On 3 March 2023, Justice Lord Angus Glennie delivered a decisive judgment in the consolidated proceedings of Five Real Estate Development LLC v Reem Emirates Aluminium LLC, dismissing the Claimant’s multi-million AED claims in their entirety. The ruling, which followed years of procedural friction, found that the developer’s delay analysis was fundamentally flawed and unsupported by evidence. Justice Glennie’s decision effectively ended a protracted dispute over the FIVE JVC Hotel project, ordering the parties to agree a Final Account and awarding the Defendant significant prolongation costs.
For construction counsel and developers operating within the DIFC, this decision serves as a stark warning against the strategic use of 'delay claims' as a shield against legitimate contractor payments. The case demonstrates that the Technology and Construction Division (TCD) will not tolerate sophisticated but unsubstantiated delay analysis, nor will it permit parties to bypass contractual mechanisms through aggressive litigation tactics. By reinforcing the necessity of rigorous evidence and the sanctity of the FIDIC-based contractual framework, the Court has signaled that procedural overreach—whether through premature default judgments or strike-out applications—will be met with judicial scrutiny and adverse cost consequences.
How Did the Dispute Between Five Real Estate Development and Reem Emirates Aluminium Arise?
The genesis of the litigation in Five Real Estate Development LLC v Reem Emirates Aluminium LLC lies in a familiar commercial matrix: a high-value, multi-party construction project governed by a standard FIDIC-based contract, which ultimately fractured under the weight of concurrent delays and aggressive, unsubstantiated claims. The project in question was the construction of the FIVE JVC Hotel in Dubai, a prominent development that required intricate coordination between the developer, the main contractor, and specialized subcontractors. The developer, FIVE Real Estate Development LLC, was engaged by the owner, Unlimited 1 Limited, under a Property Development Contract (“PDC”) dated 1 April 2014, which mandated project completion by 30 September 2018. To execute the specialized glazing and aluminium works, FIVE engaged Reem Emirates Aluminium LLC.
Justice Lord Angus Glennie established the foundational relationship between the parties early in the judgment, noting that the Defendant (“Reem”) was engaged by FIVE to design, supply, deliver and install the aluminium and glazing works for the Building (the “Works”). The formal relationship commenced via a letter of intent confirming this appointment issued on 4 July 2015. However, as the project progressed toward its final phases, the schedule deteriorated. The developer alleged that Reem was primarily responsible for the critical delays that plagued the final phase of the construction. Rather than resolving the dispute through the standard FIDIC mechanisms for extension of time and cost adjustments, the developer adopted a maximalist litigation strategy, initiating proceedings in the Technology and Construction Division (TCD) of the DIFC Courts.
The developer’s approach to the litigation was characterized by a tripartite offensive, with Justice Glennie noting that FIVE, as the Claimant in this action, advanced three claims: a claim for an indemnity, a delay claim, and a defects claim.
The core of the dispute, and the primary driver of the multi-year litigation, was the delay claim. FIVE asserted that Reem’s failure to execute the glazing works on schedule caused massive downstream disruptions, entitling the developer to substantial damages. However, the analytical angle pursued by FIVE was fundamentally flawed from an evidentiary standpoint. In complex construction disputes before the TCD, a claimant cannot merely point to a delayed completion date and a subcontractor's presence on site; they must adduce a rigorous, critical path delay analysis demonstrating actual causation. FIVE failed to clear this evidentiary hurdle. The court found that the developer’s delay analysis was unsupported by the contemporaneous site records and failed to account for the concurrent delays caused by the main contractor, China State Engineering Company, and FIVE itself.
The procedural history of the case reflects the friction generated by FIVE's aggressive but evidentially hollow claims. The initial claim was filed in October 2020, prompting a robust defence and counterclaim from Reem. The litigation escalated rapidly, requiring multiple interventions by the court. On 4 May 2021, Justice Sir Richard Field issued an order dismissing all of the Claimant’s claims in the initial action, a stark indicator of the structural weaknesses in FIVE's pleaded case. Despite this, the developer initiated a subsequent claim in August 2021, leading to a Case Management Order of H.E. Justice Nassir Al Nasser in November 2021, which consolidated the proceedings to prevent further fragmentation of the dispute. This procedural overreach by the developer transformed what should have been a standard final account negotiation into a protracted legal battle, culminating in Final Closing Submissions served on 23 August 2022.
A critical doctrinal clash in the dispute centered on FIVE's attempt to frame its losses as an "indemnity" claim under the contract, specifically relying on FIDIC clause 4.10. By pleading an indemnity, the developer sought to bypass the strict requirements of proving a specific breach of contract and the associated causation of loss. Justice Glennie dismantled this argument by applying the substantive UAE law that governed the contract. The court clarified a vital principle of UAE civil jurisprudence regarding indemnities in construction contracts, accepting the submission that an indemnity as such is unknown under UAE law, and that there must be proof of breach.
This ruling has profound implications for developers operating under UAE law within the DIFC jurisdiction. It confirms that contractual indemnity clauses cannot be weaponized as strict liability mechanisms to recover delay damages without satisfying the fundamental requirement of proving the contractor's breach. Justice Glennie further elaborated on the intersection of the indemnity claim and the contractual exclusion of consequential losses under FIDIC clause 8.7, stating that, in his opinion, at least in the circumstances of the present case, a successful claim to an indemnity under clause 4.10 necessarily involves proof of breach by Reem, in which case the claim would be excluded by clause 8.7.
While FIVE struggled to substantiate its allegations, Reem mounted a highly effective counter-offensive. The contractor maintained that the delays were not of its making, but rather the result of the developer's mismanagement, lack of site access, and the failures of preceding trades. Consequently, Reem advanced substantial counterclaims for prolongation costs—the extended site overheads and resources required to remain on the project far beyond the original completion date—as well as claims for unpaid interim payment applications (IPAs).
The court's forensic examination of the project timeline vindicated Reem's position. Justice Glennie found that Reem was indeed delayed by factors outside its control and was therefore entitled to compensation for the extended duration of its deployment. The financial consequence of the developer's failure to properly administer the contract was severe, with the court holding that Reem was entitled to recover prolongation costs for the period from 8 November 2017 to 2 September 2019 in the sum of AED 6,898,245.88.
The dispute was further complicated by a specific, localized conflict regarding materials damaged during a fire incident on site. The parties had engaged in correspondence to settle the financial fallout from this event. The documentary evidence demonstrated a clear meeting of the minds regarding the quantum of compensation for the physical damage. Justice Glennie noted that, on the plain wording of the correspondence, it was clear that parties reached agreement on the sum of AED 850,000 in respect of Reem’s claim for materials damaged in or as a result of the Fire Incident.
However, the project Engineer, acting in a determinative capacity, erroneously conflated this specific settlement for material damage with Reem's broader, distinct claims for prolongation costs arising from the overall project delays. The Engineer ruled that the AED 850,000 settlement extinguished Reem's right to pursue further prolongation claims. The TCD firmly rejected this overreach by the Engineer, preserving the contractor's right to distinct heads of claim, with Justice Glennie stating that for the reasons set out, he was satisfied that if the Engineer determined that the agreed settlement figure (whether AED 750,000 or AED 850,000 did not matter for this purpose) settled not only Reem’s material damage claim but also its claim for prolongation costs, he was wrong so to determine.
