Infra.Law

Navigating Conditions Precedent: a comparative analysis of Contractual Practices in the Middle East and England & Wales

By Glenn Bull and Murron McKeiver

The recent case of Disclosure and Barring Service v Tata Consultancy Services Ltd, provides an ideal opportunity to assess the current landscape of conditions precedent in construction contracts. This article explores cases heard in the Courts of England and Wales, and the DIFC to evaluate what constitutes a condition precedent and whether the courts take different approaches internationally.

Widening the net of ‘conditions precedent’

In the case of Disclosure and Barring Service (“DBS”) v Tata Consultancy Services Ltd [2025], heard in the Court of Appeal in England, the Judge held that a sentence whose structure is “if-then”, as seen in clause 6.1 of the agreement considered in that case, is the archetype of conditionality and will therefore form a condition precedent. Clause 6.1 of the agreement stated:

6. DELAYS DUE TO CONTRACTOR DEFAULT

6.1 If a Deliverable does not satisfy the Acceptance Test Success Criteria and/or a Milestone is not Achieved due to the CONTRACTOR's Default, the AUTHORITY shall promptly issue a Non-conformance Report to the CONTRACTOR categorising the Test Issues as described in the Testing Procedures or setting out in detail the non-conformities of the Deliverable where no Testing has taken place, including any other reasons for the relevant Milestone not being Achieved and the consequential impact on any other Milestones. The AUTHORITY will then have the options set out in clause 6.2.”

The question facing the judge was whether clause 6.1 of the agreement created a condition precedent, the breach of which would bar DBS from recovering £1,592,000 by way of delay payments. The court ruled that DBS’s entitlement to delay payments was contingent upon compliance with clause 6.1 which required them to serve a Non-conformance Report, which they did not meet. This case shows that the position, as it currently stands in England and Wales, is that seemingly limited conditional language is sufficient to form a condition precedent, meaning that such condition must be satisfied by the Contractor, before it has the right to pursue its claim.

Conditions precedent in the DIFC

Two recent cases in the DIFC Court, being Panther Real Estate Development LLC v Modern Executive Systems Contracting LLC [2022] and FIVE Real Estate Development LLC v Reem Emirates Aluminium LLC [2020], dealt with the issue of whether clause 20.1 of the FIDIC Red Book formed a condition precedent. Clause 20.1 of the FIDIC 1999 General Conditions establishes a two-stage process for contractors to submit claims for extensions of time and/or additional payment. They are:

A notice is to be served by the Contractor that describes the event or circumstance that has arisen (“Notice”); and
The Contractor is then required to follow the notice with the fully detailed claim (“Claim”).

The Notice and Claim are to be submitted 28 days and 42 days, respectively, from the date the Contractor became aware (or should have become aware) of the event or circumstance giving rise to the Claim.

Background to the two DIFC cases

In FIVE Real Estate v Reem, Reem (the Contractor) claimed, by way of counterclaim, against FIVE Real Estate (the Employer) that it was entitled to an extension of time for a period of 663 days, and prolongation costs for the whole of that period, due to the various delays caused by FIVE Real Estate. Similarly, in Panther v Modern, Modern (the Contractor) made an Extension of Time claim against Panther (the Employer), claiming that the majority of delays were caused by Panther and, as such, Panther was not entitled to liquidate the security guarantees.

