. In the circumstances we cannot say that the judge was clearly wrong in his approach on
this issue. This ground of Cross Appeal fails.

Conclusion

81. For the reasons set out above MESC’s Appeal fails and is dismissed. Panther’s Cross
Appeal succeeds only to the extent identified in relation to Ground 3. In that respect, and
in that respect only, we shall remit the case to the judge for him to make the necessary
findings as to quantum. Parties can, of course, avoid the expense of a remission by
reaching an agreement between themselves on quantum.

82. There has been divided success, but the significant issue before this court has been
MESC’s Appeal. MESC having failed in that Appeal, we order that MESC shall pay
Panther’s costs of the Appeal and Cross Appeal before this court, to be assessed by the
Registrar on the standard basis if not agreed.

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