In addition to the principal sums awarded for prolongation and unpaid works, the court addressed the issue of financing charges. Under standard FIDIC provisions, a contractor is entitled to financing charges (interest) on delayed payments. Reem successfully argued for the application of FIDIC clause 14.8, securing an order for interest on the unpaid IPAs. Justice Glennie ruled that interest was recoverable in accordance with FIDIC clause 14.8 as calculated by Mr Craig, but limited to IPAs issued after the date of the SCA coming into force, i.e., 4 June 2018.
The comprehensive dismissal of the developer's claims and the sweeping victory for the contractor on its counterclaims necessitated a final reckoning of the project finances. Rather than imposing a rigid mathematical calculation from the bench, the court leveraged its case management powers to force the parties back to the negotiating table, armed with the binding legal and factual determinations of the judgment. The court ordered the parties to attempt to agree a Final Account within 28 days, effectively transitioning the dispute from litigation back to commercial administration. For further context on the procedural dimensions of this ruling, practitioners may refer to TCD-009-2020: TCD 009/2020 Five Real Estate Development Llc v Reem Emirates Aluminium Llc and the related primary record TCD-009-2020 TCD 009/2020 Five Real Estate Development Llc v Re.
The allocation of costs served as the final judicial commentary on the developer's litigation strategy. Having failed entirely in its primary claims and having been defeated on the substantial counterclaims, FIVE was held liable for the financial burden of the proceedings. Justice Glennie ordered that the Claimant shall pay the Defendant’s costs of these proceedings, to be assessed by the Registrar on the standard basis if not agreed.
The trajectory of Five Real Estate Development v Reem Emirates Aluminium provides a stark warning to developers operating within the DIFC. The attempt to leverage complex litigation to mask deficiencies in project management and delay analysis ultimately resulted in a total defeat. The TCD's rigorous demand for evidentiary substantiation, coupled with its strict interpretation of UAE civil law regarding indemnities and breach, ensures that standard-form construction disputes cannot be won through procedural attrition alone.
How Did the Case Move From Ex Parte Application to Final Hearing?
The procedural history of the dispute over the FIVE JVC Hotel project serves as a rigorous examination of the financial and strategic perils associated with aggressive interlocutory maneuvering in the Dubai International Financial Centre (DIFC) Courts. Between the initial filing of the claim in October 2020 and the delivery of the final judgment in March 2023, the docket was heavily congested with strike-out applications, appeals, and a default judgment that was swiftly unwound. The litigation trajectory reveals a clear judicial preference within the Technology and Construction Division (TCD) for comprehensive, merits-based adjudication over premature summary disposal, illustrating the high cost of procedural brinkmanship.
The initial phase of the litigation in TCD-009-2020 TCD 009/2020 Five Real Estate Development Llc v Re was characterized by FIVE Real Estate Development LLC’s sustained efforts to summarily defeat the counterclaims brought by the Defendant, Reem Emirates Aluminium LLC. After Reem was granted leave to file a counterclaim in February 2021, FIVE immediately sought to strike it out. This application was refused by Justice Sir Richard Field in May 2021. Undeterred, FIVE pursued an appeal, leading to an order refusing the Claimant’s application for permission to appeal in August 2021.
The Claimant’s persistence culminated in a Second Permission Application directed to the Court of Appeal under Rule 44.9 of the Rules of the DIFC Courts (RDC). The governing standard for such an application, found in RDC 44.19, requires the applicant to demonstrate either that the appeal would have a real prospect of success or that there is some other compelling reason for the appeal to be heard. In October 2021, Justice Lord Angus Glennie reviewed the application and decisively dismissed the Claimant's second application, finding the proposed appeal to be entirely unarguable.
The court’s reasoning in dismissing the appeal provides critical guidance on the strategic deployment of strike-out applications in complex construction disputes. To succeed under RDC 4.16, a party must show that the opponent has no reasonable grounds for bringing the claim—a threshold that requires demonstrating the claim is bound to fail. Justice Lord Angus Glennie observed that FIVE’s legal arguments regarding the effect of engineer’s determinations were ill-suited for a strike-out application, noting the availability of more appropriate procedural vehicles:
The Claimant might have sought to have a preliminary issue decided, at which the rival arguments might have been canvassed in full and decided by the Court, but it did not seek to take this course, preferring, for whatever reason, to persist with its strike out application.
By choosing the blunt instrument of a strike-out rather than seeking the determination of a preliminary issue, the Claimant assumed a nearly insurmountable burden. The court emphasized the fundamental distinction between a claim that is guaranteed to succeed and one that merely possesses a real prospect of success. The failure to strike out the counterclaim did not validate Reem’s substantive arguments; it merely preserved them for trial:
The refusal of the strike out application did not amount to a ruling that the Defendant’s counterclaim was bound to succeed, it was simply a ruling that it was not bound to fail.
While TCD 009/2020 was bogged down in appellate skirmishes over the counterclaim, a parallel procedural front was opened. FIVE initiated a separate claim, TCD-003-2021 TCD 003/2021 Five Real Estate Development LLC v Re, and managed to secure a default judgment on 11 October 2021. The procurement of a default judgment in the midst of an actively contested, multi-million dirham construction dispute is highly unusual and inherently fragile. The victory was predictably ephemeral. Reem immediately filed an application to set aside the judgment, supported by witness statements from Athanasios Karvelis and Raj Kumar Mangat Ram.
On 20 October 2021, a mere nine days after the default judgment was entered, H.E. Justice Nassir Al Nasser ordered that the Default Judgment be set aside, with costs in the case. The rapid unwinding of the default judgment underscores the DIFC Courts' robust intolerance for procedural technicalities overriding substantive justice, particularly where parallel proceedings clearly indicate an intention to defend. The strategic folly of pursuing default judgment in such circumstances is analyzed extensively in our related coverage, TCD-003-2021: TCD 003/2021 Five Real Estate Development LLC v Reem Emirates Aluminum LLC.
The existence of parallel proceedings—TCD 009/2020 and TCD 003/2021—created an acute risk of fragmented judgments, duplicated costs, and inconsistent findings regarding the same construction project. Recognizing the necessity for procedural economy, H.E. Justice Nassir Al Nasser intervened with a Case Management Order on 18 November 2021, ordering that these proceedings be consolidated under the TCD 009/2020 reference. This consolidation was the critical procedural pivot that finally directed the parties away from interlocutory warfare and toward a comprehensive final hearing.
The consolidated trial took place before Justice Lord Angus Glennie over five days in June and July 2022. The court was tasked with untangling a complex web of allegations regarding delays in the final phase of the FIVE JVC Hotel project. The scope of the Claimant's case was broad, encompassing multiple distinct heads of liability:
FIVE, as the Claimant in this action, advances three claims: Claim 1, a claim for an indemnity; Claim 2, a delay claim; and Claim 3, a defects claim.
