Public Contracts Under United Arab Emirates Laws

The study of administrative contracts, occupies a prominent place among the study of different administrative law subjects, since the administrative contracts are having a special legal character when compared to private law, it also contains special provisions that are different from the nature of the work of other administrative contracts and their legislation, the difference can be clearly spotted in the nature and provisions of the administrative contracts when compared to civil contracts that are governed by private law.

Public Contracts Administrative are different from any other administrative management acts, the main difference is in the nature of the relation in the contracts administration whereby the contract is only established with the availability of two or more parties, the state, or any of its affiliates, and another legal entity (s) or an individual (s) who has the will to enter into a binding contractual relationship with the state to provide any type of service.

Justification of the research:

Public Contract Administration in United Arab Emirates (UAE) has become a necessity since the rule of the new modern governments these days is not just to act as a guard state, the role of the government is not only to protect the right and freedom of individuals. The state government has evolved to serve in various number of tasks, and the state is now involved in doing services that were not part of its public services before. The state is no more reliant on the private sector and individuals to provide services but the governments in today’s era is greatly involved in providing its own general public with their needs and requirements to satisfy the persistent demand of the community. Therefore, new public service administration bodies are existing to serve individual needs and the government were compelled to smoothly run its public services, to contract with other entities and individuals to provide these service. It is for that reason the public contracts and their administration were introduced here at the United Arab Emirates (UAE) in the year of 1975 through the Federal Regulation of Conditions of Purchases, Tenders and Contracts, Financial Order No. 16 of November, 1975, regarding Regulating Purchases and Works Contracts Methods. Yet again In the year of 2000 through the Ministerial Decision No. 20 of 2000 on Administration of Contracts Systems, which will be covered in details through this report. There have been no or limited resources written in English Language covering the administration of public contracts in the UAE, I have chosen this topic to highlight the rules and regulation in effect for the administration of public contracts that regulates the public institutions contractual relationships with other entities or individuals.

The Main hypothesis or direction of the research:

Having seen the Ministerial Decision No. 20 for the year 2000. This research will focus on the following areas:

The time span of the validity of the provisions of this decision;

What are the different types of contracts that are covered under this decision and what are the different public legal authorities subject to the provisions of this regulation;

The competent authority to issue the necessary instructions to implement the provisions of this decision and its interpretation; and

Control over the implementation of the provisions of this system

The time span of the validity of the provisions of this decision.

According to available resources, UAE federal government issued 2 federal orders and 2 Ministerial Decisions regarding the regulation of the Government Procurement:

Federal Orders:

UAE Federal Order No. 16 of 1975 (the public tenders law)

UAE Federal Law No. 7 of 1976 establishing the State Audit Institution

Ministerial Decisions:

Ministerial Decision No. 14 of 1978 on Administration of Contracts System, superseded by Ministerial Decision No. 20 of 2000 on Administration of Contracts System

Ministerial Decision No. 20 of 2000 on Administration of Contracts System [1] 

Effectiveness of the Decision:

The Second Article of the Ministerial Decision No. 20 of 2000 on Administration of Contracts System state the following in relation to the effectiveness of the Decision, “This Decision shall be published in the official Gazette and shall be effective from March 01, 2000 and shall supersede Ministerial Decision No. 14 for year 1978 and its amendment and anything that conflicts with this decision."

It is to be noted here that Article 111 of the UAE Constitution clearly states that all laws and regulation shall be published in the official gazette of the Federal Union within 2 weeks of their signature from the Union President and upon the attestation of the Federal Supreme Council [2] , and shall be enforced one month after its publication in the official gazette or otherwise as may be indicated in the law itself.

Therefore, the publication of the law in the official gazette properly justify the position of the government to inform the community and the official publication in the official gazette provide general knowledge of the public laws by those concerned.

Again in Article No.2 of the subject decision in relation to the time frame of the law effective date, the Article states the following:

“……..and shall be effective from March 01, 2000 and shall supersede Ministerial Decision No. 14 for year 1978 and its amendment and anything that conflicts with this decision."

It is therefore decided by the Ministry that the existing law shall be valid until the end of the last day of February, 2000. In this regard, the question arises here, what happens to those contracts that are made in according to the earlier law and whether the progress of these contracts will continue until after the new legislation is in force, and the other question arises to surface as well, what happens to those proposals, public tenders and quotations that were received by the related administration bodies before the effectiveness of the new law and how will the contractual terms be dealt with?

Many questions come to mind, but an in-depth research is required to establish what really happened during that transitional stage between both the Ministerial Decisions.

What are the different types of contracts that are covered under this decision and what are the different public legal authorities subject to the provisions of this regulation:

According to Article 1 & Article 2 of the decision, all government related purchases are subject to the Ministerial Decision No. 20, 2000 without any exception, but those expressly exempted ministries or bodies.

According to Article 123 of the Decision, All Federal Government Ministries as well as all Federal Government Bodies that are related to these ministries are covered by the subject ministerial decision. The Article excludes the following government Ministries and authorities and/or bodies from this decision:

Ministry of Defense

The State Security Services Authority

All state authorities that maintain their own independent rules and regulations in this regard.

The competent authority to issue the necessary instructions to implement the provisions of this decision and its interpretation:

Article 125 of the Decision “The Minister of Finance and Industry is the authority issue the necessary instructions to implement the provisions of this decision and the interpretation of its provisions"

It is therefore under the control and responsibility of the Minister of Finance and Industry to issue the necessary instructions for the implementation of the decision and it is also him who should be the referral for the interpretations of the provisions of the decision.

