Liquidated Damages Under the Law of the United Arab Emirates and its Interpretation by UAE Courts

Abstract

A common challenge when claiming damages under a commercial contract, and in particular in complex transactions or projects and in respect to specific types of damages such as damages for delay, is the quantification of the damages suffered. These difficulties are frequently addressed by including a liquidated damage clause. Liquidated damage clauses provide that in case of a specific breach of contract a predefined amount of compensation shall be paid to the damaged party. Thereby, these clauses serve to simplify damage claims. Liquidated damage clauses, first developed in common law jurisdictions, are frequently used today in the Middle East. Still, Middle Eastern jurisdictions such as the UAE have chosen a more reserved approach to liquidated damage clause.

Keywords: Liquidated Damages, Remedies, Liability, Torts, Contract, United Arab Emirates, UAE, Islamic Law