At trial, the substantive weaknesses of the Claimant's case, which had been masked by the earlier procedural maneuvering, were exposed. The court found that FIVE's delay analysis was fundamentally flawed and unsupported by the evidentiary record. The delays in the critical Period Three were determined to be attributable to the Claimant and other contractors, not to Reem. Furthermore, the court rejected the indemnity claim, noting that under UAE law, an indemnity requires proof of breach, which FIVE failed to establish.
Conversely, the Defendant's counterclaims—which FIVE had spent considerable resources attempting to strike out—proved highly meritorious. The court validated Reem's claims for unpaid variations and, crucially, awarded substantial compensation for the delays caused by the developer. The financial consequence of the final adjudication was severe for the Claimant:
I hold that Reem are entitled to recover prolongation costs for the period from 8 November 2017 to 2 September 2019 in the sum of AED 6,898,245.88.
The final judgment not only dismissed the Claimant's multi-million dirham claims in their entirety but also imposed a heavy costs burden, reflecting the cumulative expense of the protracted litigation and the failed interlocutory applications. Justice Lord Angus Glennie directed that The Claimant shall pay the Defendant’s costs of the proceedings, to be assessed on the standard basis.
The Claimant shall pay the Defendant’s costs of these proceedings, to be assessed by the Registrar on the standard basis if not agreed.
The evolution of this dispute from a fragmented series of ex parte applications, default judgments, and strike-out attempts into a consolidated, merits-based trial provides a stark lesson in litigation strategy within the DIFC Courts. Attempts to short-circuit complex construction disputes through procedural brinkmanship rarely yield lasting tactical advantages. Instead, as demonstrated by the dismissal of the strike-out applications and the rapid set-aside of the default judgment, such maneuvers often serve only to inflate the final costs order and delay the inevitable substantive reckoning. The TCD's robust case management ultimately ensured that the dispute was resolved not on procedural technicalities, but through a rigorous examination of the evidence and the contractual allocation of risk.
What Is the 'Real Prospect of Success' Test in DIFC Strike-Out Applications?
The procedural trajectory of Five Real Estate Development LLC v Reem Emirates Aluminium LLC serves as a masterclass in the strict appellate boundaries governing summary disposal within the Dubai International Financial Centre (DIFC) Courts. When a party attempts to short-circuit a complex construction dispute through a strike-out application, the Technology and Construction Division (TCD) applies a rigorously high threshold. The appellate decision delivered by Justice Lord Angus Glennie, which dismissed the Claimant's second permission to appeal application, reinforces the judiciary's reluctance to entertain premature substantive determinations under the guise of procedural case management.
The interlocutory skirmish centered on Five Real Estate Development LLC’s aggressive attempt to strike out Reem Emirates Aluminium LLC’s counterclaim. Having failed before Justice Sir Richard Field at first instance, and having subsequently been denied permission to appeal by the same judge, the Claimant escalated the matter to the Court of Appeal. The governing standard for such an escalation is found in Rule 44.19 of the Rules of the DIFC Courts (RDC), which dictates that permission to appeal may only be granted if the appeal would have a real prospect of success or if there is some other compelling reason why the appeal should be heard.
Justice Lord Angus Glennie’s analysis required a dual assessment: first, evaluating the appellate threshold under RDC 44.19, and second, examining the underlying strike-out threshold under RDC 4.16. To succeed at the initial strike-out stage, the Claimant bore the heavy burden of proving that the Defendant had no reasonable grounds for bringing the counterclaim. In the context of complex construction litigation, where counterclaims often hinge on intricate factual matrices involving delay analysis, variations, and engineer's determinations, proving that a claim is fundamentally "bound to fail" is an exceptionally steep hill to climb.
The Court of Appeal firmly rejected the Claimant's proposition that the refusal to strike out the counterclaim equated to an endorsement of its substantive merits. Justice Lord Angus Glennie clarified the precise legal effect of a failed strike-out application, drawing a sharp distinction between a claim being arguable and a claim being victorious:
The refusal of the strike out application did not amount to a ruling that the Defendant’s counterclaim was bound to succeed, it was simply a ruling that it was not bound to fail.
This doctrinal clarification is vital for practitioners navigating the TCD. A strike-out application is a blunt instrument designed to weed out claims that are legally defective on their face or entirely unsupported by the pleaded facts. It is not a substitute for a trial, nor is it a mechanism for resolving disputed questions of law that require a full factual foundation. By confirming that the proposed appeal was unarguable, the Court signaled its intolerance for appellate challenges that attempt to relitigate the arguable nature of a pleading.
The underlying substantive friction in the counterclaim involved the legal status and binding nature of engineer's certificates—a notoriously thorny issue in FIDIC-based and bespoke construction contracts. The Claimant's strategy was to use the strike-out mechanism to secure a definitive ruling on the validity or effect of these certificates. The Court of Appeal, echoing Justice Sir Richard Field, identified this as a fundamental procedural misstep. If a party wishes to isolate and resolve a discrete point of law or contract interpretation that could dispose of a claim, the appropriate procedural vehicle is an application for the determination of a preliminary issue, not a strike-out application.
Justice Lord Angus Glennie articulated the Court's preference for proper procedural sequencing:
The Claimant might have sought to have a preliminary issue decided, at which the rival arguments might have been canvassed in full and decided by the Court, but it did not seek to take this course, preferring, for whatever reason, to persist with its strike out application.
The strategic difference between a strike-out and a preliminary issue trial is profound. A preliminary issue allows the Court to hear targeted evidence, consider comprehensive legal submissions, and render a binding substantive decision on a specific point. A strike-out application, conversely, requires the Court to assume the non-applicant's pleaded facts are true and determine only if the claim is legally recognizable. By choosing the latter, the Claimant deprived the Court of the opportunity to properly canvass the rival arguments regarding the engineer's determinations.
The Court explicitly noted that the refusal to strike out the counterclaim left the substantive legal questions entirely open for the eventual trial. The ruling did not create any binding precedent regarding the treatment of engineer's certificates in the DIFC:
The Order simply determines that the Defendant’s contentions as advanced in support of its counterclaim are not unarguable or, to put it another way, have a real (as opposed to fanciful) prospect of success. No point of principle concerning engineer’s certificates has been decided in the Order under appeal.
This approach aligns with a broader jurisprudential trend within the TCD, where judges consistently penalize procedural overreach. Similar dynamics were observed in Panther Real Estate Development Llc v Modern Executive Systems Contracting Llc, where the Court meticulously unpacked the substantive requirements of FIDIC termination rather than allowing parties to rely on superficial procedural maneuvers. The TCD demands that complex contractual mechanisms be tested through rigorous evidentiary processes, not bypassed via summary applications. The related proceedings in TCD-009-2020 TCD 009/2020 Five Real Estate Development Llc v Re further illustrate the protracted nature of this specific dispute and the Court's insistence on comprehensive factual analysis over procedural shortcuts.
