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‘Main contractor obligated to settle financial dues of subcontractor’ Kuwaiti law covers all basis in contracting business

By Ahmed Al-Naqeeb Arab-Times Staff KUWAIT CITY, Oct 19, 2014:

Over the last couple of years, the state of Kuwait has been witnessing a number of big construction projects, both governmental and private. For this reason, the traffic of contracting companies has been heavy during this period of time, and like any industry, disputes are bound to arise between concerned parties. Bishr Al-Boukai, a lawyer who has accumulated around ten years of experience in the field of law, most of which revolves around the construction industry, asserted that the most common issue in this area is the settlement of due payments between parties. Currently working for the AlMarkaz Law Firm, Bishr explained that contracting agreements usually consists of two parties, the client, whom the project belongs to, and the contractor, who is the party that will be in charge of its execution. Approach In some cases, the contractor may approach another contractor, which in the industry is referred to as the “subcontractor,” for them to execute a specific part of the project specified in a subcontract between the main contractor and the subcontractor.

In this business model, that has become more prevalent in the modern construction industry, noted Bishr, there are now two parties that demand payments, which is a common cause for disputes, and it’s usually the subcontractor that is uncertain in these cases. Therefore, Bishr assures contractors that the Kuwaiti law addresses this matter comprehensively, for according to the law, the main contractor is obligated to settle the financial entitlements of the Subcontractor. However, the subcontractor may suffer from the main contractor’s delay, suspension or both, in terms of settling the due payments in due time, in this case the Kuwaiti law provides for the principle “privity of contracts,” where a contract cannot confer rights or impose obligations arising under the contract on any party except the parties to the agreement; it grants the subcontractor the right to claim for its due payments against the main contractor and the Client as well. The client is therefore obligated to settle the payments of the subcontractor as long as the client has pending payments to the main contractor; otherwise, the client has nothing to do with the subcontractor. Further explaining, Bishr said that the subcontractor’s ability to claim for its due payments from the main contractor is provided under the civil code of the Kuwaiti law as a part of the Kuwaiti legislator’s provisions to maintain a smooth and effective running of the contracting business, as well as insuring that the whole project is not affected in case there any illegal implementations with the subcontract. When it comes to construction, the Kuwaiti law has comprehensively covered all the basis, insuring that the client, contractor and the subcontractor are protected from any foul play, which is only expected considering Kuwait is currently blooming with large projects.