How can the subcontractor sue the employer directly to claim the main contractor’s rights?

The contract between the employer and the contractor regulates the relationship between these parties only, while the subcontracting agreement governs the relationship between the main contractor and the subcontractor. Therefore, there is no direct relationship between the employer and the subcontractor, as they are not bound by any contract that allows either of them to directly require the other to perform his obligation. The employer does not direct the subcontractor to perform his duties, but he is demanded to do so by the main contractor. Furthermore, the subcontractor is not a party to the public works contract, so the employer does not require him directly to perform his obligations. However, the subcontractor may file an indirect action to claim against the employer for the main contractor’s dues under Article (269) of the Civil Transactions Law. The conditions for the indirect action and its legal implications are shown below.

 

How is the indirect action brought by the subcontractor against the employer?

In the context of application Article (269) to the subcontractor when suing the employer, the judgments passed by Omani courts made several conditions, namely:

Firstly: Negligence on the part of the main contractor in claiming his rights owed by the employer, and such negligence has led or will lead to his insolvency.

Secondly: The employer owes a debt to the main contractor, arising from the contract.

Thirdly: The subcontractor files the action in the name of his debtor (the main contractor) as his representative. If the action is filed in his name, the contractor shall be joined to the action; otherwise, the action shall be inadmissible.

 

What are the legal implications of the filing of the indirect action by the subcontractor?

The significant legal implications of this action are as under:

  • From the action filing date, the employer shall refrain from paying the main contractor what he owes him. If, despite that, the employer pays the main contractor all or part of his right, this payment shall not apply to the right of the subcontractor who in this case has the authority to collect his right from the employer within the limits of what was owed by him to the contractor.
  • If the action is ruled in favor of the debtor (the contractor) the judgment amount shall owe to the debtor and must not be taken over by the creditor (the subcontractor) who brought the action.

 

The Conclusion

The legislator granted the subcontractor the right to sue the employer through an indirect action as an exception based on specific conditions when filing the action. Nevertheless, some complicated legal issues relate to indirect action in construction disputes; for example, if the subcontractor appoints another subcontractor, the latter may file the action against main the contractor or the employer. The main contractor may assign his entitlements due from the employer to another party without the subcontractor’s knowledge, which creates procedural litigation problems.

Ali Al Rashdi

ali.alrashdi@sandalaw.om

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