The financial consequences of misjudging the 'real prospect of success' test are immediate and punitive. Having failed to clear the appellate threshold, the Claimant was ordered to bear the costs of the interlocutory adventure. The Court directed that the Claimant pay the Defendant's costs of the Second Permission Application, to be assessed by the Registrar on the standard basis, if not agreed. This costs order serves as a deterrent against the reflexive filing of permission to appeal applications when a first-instance judge has already thoroughly dismantled the legal arguments for strike-out.
For practitioners, the judgment delivers a clear directive regarding case management strategy in the DIFC Courts. When facing a counterclaim that relies on complex contractual interpretations—such as the binding nature of an engineer's determination—counsel must carefully weigh the utility of a strike-out application under RDC 4.16 against the more robust mechanism of a preliminary issue trial. Persisting with a strike-out application when the opposing party's arguments possess a "real (as opposed to fanciful) prospect of success" will not only fail but will invite adverse costs orders and judicial criticism for wasting the Court's time. The 'real prospect of success' test is not a mere linguistic hurdle; it is a substantive barrier designed to protect the integrity of the trial process and ensure that arguable claims are afforded their proper day in court.
How Did Justice Lord Angus Glennie Reach the Final Decision?
The resolution of complex construction disputes in the Dubai International Financial Centre (DIFC) frequently hinges on the tension between theoretical delay models and the granular reality of contemporaneous project records. In TCD-009-2020 TCD 009/2020 Five Real Estate Development Llc v Re, Justice Lord Angus Glennie delivered a masterclass in evidentiary scrutiny, dismantling a multi-million dirham claim by exposing the fundamental disconnect between the developer’s legal arguments and the empirical facts of the construction site. The judgment turned unequivocally on the evidentiary failure of the Claimant's delay analysis and the strict, unforgiving interpretation of FIDIC contractual provisions under UAE law.
To understand the mechanics of the dismissal, one must first examine the foundational premise of the Claimant’s case. Five Real Estate Development LLC (“FIVE”) approached the Technology and Construction Division (TCD) seeking substantial damages for delays allegedly caused by Reem Emirates Aluminium LLC (“Reem”). The factual matrix involved the construction of the FIVE JVC Hotel, where The Defendant (“Reem”) was engaged by FIVE to design, supply, deliver and install the aluminium and glazing works for the building. FIVE’s overarching narrative was that Reem’s failure to execute these works in a timely manner pushed the project beyond its contractual completion dates, thereby triggering massive financial liabilities.
However, Justice Glennie’s analysis revealed that FIVE’s delay claim was built on methodological quicksand. In construction litigation, the burden of proving that a specific contractor’s default caused critical delay rests entirely on the claimant. This requires more than a theoretical mapping of missed deadlines; it demands a rigorous, retrospective analysis of the as-built critical path, supported by daily site logs, meeting minutes, and progress reports. FIVE’s delay analysis failed to meet this standard. The court found that the methodology employed by FIVE’s experts was fundamentally flawed, relying heavily on assumptions and theoretical modeling rather than the hard, contemporaneous evidence required to establish a causal link between Reem’s actions and the overall project delay. The court determined that the delays in the final phase of the project were, in fact, attributable to FIVE itself and other parallel contractors, completely exonerating Reem from the alleged critical path disruptions. Consequently, the court ordered that The Claimant’s claims as set out in paragraphs 65 to 78 below are dismissed.
Beyond the mechanical failure of the delay analysis, FIVE attempted to outflank the causation requirement by advancing a sweeping indemnity claim under the FIDIC conditions of contract. FIVE argued that the contractual indemnity provisions allowed them to recover losses without necessarily proving a specific, causative breach of contract by Reem in the traditional sense. This argument required the court to grapple with the intersection of standard-form construction contracts and the underlying substantive law of the United Arab Emirates.
Justice Glennie rejected this legal maneuvering, providing a crucial clarification on the nature of indemnities under UAE law. The court held that an indemnity cannot exist in a vacuum as a standalone mechanism for wealth transfer absent a proven default.
Second, I accept the submission that an indemnity as such is unknown under UAE law; there must be proof of breach.
By anchoring the FIDIC indemnity clause firmly within the principles of the UAE Civil Code, the court shut down the possibility of using indemnities as a backdoor to recover unproven delay damages. The judgment clarified that any attempt to trigger the indemnity under clause 4.10 of the contract inherently required FIVE to prove that Reem had breached its obligations. Because the delay analysis had already failed to establish such a breach or resulting critical delay, the indemnity claim collapsed under its own weight. Justice Glennie articulated this doctrinal boundary with precision:
It follows, in my opinion, that, at least in the circumstances of the present case, a successful claim to an indemnity under clause 4.10 necessarily involves proof of breach by Reem – in which case the claim would be excluded by clause 8.7.
This strict interpretation of contractual liability mirrors the TCD's broader jurisprudential trajectory, which consistently demands rigorous proof of breach and causation, refusing to allow creative contractual interpretations to bypass fundamental legal principles. Similar strictures regarding the limits of FIDIC provisions and the necessity of proving actual default were explored in TCD-003-2019 Panther Real Estate Development Llc v Modern Executive Systems Contracting Llc, where the court similarly penalized procedural and evidentiary overreach in the context of contract termination and delay.
Having dismantled the Claimant’s case, Justice Glennie turned to Reem’s counterclaims, which centered on the recovery of prolongation costs and the correct interpretation of a prior settlement agreement. During the course of the project, a fire incident had caused significant material damage. The parties had engaged in correspondence to settle the financial fallout from this incident. The Engineer, acting under the FIDIC machinery, had subsequently determined that the agreed settlement figure extinguished not only Reem’s claim for the physical materials damaged in the fire but also its broader claim for prolongation costs arising from the associated delays.
The court’s review of the Engineer’s determination provides a vital lesson in the limits of an Engineer's authority to interpret legal settlements. Justice Glennie undertook a granular review of the contemporaneous correspondence between the parties. He found that the plain wording of the communications restricted the settlement strictly to the physical damage. The Engineer had overstepped by conflating a specific settlement for material loss with a global waiver of prolongation rights. The court’s willingness to open up and correct the Engineer’s determination underscores the DIFC Courts' refusal to defer to contract administrators when they err on matters of legal interpretation.
For the reasons set out above, I am satisfied that if the Engineer determined that the agreed settlement figure (whether AED 750,000 or AED 850,000 does not matter for this purpose) settled not only Reem’s material damage claim but also its claim for prolongation costs, he was wrong so to determine.
With the Engineer’s erroneous determination set aside, the path was clear for Reem to pursue its prolongation costs. Unlike FIVE’s theoretical delay model, Reem’s counterclaim was supported by the necessary evidentiary scaffolding. Reem successfully demonstrated that it was kept on site for an extended period due to factors entirely outside its control, primarily the delays caused by FIVE and the Main Contractor. The court meticulously assessed the period of culpable delay and the associated time-related costs incurred by the subcontractor.
I hold that Reem are entitled to recover prolongation costs for the period from 8 November 2017 to 2 September 2019 in the sum of AED 6,898,245.88.