It is worth to mention here that, this authority provided to the Minister is without prejudice to the competence and rule of the Ministry of Justice and courts with their different level to the interpretations of the decision as these bodies has an impeded right of interpretations which does not conflict with what is contained in Article 125 of the Ministerial Decision.

Control over the implementation of the provisions of this system:

The Control over authorities of the Decision are as per the following:

Ministry of Finance And Industry

State Audit Institution

Fatwa & Legislation Department, Ministry of Justice

UAE Courts

Ministry of Finance And Industry Control:

Article 2 of the Decision states “ All Public contracts that are below AED 500,000 in value or any purchase or orders that are covered under Clause B of Article 1 of this system …………, must be referred to the Ministry of Finance before awarding, so that it can be audited and a pre-approval is secured……"

Article 115 of the Decision States “ Copy of tender opening forms and minutes of tender opening committee meeting as well as a copy of the contract and any other documents to be sent to the internal Financial Audit Section of the Ministry of Finance, and the Audit Section shall have the right to look at the original documents of all the tenders file that are kept with the respected authorities".

State Audit Bureau Control:

Establishment of the State Audit Bureau came in to light through Federal Law No.7 for the year 1976. Whereas the First Article of the above Law state the following" An Independent entity to be established in the name of the audit bureau and shall be annexed to the federal national council and shall assume financial control over funds of states and funds of entities stipulated upon in article 4, and in particular it shall identify safety and legitimacy of management of funds of state and execution of development projects as stipulated in this law and its internal regulation [3] ." Accordingly, this law also identified the government entities that this bureau has control over their financial practice, Article 4 of Law No. 7 states “Audit bureau shall practice financial control over the following entities:

Ministries and federal government departments.

Federal National Council

Institutions and public entities of the state, and so on.

Fatwa & Legislation Department, Ministry of Justice Control:

Fatwa & Legislation Department, Ministry of Justice play a vital rule in observing the implementation of the federal laws, legislations and regulatory decisions for any subject that is presented to them for review and opinion.

It is therefore, that the Fatwa & Legislation Department, Ministry of Justice

Initiate their rule in as an observer for all of the public contract administration for all the feedback they provide which reflects the proper interpretation of the law in that regard.

UAE Courts Control

The UAE Courts plays their control rule over the implementation of the subject decision from the judgments they make over time due to dispute between the state and the contractors. Courts therefore, decide on matters submitted to them from the conflicts in this regard and interpret the provisions of this decision and the application adhered by the management authorities to correct the rule of law.

A review of previous research:

This subject is barely covered by researchers in the English Language, I have come through some Arabic written researches covering the public contracts Administration such as, Encyclopedia of United Arab Emirates legal system of administrative management contracts for Elewah Mustafa Fateh Al Babab, 2004.

On the other hand, the English translation of the Laws are also not easily accessible, not to mention the limited sources available, the only reliable source that are available, based on my experiment while researching, is a licensed software system made by Salah Al-Jasim “TRANSLATION of UAE FEDERAL LAWS" this software is updated from time to time and contains all of the UAE Federal Government issued Laws. The software is available at public libraries and only available for seeing inside the library premises and only printed copies can be obtained from the software.

Proposed methodology or sources:

The subject research law under this report is the United Arab Emirates, Ministerial Decision No.20 of 2000 on Administration of Contracts System (Government Procurement).

I have assumed at the commencement stage of this research that since I am an off campus student and my resources are limited somehow to the electronic resources available, the subject would be an straightforward one since I am also residing in the same country, UAE. I have assumed that all resources on the subject matter would be reached easily. Once the research study started, it has proven to me now the selected topic is not simple. It materialized to me very clearly that it is quite challenging to get resources in the English language for subjects originally written in the Arabic language. To start with, I needed to obtain a copy of the legislation, so I have made my first choice resource, to start with, is the authority that maintains the subject law, the UAE Ministry of Finance & Industry. The ministry internal legal advisory section was the department who keeps copies of all the ministries related decisions and legislations. My second choice was the electronic resources available in public libraries here in UAE. Unfortunately the subject is barely touched by English speaking researchers and the Arabic language resources are very minimal, I may say, my research of the subject matter revealed the availability of one only reliable resource, that is, Encyclopedia of United Arab Emirates legal system of administrative management contracts for Elewah Mustafa Fateh Al Babab, 2004. (Nitham Aogoud Al Edara, qarar wazir almaliyah wa alsenah raqm eshreen lesanat alfeen, derasah elmieh fi daua alahkam wa alfatawa).

An evaluation of the research activity:

Availability of resources for any research topic is the first aspect to be established when deciding the research subject. I have assumed the availability of the resources for the subject matter before I actually check physically. I have proven that my assumption was wrong and I should have made more efforts making sure of the availability of resources at the subject selection stage. My experience with this research can be summarized with the following:

Availability of Legal resources are nominal in UAE compared to other countries, especially resources in the English language, it costs a researcher around $ 125 to purchase a translated copy of the subject researched Ministerial Decision.

The main available resource for getting Trade-Related Laws in the UAE are derived from the official gazette publication and that also is in the Arabic language. Therefore, researchers of non Arabic speaking will face great deal of obstacles and difficulties getting information in English.

An English language resource namely “Business Laws of the Middle East: The United Arab Emirates, edited by Bryan Cave, published in April 1999" is also available, but the series does not cover the laws issued after 1999.

The only available electronic resource that is free is the software system made by Salah Al-Jasim “TRANSLATION of UAE FEDERAL LAWS" which contains all UAE laws translated to the English Language. Other legal website are also available, but a more detailed study is required to establish the reliability of these resources.