Dubai court orders contractor to pay Dh28.7m after subcontractor bankruptcy

Court also dismisses a counterclaim and directs the contractor to bear the legal costs

Dubai: A Dubai commercial court has ordered a construction company to pay Dh28.7 million to an electromechanical company after ruling it was liable for pushing the smaller company into bankruptcy by delaying project payments.

The court also dismissed a counterclaim and directed the contractor to bear legal costs.

The dispute began in 2017 when the two companies signed a subcontract worth Dh113 million for electrical, mechanical, and plumbing works on a Dubai real estate project.

Court records show the subcontractor completed between 99% and 100% of the work, but the main contractor withheld payments and, without justification, liquidated performance and advance payment guarantees.

The subcontractor argued that the non-payment triggered a financial collapse, leaving it unable to pay suppliers, subcontractors, and employees.

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In 2022, the firm was declared bankrupt. A court-appointed engineering expert later determined that Dh77.6 million, including VAT, was owed for the completed works.