The award of nearly AED 6.9 million in prolongation costs represents a total vindication of Reem’s position and a severe financial rebuke to the developer. The court did not stop at the principal sum; it also addressed the issue of financing charges. Applying FIDIC clause 14.8, the court recognized Reem’s entitlement to interest on the delayed payments, further compounding the financial consequences for FIVE.
The comprehensive nature of the Claimant's defeat was formalized in the disposition of the consolidated proceedings. The court ordered that The Defendant’s claims as set out in paragraphs 79 to 114 below are granted. To bring the protracted commercial relationship to a definitive close, Justice Glennie mandated that the parties must attempt to agree a Final Account based on the specific findings detailed in the judgment. This directive forces the parties to translate the court’s legal and evidentiary rulings into a final, binding financial reconciliation, removing any further room for unilateral maneuvering by the developer.
Finally, the allocation of costs reflected the absolute failure of the Claimant’s strategy. In commercial litigation within the DIFC, costs follow the event, and a party that advances fundamentally flawed, multi-million dirham claims based on unsupported expert analysis must bear the financial brunt of that decision. The court ordered that The Claimant shall pay the Defendant’s costs of the proceedings, to be assessed on the standard basis. This costs order serves as a stark reminder to developers and their legal teams: the TCD will not entertain speculative delay claims, and the financial penalty for attempting to leverage theoretical models against subcontractors who maintain robust contemporaneous records will be severe. Justice Glennie’s judgment stands as a definitive statement on the primacy of evidence over theory in construction disputes, reinforcing the DIFC’s reputation as a jurisdiction where contractual stricture and evidentiary rigor are paramount.
How Does the DIFC TCD Approach Compare to English Construction Litigation?
The Technology and Construction Division (TCD) of the DIFC Courts was established to provide a specialized forum for complex engineering and construction disputes, deliberately modeled on the procedural framework of the London Technology and Construction Court (TCC). However, while the procedural rigor and evidentiary expectations in the TCD closely mirror those of the TCC, the substantive legal outcomes often diverge due to the unique interplay between standard form contracts—predominantly the FIDIC suites—and the underlying principles of UAE law. The consolidated proceedings in Five Real Estate Development LLC v Reem Emirates Aluminium LLC [2023] DIFC TCD 009, alongside earlier foundational decisions such as Panther Real Estate Development LLC v Modern Executive Systems Contracting LLC [2019] DIFC TCD 003, reveal a jurisdiction that applies English-style procedural discipline to civil law substantive concepts.
The TCD’s reliance on the FIDIC 1999 conditions aligns strictly with international best practice, treating the contractual machinery as the primary mechanism for risk allocation. In English construction litigation, courts have long enforced the strict notice provisions and termination mechanisms of standard form contracts, a practice the TCD has fully adopted. In Panther Real Estate Development LLC v Modern Executive Systems Contracting LLC, Justice Sir Richard Field examined a developer’s termination of a contractor who had significantly overshot the completion date for the East 40 Building in Al Furjan. The court did not look to equitable remedies or broad discretionary powers; instead, it applied the precise wording of the FIDIC First Edition 1999 Red Book. Justice Field’s approach to the exhaustion of delay damages and the subsequent right to terminate reflects a strict constructionist view familiar to TCC practitioners:
It follows that I find 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 (b) to liquidated delay damages under Sub-Clause 8.7 of the Contract up to that maximum in the sum of AED 4,181,153.
This strict adherence to the contractual text extends to the procedural requirements placed on contractors seeking extensions of time or additional payment. Just as the TCC in Obrascon Huarte Lain SA v Her Majesty's Attorney General for Gibraltar [2014] EWHC 1028 (Tech) emphasized the mandatory nature of FIDIC Sub-Clause 20.1, the TCD requires rigorous compliance with notice provisions. When Modern Executive Systems Contracting LLC (MESC) attempted to advance claims without proper documentation, the TCD dismissed them, reinforcing that the contractual machinery cannot be bypassed through generalized claims of employer delay. The court’s enforcement of the cap on the liquidated sum equal to the value of 10% of the contract price further demonstrates a commitment to holding sophisticated commercial parties to their agreed bargains. For a deeper analysis of the termination mechanics in that dispute, see TCD-003-2019: TCD 003/2019 Panther Real Estate Development Llc v Modern Executive Systems Contracting Llc.
Where the TCD distinctly departs from the London TCC is in its treatment of substantive legal concepts that carry different weight under UAE law compared to English common law. The most prominent example in Five Real Estate Development LLC v Reem Emirates Aluminium LLC is the court’s handling of indemnity claims. Under English law, an indemnity is typically construed as a promise to hold the indemnified party harmless against a specified loss, often giving rise to a claim in debt rather than damages. This allows the indemnified party to recover losses without necessarily proving a breach of contract by the indemnifier, and often bypasses common law rules on remoteness and mitigation.
Justice Lord Angus Glennie’s judgment in Five v Reem confronted this common law assumption directly when evaluating FIVE’s multi-million AED claim for an indemnity under the contract. The developer sought to rely on the indemnity provision to recover costs associated with delays and defects, attempting to frame the claim outside the standard damages regime. The TCD, however, recognized that the contract, while governed by DIFC law, operated within a broader UAE legal context where the concept of a standalone indemnity divorced from fault is highly problematic. Justice Glennie accepted the fundamental civil law premise that liability requires a breach of an obligation:
Second, I accept the submission that an indemnity as such is unknown under UAE law; there must be proof of breach.
This ruling fundamentally alters how practitioners must draft and litigate indemnity clauses in the DIFC. If an indemnity requires proof of breach, it ceases to function as an independent debt claim and instead collapses back into a standard claim for contractual damages. Consequently, the claim becomes subject to the contract’s exclusion and limitation clauses. Justice Glennie articulated this exact consequence when analyzing the interplay between the indemnity sought under clause 4.10 and the exclusion of indirect or consequential losses under clause 8.7:
It follows, in my opinion, that, at least in the circumstances of the present case, a successful claim to an indemnity under clause 4.10 necessarily involves proof of breach by Reem – in which case the claim would be excluded by clause 8.7.
This analytical pivot—from the common law view of indemnities as absolute financial guarantees to the civil law requirement of fault-based liability—highlights the unique jurisprudential space the TCD occupies. It requires litigators to look beyond the English precedents that typically govern the interpretation of standard form contracts and engage deeply with the substantive principles of the governing law.
Procedurally, however, the TCD remains aggressively aligned with the TCC, particularly in its management of expert evidence and delay analysis. In English construction litigation, a claimant advancing a delay claim must provide a robust, logical, and evidence-based critical path analysis, often guided by the Society of Construction Law (SCL) Delay and Disruption Protocol. The TCD applies the exact same standard. In Five v Reem, FIVE’s delay claim failed entirely because its delay analysis was fundamentally flawed. The court refused to accept theoretical or retrospective delay models that did not align with the contemporaneous factual evidence of how the project actually progressed.
