Cash flow is what keeps a construction business alive. Yet late payment is so common in the UAE market that many contractors treat it as normal: interim payments certified months late, retention never released, variations left “under review” indefinitely.
It does not have to be that way. This Unpaid Construction Payments guide covers the most common payment problems on UAE projects, the legal position, and the practical steps that actually get money released.
Why construction payments get stuck
In our experience, most payment disputes fall into one of five categories:
- Certified but unpaid. The interim payment certificate (IPC) has been issued, but the employer or main contractor simply does not pay.
- Not certified. The engineer delays or under-certifies work that has been done.
- Variations. Additional work was instructed, often verbally, and its value is now disputed.
- Retention. The retention amount is held long after handover or the end of the defects liability period.
- Pay-when-paid. The main contractor tells the subcontractor it cannot pay until the employer pays it.
Each of these needs a different strategy. The first step is always to identify which one you are dealing with.
Pay-when-paid clauses: what subcontractors should know
Main contractors in the UAE commonly include “back-to-back” or pay-when-paid clauses in subcontracts. UAE law has no specific statute banning them, and UAE courts have generally treated them as valid and enforceable. A subcontractor who sues too early may see the claim dismissed as premature.
That does not make the clause a permanent shield. In practice, several arguments are available to a subcontractor:
- The main contractor has in fact been paid for the relevant work, which it often has.
- The main contractor has made no real effort to recover payment from the employer.
- The clause is drafted as a timing mechanism, not as a condition that cancels the debt altogether.
- The employer’s non-payment is caused by the main contractor’s own default.
Evidence is everything here. Payment certificates issued to the main contractor, site records and correspondence with the employer can all show that the money has already come in.
Retention: getting it released
Retention is usually 5% to 10% of each interim payment, with part released at taking-over and the rest after the defects liability period. UAE law does not treat retention as held in trust, so if the party holding it becomes insolvent, you are an ordinary unsecured creditor.
To recover retention:
- Identify the release triggers in your contract.
- Collect proof that each trigger happened: taking-over certificate, end of the defects period, closed snag list.
- Send a formal demand that refers to those documents.
On future projects, consider offering a retention bond in exchange for releasing cash retention early.
Variations: protect them while the work is ongoing
Variations are where most of the money is lost, and it is almost always lost at the documentation stage. A few habits make a big difference:
- Get written instructions, or confirm verbal instructions in writing the same day.
- Notify the cost and time impact within the contractual deadlines. FIDIC-based contracts, for example, have strict notice periods for claims.
- Keep daily site records, photographs and labour and material logs.
A variation claim backed by contemporaneous records is far easier to win than one rebuilt from memory a year later.
Your legal options when payment does not come
Formal notice. A legal notice citing the contract, the certificates and the amount due is the right first step. It also meets the notice requirements of most contracts.
Payment order. If the amount is certified and undisputed, for example a signed IPC that has not been paid, a payment order can be a fast and effective route. It is decided on the documents, without a full trial.
Precautionary attachment. Where there is a risk that the debtor will move assets, the court can be asked to freeze bank accounts before a final judgment.
Court claim or arbitration. Disputed variations, extension of time claims and defects counterclaims usually need a full claim, often with an engineering expert. Check your contract for an arbitration clause first, because it decides where the claim must be filed.
Suspension of work. In some cases, a contractor may be entitled to suspend work for non-payment. This must be handled carefully and in line with the contract and the law, because a wrongful suspension can put you in breach.
Watch the new Civil Transactions Law
The new UAE Civil Transactions Law came into force on 1 June 2026 and changes some rules on contracts, hardship and limitation periods. Contracts signed after that date, and some ongoing matters, may be affected. If you are negotiating new subcontracts or planning a claim, it is worth checking how the new provisions apply.
Practical checklist for contractors
- ☐ Keep a register of every IPC, its certified amount and its due date.
- ☐ Chase late payments in writing, every time.
- ☐ Confirm every site instruction in writing.
- ☐ Diary all contractual notice deadlines.
- ☐ Review pay-when-paid, retention and dispute clauses before signing, ideally with a contract drafting and review specialist
- ☐ Act within weeks of a missed payment, not months.
How Omam Legal Consultancy can help
Our team works with contractors and subcontractors on payment claims, from reviewing subcontracts before signing to legal notices, payment orders, attachments and full claims. We understand how payment certificates, variations and site records work in practice, which is where these cases are won or lost.
If you are owed money on a project, send us your documents on WhatsApp for an initial review.
This article is for general information only and is not legal advice. The outcome of any claim depends on the contract terms and the facts.
How Omam Legal Consultancy can help?
Our team reviews existing contracts against the new Civil Transactions Law and updates templates so they work under the new rules. We also advise on disputes where the old law and the new law may both be relevant.
Frequently Asked Questions About Unpaid Construction Payments
1. How much does a lawyer cost in Dubai?
It depends on the type of work and how the lawyer charges. Standard tasks like contract drafting, legal notices and payment orders are usually priced as a fixed fee. Court cases are often priced per stage. Hourly rates range from roughly AED 700 for junior lawyers to AED 2,000–5,000 or more for senior partners at large firms.
2. How much is a lawyer consultation fee in Dubai?
An initial consultation is typically a fixed fee of roughly AED 500–1,500, depending on the lawyer’s seniority, the complexity of the matter and the length of the meeting. A good consultation should include a document review, practical advice and an estimate of costs.
3. What are the main ways lawyers charge in Dubai?
There are four common methods: a fixed fee for a defined task, an hourly rate for time spent, stage-based fees for litigation (first instance, appeal, cassation, execution), and a success fee linked to the outcome, usually combined with a lower fixed fee.
4. Are court fees included in a lawyer’s fee?
No. Court fees are paid to the court, not your lawyer. In Dubai, filing fees for most civil and commercial claims are generally 6% of the claim, with a minimum of AED 500 and a cap of AED 40,000. Appeals and execution carry separate fees.
5. What hidden costs should I expect besides legal fees?
Common extra costs include court fees, expert fees if the court appoints an accounting or engineering expert, legal translation (court documents must be in Arabic), and notary or attestation charges for notices, powers of attorney and certified copies. Ask your lawyer to list these upfront.
6. Do lawyers in Dubai work on a success fee basis?
Some do, mainly in debt recovery and certain commercial claims. A success fee is usually combined with a lower fixed fee rather than replacing it entirely. Any success fee arrangement should be agreed clearly in writing before work begins.
7. Who pays the expert fees in a Dubai court case?
If the court appoints an expert, such as an accountant or engineer, the expert’s deposit is usually paid by the party who requested the expert. These fees are separate from your lawyer’s fee and can add significantly to the cost of a case.
8. How can I reduce my legal costs in Dubai?
Organise your documents well, since a clear file saves hours of work. Choose the right route from the start, such as a payment order instead of a full case where possible. Early settlement is almost always the cheapest outcome, while appeals and counterclaims add time and cost.