Giga-projects in the Middle East are amongst the most ambitious and complex construction projects ever undertaken, attracting contractors from across the globe and generating contracts of extraordinary value and complexity. However, while these projects offer substantial opportunities, they also carry significant contractual risks. In recent months the industry has witnessed a notable rise in the termination of contracts across several high-profile developments.
Authors: Ashlea Read, Quantum Expert, Dubai and Oliver Pearson, Associate Director, Dubai
It is important to recognise that termination does not strip a contractor of its rights, remove its entitlement to payment for work executed, or relieve an employer of its contractual obligations. What it does do is create an environment in which those rights must be carefully identified, properly documented, and diligently pursued through the appropriate contractual and legal channels.
Stakes are High
On giga-projects, the financial consequences of termination can be significant. By the time of termination, contractors will typically have mobilised substantial workforces, committed considerable investment in plant and equipment, procured large quantities of materials, and established extensive supply chain arrangements, all of which give rise to cost implications that do not simply cease upon termination.
The potential heads of claim available to a contractor in such circumstances are broad and may include the unpaid executed contractual works, materials on and off site, the costs of demobilisation, settlements due to subcontractors and suppliers, and prolongation and disruption costs incurred prior to the termination date. Where the termination itself is found to be wrongful, the contractor may additionally seek to recover loss of profit and contribution to overheads on the uncompleted portion of the works.
The real challenge, however, is not in identifying what is recoverable in principle, but in proving it in practice. In formal dispute proceedings, whether through adjudication, arbitration, or litigation, the burden rests firmly on the contractor to demonstrate its entitlement with evidence that is robust, contemporaneous, and credible. It is at this stage that the real work begins, and where the line between recovery and loss is often determined.
Importance of Records
At the point of termination, the most critical step a contractor can take is to ensure that the quantity and percentage completion of the works undertaken are accurately recorded and preserved. A joint site survey conducted with the employer or its representative is the ideal starting point, as it creates an agreed record of the physical status of the works at the date of termination. Where the employer is unwilling to participate, the contractor must act quickly, engaging (ideally) independent quantity surveyors and technical experts to measure, assess, and document both completed and partially completed works. In parallel, the contractor should work closely with suppliers to independently verify and record any off-site materials and equipment that have been paid for by the contractor but not yet reimbursed by the employer. This process is not merely procedural but fundamental to preserving evidentiary integrity, mitigating disputes over valuation, and strengthening the contractor’s position in any subsequent negotiation or formal process.
Contemporaneous records form the foundation of any subsequent claim. Photographs and video evidence, marked-up drawings, as-built records, delivery notes, and signed timesheets collectively build a picture that is difficult to dispute. Equally, contractual notices and documentation must be issued strictly within the timelines prescribed by the contract, as procedural failures at this stage can prejudice recovery significantly. In high-value disputes, the quality and completeness of contractor's records often prove determinative in deciding whether a claim succeeds or fails.
Contract Landscape on Giga-projects in the Middle East
Giga-projects in the Middle East are typically governed by bespoke or heavily amended standard forms, often incorporating NEC, FIDIC, or entirely project-specific frameworks. Each brings its own termination provisions, payment mechanisms, and dispute resolution procedures, and the nuances between them are generally significant. Understanding how these provisions operate, particularly in circumstances where the employer asserts termination for default and the contractor disputes the grounds, requires a depth of contractual expertise that cannot be improvised under pressure.
Importantly, having a contractual right to terminate does not necessarily mean that the decision to do so has been exercised correctly or in accordance with the contract. Where termination is unlawful or procedurally flawed, a contractor may be entitled not only to recover its costs but to pursue damages for wrongful termination, which can be significantly more valuable. Identifying and pursuing these arguments requires early and informed specialist involvement.
How Diales can Help
At Diales, we have extensive experience advising and supporting contractors through some of the most complex and high-value termination scenarios in the Middle East construction market and worldwide. Our team of quantum experts, delay analysts, and contract and claims specialists bring a depth of technical and commercial knowledge that is specifically tailored to the demands of the regional market and the particular characteristics of giga-project delivery.
From the point of termination, we work alongside contractors to help in protecting their position. We conduct or oversee independent valuations of work executed, compile and organise contemporaneous records, identify and quantify all recoverable heads of claim, and ensure strict compliance with contractual procedures. Where disputes proceed to formal proceedings, our experts are experienced in preparing and presenting expert evidence across the full range of dispute resolution forums, including ICC, LCIA, and DIAC arbitration, as well as proceedings before the Saudi Centre for Commercial Arbitration.
We recognise that termination is not only a financial crisis but an operational and reputational one. Our approach is not simply to quantify a claim but to build a coherent, evidence-based narrative that stands up to the most rigorous scrutiny. Diales combines pragmatic thinking with commercial insight and is committed to achieving the best possible outcome for the contractors we represent.
Conclusion
The rise in contractor terminations across parts of the Middle East is a stark reminder that contractual risk does not diminish with project ambition, it amplifies it.
For contractors facing termination, the path to financial recovery is achievable, but it demands early intervention, strategic clarity, and disciplined execution. This includes maintaining robust and contemporaneous records, ensuring strict compliance with the contractual procedures, and taking a proactive approach to identifying and substantiating all available heads of claim. Diales can also advise contractors on when it is necessary to seek legal counsel, particularly in navigating the complex contractual and legal nuances associated with termination, whether for convenience or in cases of potential wrongful termination.
Navigating this process requires more than a theoretical understanding of entitlement as it calls for practical expertise in building claims that are evidentially sound, commercially coherent, and capable of withstanding detailed scrutiny in formal dispute resolution forums. With the right support, contractors can not only protect their position but also maximise recovery in what are often high-value and high-stakes disputes.
Diales stands ready to provide that guidance, combining technical excellence with commercial insight to support contractors at every stage of the termination and recovery process.
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