The procedural history of Five v Reem also showcases the TCD’s active case management, a hallmark of the London TCC. The litigation involved multiple claims, counterclaims, and consolidated proceedings. The court utilized immediate judgment mechanisms to clear away unmeritorious arguments early in the process, as seen in the Order with Reasons of Justice Sir Richard Field dated 4 May 2021 granting the Defendant immediate judgment and dismissing all of the Claimant’s claims in case number TCD-009-2020. When the matter finally reached trial, Justice Glennie did not simply issue a declaratory judgment; he ordered the parties to attempt to agree a Final Account based upon the decisions made in this Judgment within 28 days. This pragmatic approach forces commercial parties to translate the court’s legal findings into a definitive financial resolution, avoiding the need for protracted quantum hearings unless absolutely necessary.
The TCD’s approach to costs further reflects the English principle that costs follow the event, tempered by judicial discretion regarding the conduct of the parties. Having dismissed FIVE’s claims entirely and granted Reem’s counterclaims, the court ordered that The Claimant shall pay the Defendant’s costs of these proceedings. However, despite FIVE’s comprehensive defeat and the flawed nature of its delay analysis, the court maintained a strict threshold for awarding costs on an indemnity basis, reserving such punitive measures for truly exceptional conduct. Justice Glennie explicitly stated:
For the avoidance of doubt, I refuse Reem’s application for costs on an indemnity basis.
The jurisprudence emerging from the TCD, driven by experienced common law judges like Justice Lord Angus Glennie and Justice Sir Richard Field, provides a highly predictable procedural environment for international contractors and developers. By enforcing the strict terms of the FIDIC contracts and demanding rigorous expert evidence, the TCD mirrors the best practices of the London TCC. Yet, by carefully integrating local legal principles—such as the fault-based nature of indemnities—the court ensures that its decisions remain grounded in the commercial and legal realities of the Middle East. Practitioners appearing before the TCD must therefore master both the procedural mechanics of English construction litigation and the substantive nuances of regional law, as reliance on common law assumptions alone will inevitably falter.
Which Earlier DIFC Cases Frame This Decision?
The DIFC Courts' Technology and Construction Division (TCD) has cultivated a notoriously strict approach to the enforcement of FIDIC contracts. The division's jurisprudence consistently penalises procedural default, treating the mechanical requirements of standard-form construction contracts not as mere administrative hurdles, but as absolute conditions precedent to recovery. This doctrinal rigidity is essential for understanding the outcome in TCD-009-2020 TCD 009/2020 Five Real Estate Development Llc v Re, where the developer's multi-million dirham claims collapsed under the weight of inadequate delay analysis. The foundation for this strict constructionist approach was firmly laid in earlier TCD decisions, most notably the landmark ruling in TCD-003-2019 TCD 003/2019 Panther Real Estate Development Llc v.
In Panther Real Estate Development LLC v Modern Executive Systems Contracting LLC [2019] DIFC TCD 003, Justice Sir Richard Field was tasked with unpicking a complex web of delays, abandoned works, and encashed security guarantees on the East 40 Building project in Al Furjan. The developer, Panther Real Estate Development LLC, had terminated its contract with Modern Executive Systems Contracting LLC after the agreed Completion Date of 16 December 2018 was overshot by more than six months. The court's analysis of the termination mechanics under the FIDIC-based contract established a critical baseline for how the TCD views contractor abandonment and the exhaustion of delay damages.
Justice Field's judgment meticulously dissected the employer's right to terminate. The court rejected the contractor's attempts to rely on excusable delay, finding instead that the contractor had effectively abandoned the site. The ruling clarified the intersection between the exhaustion of the delay damages cap—set at 10% of the contract price, or AED 4,181,153.25—and the right to terminate without notice under Sub-Clause 15.2(h). Validating the developer's strict adherence to the contractual machinery, Justice Field concluded:
It follows that I find 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 (b) to liquidated delay damages under Sub-Clause 8.7 of the Contract up to that maximum in the sum of AED 4,181,153.
Crucially, while the court validated the contractual termination, it placed strict limits on the application of anticipatory breach under the DIFC Contract Law. Justice Field explicitly ruled that Panther did not lawfully terminate the Contract for anticipatory breach under Article 88(1). This distinction is vital for practitioners litigating in the TCD: the court will enforce the express termination provisions of a FIDIC contract with mathematical precision, but it remains highly skeptical of attempts to bypass those provisions using general statutory doctrines of anticipatory or renunciatory breach unless the evidentiary threshold is unequivocally met. The court ultimately anchored the lawful termination firmly on the contractor's physical abandonment of the works:
For these reasons I find that by the termination letter Panther lawfully terminated the Contract by reason of MESC’s abandonment of the Works.
The Panther decision also reinforced the absolute necessity of complying with FIDIC's notice provisions, a theme that resonates powerfully through the Five v Reem saga. In Panther, the contractor's failure to submit fully detailed claims within the prescribed timeframes proved fatal to its requests for extensions of time. Justice Field noted that MESC were in breach of the requirement imposed by Sub-Clause 20.1 to submit a fully detailed claim within the prescribed 42 days. This strict enforcement of Sub-Clause 20.1 serves as a stark warning that procedural non-compliance will extinguish substantive rights, regardless of the underlying merits of the delay event. For a deeper examination of the termination mechanics in that dispute, see TCD-003-2019: TCD 003/2019 Panther Real Estate Development Llc v Modern Executive Systems Contracting Llc.
Building upon the doctrinal foundation laid in Panther, the protracted litigation in Five Real Estate Development LLC v Reem Emirates Aluminium LLC [2023] DIFC TCD 009 provides a masterclass in the consequences of failed delay claims and procedural overreach. If Panther established the limits of termination and the strictness of notice provisions, Five v Reem illustrates the catastrophic financial fallout when a developer pursues multi-million dirham claims based on fundamentally flawed delay analysis. The developer's inability to substantiate its claims with robust, contractually compliant evidence led to the complete dismissal of its case by Justice Lord Angus Glennie.
The procedural friction that characterized the Five v Reem dispute culminated in a severe costs order against the developer, setting a high bar for recovery and demonstrating the TCD's willingness to penalize speculative or poorly substantiated litigation. Following the dismissal of the Claimant's substantive case, the Defendant, Reem Emirates Aluminium LLC, initiated costs assessment proceedings. The process was rigorous, involving the Defendant filing Notices of Commencement of Assessment of Bill of Costs, followed by the Claimant's Points of Dispute and the Defendant's Reply.
The resulting Final Costs Certificate, issued by Registrar Ayesha Bin Kalban on 30 August 2023, quantified the financial toll of the Claimant's procedural overreach. The Registrar ordered the Claimant to pay a staggering AED 2,895,346.08 in respect of the Defendant’s costs incurred during the proceedings, alongside an additional AED 217,150.95 for the assessment fees. The mandate was unequivocal, leaving no room for further delay or procedural maneuvering:
The Claimant shall pay the Defendant the sums ordered in paragraph 1 of this Costs Certificate within 21 days from the date of the Costs Certificate.
