How to stop liquidation of banking letter of guarantee and win a construction dispute of half billion?
Yet with a winning construction dispute of AED 4300000000.00 and fess over 10000000 ten million safely won with our construction & real estate client, we are now by far and away Abu Dhabi, Dubai UAE’s best results, paid and winning of construction dispute lawyer in all Middle East.
We are Advising Owners and Developers on Construction Law on how to win multi national, multi jurisdictional disputes in Gulf.
Even the simplest construction project will often involve multiple parties whose varying responsibilities and risks are outlined in a web of contracts. The bigger the project, the more complexity is introduced into the agreements.
Our construction attorneys always handled very high-profile projects that have an exceptional level of complexity and scrutiny.
Advocate Ahmed Al Saaedi he 34-year-old Emirati lawyer with legal consultant Ezz who head a team of construction law consultants have won the record-breaking lawsuit for a U.A.E construction & property company against a major Saudi based construction company with branches in middle east and a major bank in UAE, catapulting him above his peers to become the most successful solicitor in the U.A.E land.
We could defend and advise the construction client on the dispute against biggest construction and one of the biggest banks in UAE against company in the kingdom of Saudi Arabia.

What was the case?

A story of international construction dispute between 2 of biggest companies in GULF States.
We are now annexing the verdict from courts of UAE against the construction company in KSA

Court Have heard case no 000/2015 ABU DHABI TOTAL COMMERCIAL COURT register
Filed by Our clients,
Against: First Defendant: the SAUDI COMPANY
Second defendant: and U.A.E Bank
The Court
The facts of the case are summarized in that the plaintiff filed it by a statement of claim that was lodged with the Court registry, seeking the appointment of an accounting expert to settle accounts between the parties and calculate the dues of the plaintiff for completed works as well as the damages it incurred and the profits it lost, and to order the defendants to pay charges, costs and legal consultancy fees.
These reliefs were based on the argument that the first defendant assigned to the plaintiff the construction of Saudi compound. The plaintiff received from the first defendant an advance payment of SR 0000000, to be recovered based on the monthly progress by discounting 12.5%. It was agreed that the first defendant would open an SR 30,000,000 letter of credit for the plaintiff, to be renewed every 90 days and payments would be made 90 days from the date of receiving the plaintiff’s approved delivery notes and the monthly invoice for the materials delivered to the site. In exchange for this, the plaintiff opened a letter of guarantee for the advance payment in the second defendant bank, which undertook to pay the said amount, should the plaintiff fail to perform any of its obligations.
The plaintiff began working and constructed a factory for preparing project concrete works. The value of the completed works on site amounted to SR 47,000,000 and those completed in the factory, the value of which amounted to SR 18,458,296. On 2015, the plaintiff was surprised to receive a notice from a Bank (the second defendant) to the effect that the first defendant asked the Banks to liquidate the first advance payment letter of guarantee on the claim that the plaintiff breached the terms of their agreement.
Whereas the first defendant did not perform the payment terms, withdraw its employees agreed to work for the plaintiff and did not issue letters of guarantee for the invoices submitted by the plaintiff and whereas the factory constructed by the plaintiff is under the first defendant’s control, the plaintiff filed this lawsuit, seeking the above reliefs and attached the decision of the Reconciliation Committee and a trade license.
The first defendant’s lawyer submitted a reply note, at the conclusion of which he sought a judgement that Abu Dhabi Court of First Instance lacks the international jurisdiction to hear the dispute, to forward the dispute to KSA courts and to order the plaintiff to pay costs and legal consultancy fees. These reliefs were based on the claim that the defendant concluded a sub-contract agreement to complete some contracting works in KSA and that they agreed that should any dispute arise, the same would be governed by KSA laws and that the business office of the first defendant is in KSA. He attached a sub-contract agreement, the company’s registration certificate and a To-Whom-It-May-Concern certificate. The lawyer appearing for the second defendant submitted a reply note, at the conclusion of which he sought dismissing the case against the Bank and de-impleading it from the case without costs, as the Bank has no competence in the case and is no party to the agreements upon which the case is built.
In addition, the plaintiff and the impleaded party’s lawyer appeared and submitted a docket of documents that contained copies of contracting agreements.
On 2015, the court, after determining the subject, appointed an expert to undertake the task stated in the said judgement, to which the court refers to avoid redundancy.
The expert performed the task assigned to him and lodged his report, in which he concluded that it is the defendant who breached its contractual obligations,
Accordingly, the expert concluded that the defendant breached its contractual obligations, which made the plaintiff incur the following losses, as indicated by the plaintiff’s statements of account, to which the defendant did not reply.

In addition, the defendant’s lawyer appeared and submitted a commentary note on the expert report, maintaining that the defendant did not conclude any agreements with the plaintiff. At the conclusion of the said statement, the defendant’s lawyer sought the dismissal of the plaintiff’s action and ordering the plaintiff to pay costs, legal consultancy fees and damages, attaching a contracting agreement contract, a registration certificate and an advance payment guarantee.
Regarding the plea of the lack of jurisdiction, it was already dismissed by the court in its judgement delivered on 2015, to which the court refers to avoid redundancy.
Regarding the pleas for dismissing the case for being filed against a party lacking capacity:
It is legally established that “the scope of a case before the primary court is determined by the final reliefs of the adversaries, rather than by the reliefs contained in the preliminary statement of the claim, the reliefs sought in the statement of relief modification or the notes submitted by them. The court must limit itself to the reliefs brought before it and its judgement must be limited to the reliefs brought before it, either regarding its subject or its parties”.

