Decennial Liability Insurance in The Omani Law

The Omani Law impose upon contractors and architects/engineers (referred to as “engineers” hereafter) to guarantee the design and construction works they implemented for ten years. The provisions related to the decennial liability insurance determine as a public order as stated in article 636 of the Civile Transaction Law No. 29/2013 which says: “Any clause that exempts the contractor or the engineer from the liability or limits such liability shall be void.” As a result, the law prohibits agreeing on exemption or limitation of the decennial liability. Also, it is an assumed responsibility, meaning the employer is not required to prove the fault of the contractor or engineers as long as the total or partial collapse or defect affecting the stability or safety of the building or fixed installation has occurred.

This article will explain the legal articles that governed the decennial liability insurance, the responsible and beneficial parties, and the conditions to implement the decennial liability.

Legislation Relevant to Decennial Liability Insurance

The Omani legislator regulated the decennial liability in two articles, Article 634 of the Civil Transactions Law No. 29 of 2013 promulgated on May 6, 2013, which reads:

“(1) Both the engineer and the contractor shall be jointly liable for a period of ten years for any total or partial collapse of the buildings or other fixed facilities constructed thereby, and for any defect which threatens the stability or safety of the building, unless the contract specifies a longer period. The above shall apply unless the contracting parties intend that such installations should remain in place for a period of less than ten years.

(2) The warranty set forth in the foregoing Article shall include any defects existing in the buildings and facilities, which endanger the safety and endurance of building.

(3) The period of ten years shall commence as from the time of delivery of the work.”

Also, the decennial liability is stipulated in the article 22 of the Law on the Regulation of Engineering Consulting Firms No. 27 of 2016 promulgated on May 12, 2016, which reads as follows:

“The licensed designer or supervisor of implementation shall be liable, jointly with the contractor, for any mistakes or defects in the projects designed by him or implemented under his supervision, even if the defect is due to the land on which the project is built or if the employer authorised the establishment of defective enterprises, for a period of (10) ten years from the date of taking over of such enterprises.

If the work of the office was limited to the design without being assigned to supervise the implementation, it shall not be liable Oman Sultani Decree No. 27/2016 On the Issuance of the Law Regulating the Work of Consulting Engineering Offices
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If the work of the office was limited to the design without being assigned to supervise the implementation, it shall not be liable for the defects resulting from the design. Any agreement or condition intended to exempt or reduce the guarantee shall be considered void.

The liability lawsuit shall be forfeited after (3) three years from the date of detection of the error, defect or violation, without taking actions of filing the said lawsuit.”

The Parties Responsible for The Decennial Liability

The contractor and the engineers are liable for the decennial liability according to their contribution to the works, and the court may decide that either one of them is liable or apportion liability equally in case it is not possible to determine the contribution of each of them. It is noteworthy that, although the law is silent regarding the engineers participate in designing or consulting without havening a certificate or a license from the authority, Al Sanhoury believes that the engineer shall be liable, for ten 10 years, for the defects as long as the engineer is proved to be practicing the architect’s assignment.

Also, the buyers may sue the developers in respect of defects based on the decennial liability provisions. Therefore, in the jointly owned properties, developers are liable to remedy defects in structural elements for a period of ten years from the date of completion.

Who Does Decennial Liability Benefit?

The employer mainly benefits from the decennial liability insurance as the party engaged the contractor and the engineer to carry out the construction work. However, the employer in the subcontract does not benefit from decennial insurance; instead, the employer can sue the subcontractor for any defects within the period fixed by the customs of the profession.

The singular successor of the owner of the building, such as the buyer, the heir and the assignee, can also benefit from the decennial insurance as they shall have a right of recourse against the contractor or the engineer with respect to the decennial liability if a defect that threatens the safety or durability of the building appears within ten years. Although there is no explicit provision in the clauses of the construction contract determining that the singular successor will benefit from the said insurance, such benefit is established under the text of the article 160 of the Civil Transactions Law, which reads as follows: “.The effects of the contract shall extend to the contracting parties and their general successors without prejudice to the rules relating to inheritance unless it appears from the contract or from the nature of the transaction or from the provisions of the Law that the effects were not to extend to a general successor”.

The Conditions For The Realization of The Decennial Liability Insurance

Articles 634 and 637 of the Civil Transactions Law contained substantive and formal conditions for the application of the decennial liability insurance, which are:

1. Contracting for the construction of fixed structures

Article (634/1) requires applying for the decennial liability insurance, that the object of the contract must be the construction of fixed structures. Therefore, the decennial liability cannot be obtained in respect of repair and decoration works, nor does it apply to the construction of structures that can be dismantled, installed and easily moved from one place to another.

In its judgment rendered in case number 24/99 on December 21, 1999, the Commercial Court ruled that the decennial liability insurance shall not apply if the defect is in the paint, tiles or doors or in other parts of the building so that it would not threaten the integrity or durability of the building. The Authority decided that a short insurance period determined by the customs of the industry shall apply to this type of defects.

2. The collapse of the construction or the presence of a defect that threatens its soundness and safety

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There is a distinction between construction defects and non-conformance of the work with the specifications. The decennial insurance covers the defects that threaten the durability of the building or make the construction unfit for its intended purpose. However, if the structure is distinct from the design, this shall not be subject to the decennial liability insurance as long as the construction meets the intended purpose. However, the employer can claim compensation from the contractor and the engineer based on the contractual liability if its conditions are met; for example, the employer can be compensated for the difference in the cost of the materials paid to the contractor for works not carried out.

3. Period of Decennial Liability

The liability lasts for ten years, commence from the time of delivery of the works and three years to file a decennial liability suit calculated from the occurrence of the collapse or the discovery of the defect, based on Articles 634 and 637 of the Civil Transactions Law and Article 22 of the Law on the Regulation of Engineering Consulting Offices.

In practice, there is no challenge in establishing the time of the demolition and the discovery of the defect, as it is a material fact that can be proven by all means of proof. However, there are obstacles in determining the entry into force of the decennial liability period, particularly in the case of a phased delivery or delivery of the project in temporary and final stages, in the absence of an explicit agreement. The same challenges arise regarding the defects whose effects worsen over time and repair some flaws during the warranty period. Is a new period shall be calculated for the employer to ensure that the repair work of those defects is well carried out? These issues have no explicit legal provision, and they will be further complicated if the contract does not regulate them.

Conclusion

The provisions related to decennial liability determine as a public order matter; therefore, it is not permissible for the parties to the contract to agree otherwise than these provisions. The courts concluded that the employer is exempt from the burden of proof the fault of both the contractor and engineer independently; it is sufficient only to prove the existence of defects in the construction that threaten its safety and integrity. On the other hand, the employer or any other beneficiary from the decennial liability must file a claim within a specified amount of time.

Ali Al Rashdi

ali.alrashdi@sandalaw.om

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