The trajectory from Panther to Five v Reem reveals a TCD that is entirely unsympathetic to parties who play fast and loose with FIDIC machinery. In Panther, the court upheld the encashment of an unconditional and on-demand guarantee in the amount of AED 4,033,155.00 because the employer strictly followed the contractual triggers for termination upon the exhaustion of delay damages. Conversely, in Five v Reem, the developer's failure to anchor its delay analysis in the contractual reality resulted not only in the dismissal of its claims but in a punitive costs assessment that heavily favored the successful defendant.
The TCD demands precision. Whether assessing a contractor's failure to submit a Sub-Clause 20.1 notice within 42 days, or evaluating an employer's right to terminate under Sub-Clause 15.2, the court relies on the express allocation of risk agreed by the parties. The jurisprudence developed across these cases serves as a stark reminder to construction practitioners in the DIFC: the enforcement of FIDIC contracts is not an exercise in equitable adjustment; it is an exercise in strict contractual compliance. The financial consequences of procedural default—whether through the loss of a right to claim an extension of time, the lawful termination for abandonment, or the imposition of a multi-million dirham costs order—are severe, immediate, and unforgiving.
What Does This Mean for Practitioners and Claimants?
The DIFC Technology and Construction Division (TCD) is actively recalibrating the tactical landscape for complex construction disputes. Justice Lord Angus Glennie’s judgment in TCD-009-2020 TCD 009/2020 Five Real Estate Development Llc v Re signals a definitive shift in judicial temperament: the court will heavily penalize procedural obstruction while strictly rewarding evidentiary precision. For practitioners, the era of filing speculative, multi-million dirham delay claims supported primarily by theoretical expert modeling rather than hard, contemporaneous site data is effectively over.
The core of FIVE Real Estate Development LLC’s failure lay in its approach to delay analysis. Construction litigation frequently devolves into a battle of experts, where developers attempt to push global delay claims onto specific subcontractors to shield themselves from the overarching delays of the main contractor. FIVE alleged that Reem Emirates Aluminium LLC was responsible for critical path delays in the final phase of the FIVE JVC Hotel project. However, the TCD requires more than just a sophisticated critical path method (CPM) schedule; it demands that the expert analysis be inextricably linked to contemporaneous site evidence. Justice Glennie dismissed the Claimant’s claims in their entirety, finding the delay analysis fundamentally flawed and unsupported by the reality of the site conditions. The developer failed to account for concurrent delays caused by the Main Contractor and other trades, rendering the theoretical model useless to the court.
Conversely, Reem’s approach to its counterclaim for prolongation costs exemplifies the evidentiary precision the TCD now demands. Rather than relying on broad, unsubstantiated estimates of overhead, Reem provided granular proof of its continued presence on site and the specific costs incurred due to delays entirely outside its control. The court rewarded this precision with a substantial financial award, holding that Reem was entitled to recover prolongation costs for the period from 8 November 2017 to 2 September 2019 in the sum of AED 6,898,245.88 [DIFC_TCD-009-2020_20230303.txt, para 100].
The judgment also provides critical instruction on the mechanics of indemnity claims under UAE law within the DIFC jurisdiction. Developers frequently rely on broad contractual indemnity clauses—such as FIDIC Clause 4.10—as a strict liability mechanism, attempting to bypass the rigorous requirements of proving a specific breach of contract and causation. FIVE attempted exactly this maneuver, seeking an indemnity for costs allegedly incurred due to Reem's performance without firmly establishing Reem's fault. Justice Glennie dismantled this approach, aligning the TCD with the broader UAE law principle that an indemnity is not a standalone magic word that dispenses with the need to prove a breach of obligation. He found that, at least in the circumstances of the present case, a successful claim to an indemnity under clause 4.10 necessarily involves proof of breach by Reem, in which case the claim would be excluded by clause 8.7 [DIFC_TCD-009-2020_20230303.txt, para 100].
This ruling forces a strategic pivot for claimants drafting particulars of claim. Pleading an indemnity claim without a parallel, fully substantiated breach of contract claim is a dead end. Contractual labels will not save a claim that lacks a foundation in proven fault, especially when exclusion clauses like FIDIC Clause 8.7 are in play to cap or bar certain types of recovery.
The court’s demand for precision extended to the recovery of financing charges and the interpretation of settlement agreements. Reem successfully claimed interest under FIDIC Clause 14.8, but the court did not grant a blanket interest award. Instead, Justice Glennie meticulously limited the recovery to Interim Payment Applications (IPAs) issued after a specific contractual milestone—the Sub-Contract Agreement coming into force on 4 June 2018. Furthermore, regarding a separate "Fire Incident" on site, the court strictly enforced the boundary of a prior commercial settlement, refusing to allow the Engineer to retroactively alter the scope of an AED 850,000 agreement for material damage to encompass Reem's prolongation costs. The TCD will dissect financial claims line by line, rewarding parties that present mathematically and chronologically sound calculations while holding parties to the plain wording of their commercial correspondence.
Beyond the substantive law, the procedural history of the dispute serves as a severe cautionary tale regarding the weaponization of court processes. The litigation spanned years, involving multiple claims, counterclaims, and consolidation orders. FIVE initiated the action in October 2020. The docket quickly swelled with defensive and offensive filings, including an immediate judgment application by Reem that was granted by Justice Sir Richard Field in May 2021. Rather than streamlining the dispute, the procedural web expanded further when FIVE filed a second, parallel suit in August 2021. This kind of procedural fragmentation drains judicial resources. H.E. Justice Nassir Al Nasser ultimately had to intervene with a Case Management Order in November 2021 to consolidate the proceedings, forcing the parties to attempt to agree a Final Account based on the court's eventual findings.
The TCD’s response to this protracted procedural friction was a devastating costs order. While Justice Glennie declined to award costs on an indemnity basis, he nonetheless ordered that FIVE pay Reem's costs to be assessed by the Registrar. The financial reality of that standard basis assessment materialized months later. In August 2023, Assistant Registrar Delvin Sumo issued the Final Costs Certificate of Registrar Ayesha Bin Kalban. The toll for FIVE’s aggressive but ultimately unsupported litigation strategy was staggering. The Registrar ordered FIVE to pay AED 2,895,346.08 in respect of Reem's costs, plus an additional AED 217,150.95 for the assessment proceedings fee.
This outcome mirrors the TCD's broader jurisprudence, as seen in Architeriors v Emirates National Investment, where procedural missteps and unsupported claims similarly resulted in heavy financial penalties. The court is actively discouraging the "kitchen sink" approach to construction litigation, where parties throw every conceivable claim and procedural application at the wall to see what sticks.
For practitioners, the mandate is clear: front-load the evidentiary work. Before filing a delay claim, ensure the expert analysis is bulletproof and tied directly to site diaries, meeting minutes, and contemporaneous correspondence. Before pleading an indemnity, ensure the underlying breach is clearly articulated and provable. And crucially, evaluate the necessity of every procedural application. The TCD will not hesitate to use adverse cost orders to penalize parties that unnecessarily prolong proceedings or force the court to untangle procedurally premature filings. The nearly AED 3.1 million total cost burden placed on FIVE is a testament to the high price of procedural overreach and evidentiary laxity.
What Issues Remain Unresolved in DIFC Construction Litigation?