Effect of clause 20.1 in the FIDIC Red Book

The Judge in FIVE Real Estate v Reem, noted that, had Reem failed to give notice under clause 20.1, the Time for Completion: “shall not be extended, the Contractor shall not be entitled to additional payment, and the Employer shall be discharged from all liability in connection with the claim.” The Court of Appeal in Panther v Modern stated the language of clause 20.1 “could not be clearer” and that there is “no doubt” that the 28-day notice requirement forms a condition precedent to the Contractor bringing a claim. The time bar applies regardless of the strength of the Contractor’s additional time and payment claims. For instance, in both cases the courts found that the Employers were responsible for the majority of delays caused. In Panther v Modern, the Court of Appeal found that 304 out of the 325 days of delay were caused by Panther. Yet, Modern’s claims were dismissed due to its failure to fulfil the precondition prescribed in clause 20.1 in the contract. The court dismissed Modern’s argument that to allow Panther to claim liquidated damages for delays attributable to them was contrary to implied duties of good faith, fair dealing and cooperation outlined in Articles 57 and 58 of the DIFIC Contract Law. The court emphasised that the “Contractor willingly entered into a contract that included the 28-day notice requirement in sub-clause 20.1”. The court further noted that the provision was so explicitly clear that it left no room for “the suggested implied term or obligation of good faith”. This reasoning, which may appear stringent to Contractors, is grounded in the principle that timely notice and resolution are vital and should be prioritised as prompt notice enables both parties to examine the situation thoroughly, and perhaps enables the Employer and/or the Engineer to implement changes that alleviate the delay and/or prevent such matters from occurring in the future. Therefore, both of these DIFC Court cases highlight the crucial importance of serving notices, and how the courts will stringently apply clause 20.1 as a condition precedent, even if this is detrimental to a Contractor with a strong claim. It is further noted that whilst such decisions were made by the DIFC Court, the applicable law for FIVE Real Estate v Reem was Dubai onshore law whereas DIFC law applied for Panther v Modern. Notwithstanding the differing law, the court has in both instances applied a similar approach to the courts of England and Wales on this issue.

Is there hope for contractors?

A Contractor-friendly decision in the Technology Construction Court (England and Wales)

If we look back to the case of Obrascon Huarte Lain SA v Her Majesty’s Attorney General for Gibraltar [2014] which subsequently went to appeal, the Contractor, OHL claimed for extension of time and / or additional payment. The parties contracted under the FIDIC Conditions of Contract (Yellow Book 1999) and agreed that clause 20.1 constituted a condition precedent. However, they disputed what it meant to become ‘aware of the event or circumstance’. Upon an initial review, clause 20.1 seems to indicate that the 28-day period begins when OHL either “becomes aware or ought to have become aware of the event or circumstance” i.e. a prospective delay such as a variation that leads to a delay. However, at first instance, the court determined that this clause should be construed more broadly in favour of the Contractor, taken together with clause 8.4 which stated that the Contractor will be entitled to an extension of Time for Completion, subject to clause 20.1, if the completion “is or will be delayed”. Consequently, OHL could either give its notice within 28 days from:

The variation that OHL was aware, or should have been aware, would give rise to a delay (a prospective delay); or
When the delay resulting from the variation actually occurred (a retrospective delay).

The second avenue is advantageous to OHL and other contractors operating under FIDIC contracts, extending the 28-day period until they have knowledge or awareness of the actual delay caused by the event or circumstance.

Can the same contractor-friendly approach be seen in the DIFC?

In Panther v Modern, the DIFC Court considered the Obrascon case and when the 28 day notice period starts. The court held that the notice period starts when the Contractor becomes aware, or should have become aware, of the event or circumstance prompting the claim for an extension of time (i.e. prospective delay). The notice period is triggered when a Contractor recognises any delay event that could warrant an extension of time claim, rather than when the project experiences an actual delay. This approach is likely based on the rationale that postponing action until delay occurs undermines the goal of resolving claims swiftly, and avoiding claims during the course of the works. This decision shows a less Contractor friendly approach than that adopted in Obrascon.

Takeaways

Whilst there is some disparity seen in these decisions, these cases show that courts of England and Wales and the DIFC will impose conditions precedent stringently and requirements to give notice should therefore be taken seriously. Even with a strong claim, a Contractor will be prevented from bringing a claim for extension of time and / or additional payment if they have failed to comply with the notice requirements. It remains to be seen how arbitrators in private proceedings will be influenced by the published decisions of the DIFC Court made in relation to construction projects that are carried out under Dubai onshore law. Whilst they are not obligated to follow such decisions, a body of common law is growing in the DIFC that will likely influence such arbitrators, particularly those with a common law background.

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