In view of this, the final reliefs sought by the plaintiff are to order 00000000 Saudi Ltd to pay its dues for the completion of the works that were the result of a commercial venture, which constitute the contract works completed for the first defendant, for whom it will make no difference if it pays to the impleaded party (being the main contractor who is obliged to perform the works) or to the plaintiff itself (being the subcontractor who actually completed the works), so long as the main contractor (the impleaded party) has transferred his rights for the said works, according to the provision for this in Clause 5 of the sub-contract agreement concluded between the plaintiff and the impleaded party, under which agreement the parties agreed that the first party shall take the place of the second party in all the rights and obligations under the contract. The result of this is that the transferred right is transferred from the transferor to the beneficiary at the state it was at the time such transfer was accepted, without the need for the transferee’s (the first defendant’s) knowledge or acceptance. This is the conclusion reached by the court. Therefore, the defendant’s plea for dismissing the case for the lack of capacity turns out to be ungrounded and must be rejected.
Regarding the second defendant’s plea for the dismissal of the case against him for the lack of capacity, as the reliefs sought by the plaintiff relative to the cancellation of the bank guarantee are directed against him, such plea turns out to be unfounded and must be rejected.
Regarding the impleading and intervening reliefs, it is legally established that an adversary may implead a party that may be legally sued at the time of filing the case and that every interested party may implead in the case, joining a party thereto and that this must be done following the usual procedures of filing cases. As the plaintiff impleaded the impleaded party, who it was permissible to sue at the start of the case, and as the impleaded party impleaded in the case joining the plaintiff following the usual procedures of filing cases, the case must be accepted in formalities.
Regarding the subject of the case, the impleading and the intervening party, the final reliefs sought by the plaintiff and the intervening party were to order SAUDI Ltd to pay the plaintiff AED 99,525,265.42 plus interests at 12% and to order the first defendant (Bank) to cancel the letter of guarantee because its purpose no longer exists.
It is legally established that the purport of Articles 872, 877, 882 and 885 of the Civil Transaction Law is that a contracting; is a contract under which a contracting party undertakes to make something or perform some work for a certain consideration that the other contracting party undertakes to pay. A contracting agreement is one that binds both parties, under which the contractor has three obligations: to complete the work assigned to him under the contracting agreement, to hand over the work after completing it and to guarantee that work after being handed over. The master also has three obligations: 1- to enable the contractor to complete the work, 2- to hand the work after being completer and 3- to pay the consideration. It is established in court rulings that a subcontractor is obliged to perform the agreed work according to the terms and specifications of the contract (The Federal High court, Action No 482 of Year 28 Civil, hearing of 22/12/2008).
It is agreed that the expert’s work is only one of the elements of evidence in the case and that it is subject to the discretionary power of the trial court, who may adopt the conclusions reached by the expert if they are convincing to the court and if these conclusions are supported by the record of the case and such record leads to these conclusion. The trial court’s adoption of the reasoned expert conclusions means that the court did not find the objections directed to the report worthy to be replied to by more than the contents of the report itself.
Hence, it is established from the record of the case and the expert report, with which the Court is satisfied, that the first defendant assigned the Saudi 00 Project to the impleaded intervening party and that the latter agreed with the plaintiff that the plaintiff would complete the National Guard building in its entirety.

Regarding the relief to cancel the letter of guarantee, it is legally established that a letter of guarantee is an undertaking by the guarantor bank based on the request of one of its customers (the instructor in this case) in which the bank guarantees the customer undertaking to perform his obligation and to pay a definite amount (or an amount that can be defined) to another person (the beneficiary) unconditionally upon demand, unless the letter of guarantee is conditional, should the customer fail to perform his obligation. The purpose of the letter is stated in the letter itself.
In view of this, the intervening party received from the first defendant the first advance payment of SR 73,195,105 and it is established that the second defendant undertook, under letter of guarantee no 000000, to guarantee the advance payment of SR 73,195,105, by paying the said amount to the first defendant at any time the first defendant advises the bank that the impleaded party failed to perform its obligations. As it is established that the contracting agreement was terminated as indicated above, and that upon settling accounts, the advance payment guarantee was discounted, which entails that the purpose of the letter of guarantee of the advance payment is satisfied. Accordingly, the plaintiff’s relief to cancel the letter of guarantee turns to be supported by the facts of reality and the rules of law and the Court hereby approves it as will be indicated in the operative part hereof.
Regarding the relief regarding interests, it is legally established under Article 88 that “Unless otherwise agreed, where the commercial obligation is a sum of money, the amount of which was known when the obligation arose, and the debtor delays payment thereof, he shall be held liable to pay to the creditors, as compensation for the delay, the interest fixed in Articles (76) and (77).”
For these reasons
The Court, in pressentia, hereby judges as follows:
The impleading and intervening reliefs shall be accepted regarding formalities. Regarding the subject of the case and the impleading matter, the Court hereby orders the first defendant to pay the plaintiff SR 00000000000 million, or an amount equivalent to the same in Dirhams and the second defendant is hereby ordered to cancel the letter of guarantee no 00000000, which guarantees the advance payment of SR 73,195,105 and both defendants are hereby ordered to pay costs and two hundred dirhams for legal consultancy fees. All other reliefs are hereby dismissed.
May Allah grant His peace and mercy to our lord Mohamed, his household and his companions?

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