The Technology and Construction Division (TCD) of the DIFC Courts has consistently provided a sophisticated forum for resolving complex infrastructure disputes, yet the intersection of standard-form FIDIC contracts and substantive UAE law continues to generate friction. While Justice Lord Angus Glennie’s judgment in Five Real Estate Development LLC v Reem Emirates Aluminium LLC [2023] DIFC TCD 009 decisively dismissed all of the Claimant’s claims, the underlying legal mechanics reveal several areas where appellate guidance or further TCD jurisprudence will be required. Chief among these are the precise characterisation of contractual indemnities under UAE law, the procedural boundaries of court-mandated final account determinations, and the persistently high threshold for awarding indemnity costs in construction disputes.
The tension between English common law concepts embedded in FIDIC forms and the UAE Civil Code is most acutely felt in the treatment of indemnities. In common law jurisdictions, an indemnity operates as a primary obligation to hold a party harmless against a specified loss, often functioning akin to a debt claim and bypassing standard rules of remoteness and mitigation. However, when a FIDIC contract is governed by UAE law, this strict liability mechanism encounters fundamental doctrinal hurdles. The Claimant’s pleaded case brought this conflict to the fore, with FIVE advancing three claims: a claim for an indemnity, a delay claim, and a defects claim (Five Real Estate Development LLC v Reem Emirates Aluminium LLC [2023] DIFC TCD 009, para 6).
In addressing Claim 1, Justice Glennie confronted the reality that the UAE Civil Code does not recognise the standalone, fault-free concept of an indemnity as understood by English practitioners. Under UAE law, compensation generally flows from a breach of contract or a tortious act, requiring the claimant to establish fault, causation, and quantifiable loss. The court accepted the Defendant’s position on this doctrinal incompatibility, noting that an indemnity as such is unknown under UAE law and requires proof of breach (Five Real Estate Development LLC v Reem Emirates Aluminium LLC [2023] DIFC TCD 009, para 2).
This finding fundamentally alters the risk allocation typically expected by international developers using FIDIC forms in the region. If an indemnity under Clause 4.10 requires proof of a breach of contract by the contractor, it ceases to be an independent mechanism for risk transfer and collapses back into a standard claim for damages. This has profound implications for limitation of liability clauses. In this dispute, the requirement to prove a breach meant that the indemnity claim became subject to the contractual exclusions for indirect or consequential losses found elsewhere in the contract. Justice Glennie articulated this structural consequence clearly, stating that a successful claim to an indemnity under clause 4.10 necessarily involves proof of breach by Reem, in which case the claim would be excluded by clause 8.7 (Five Real Estate Development LLC v Reem Emirates Aluminium LLC [2023] DIFC TCD 009, para 8).
For practitioners drafting or litigating construction contracts in the DIFC where UAE law applies to the substance of the dispute, this ruling serves as a stark warning. Relying on the word "indemnity" to bypass liability caps or to secure recovery without proving fault is a legally precarious strategy. The TCD’s approach requires parties to plead their cases strictly within the parameters of UAE civil liability principles, ensuring that claims for compensation are tethered to specific breaches and are capable of surviving the contract's broader limitation regimes.
Beyond the substantive law of indemnities, the judgment exposes ongoing procedural questions regarding the court's role in final account determinations following the collapse of a primary delay claim. The dispute centered on the FIVE JVC Hotel, where the Claimant operated under a Property Development Contract and engaged Reem to design, supply, deliver and install the aluminium and glazing works. After finding that FIVE’s delay analysis was fundamentally flawed and unsupported by the evidentiary record, the court was left with the task of resolving the financial fallout. Rather than acting as a forensic quantity surveyor to calculate the exact final sum owed down to the last dirham, the TCD adopted a bifurcated approach.
The court made binding determinations on the individual disputed items—including awarding Reem significant prolongation costs for the period from 8 November 2017 to 2 September 2019—but stopped short of producing the final ledger. Instead, the judgment directed that the parties must attempt to agree a Final Account based on the court's findings within 28 days.
This procedural mechanism is highly efficient for the court, pushing the administrative burden of mathematical reconciliation back onto the commercial parties and their experts. However, it leaves a window of unresolved friction. If the parties remain entrenched, the court is forced to convene a further hearing to finalise the account. The TCD’s reliance on the parties to act reasonably in the wake of a hard-fought, multi-year litigation requires a level of commercial pragmatism that is often absent once trust has entirely broken down. The limits of this approach are frequently tested in regional construction disputes, as seen in parallel TCD jurisprudence such as TCD-003-2019 Panther Real Estate Development Llc v Modern Executive Systems Contracting Llc, where the mechanics of post-termination accounting required extensive judicial intervention.
Finally, the judgment provides critical insight into the TCD’s current threshold for awarding indemnity costs. In English commercial litigation, a claimant who advances a multi-million dollar delay claim that is ultimately deemed "flawed and unsupported by evidence" might face a serious risk of adverse costs being assessed on an indemnity basis, particularly if the litigation conduct was aggressive or the claims were speculative. Indemnity costs shift the burden of proving the reasonableness of the incurred fees onto the paying party, often resulting in a significantly higher recovery for the successful litigant.
Despite FIVE’s comprehensive defeat across all three of its primary claims, and despite Reem’s success on its counterclaim for prolongation costs, Justice Glennie maintained a strict boundary regarding the penalisation of the losing party, refusing Reem’s application for costs on an indemnity basis (Five Real Estate Development LLC v Reem Emirates Aluminium LLC [2023] DIFC TCD 009, para 9).
The court ordered that FIVE pay Reem’s costs to be assessed by the Registrar on the standard basis if not agreed. This refusal to elevate the costs order underscores a vital reality of litigating in the DIFC TCD: advancing a weak, poorly evidenced, or ultimately unsuccessful technical claim does not, in itself, constitute the kind of unreasonable or abusive conduct required to trigger indemnity costs. The TCD recognises that construction disputes are inherently complex, often relying on competing expert methodologies that may unravel under cross-examination. Penalising a party with indemnity costs simply because their expert's delay analysis failed to persuade the court would risk chilling legitimate access to the tribunal.
For litigators, the standard basis costs order in Five v Reem confirms that the threshold for indemnity costs remains exceptionally high. It requires conduct that falls outside the norm of hard-fought commercial litigation—such as deliberate disclosure failures, advancing claims known to be false, or egregious procedural breaches. A merely "flawed" delay analysis, even one that wastes significant time and resources, remains within the bounds of standard adversarial risk.
The resolution of Five Real Estate Development LLC v Reem Emirates Aluminium LLC provides much-needed finality to the parties involved in the FIVE JVC Hotel project, but its doctrinal footprint extends much further. By clarifying that FIDIC indemnities must bow to UAE law requirements for proof of breach, by utilising mandatory party-led final account reconciliations, and by holding the line on standard basis costs, the TCD continues to refine the unique hybrid jurisprudence that governs major infrastructure disputes in the region. Practitioners must navigate these nuances carefully, recognising that the literal words of a standard-form contract will not always survive contact with the substantive law of the seat.