UAE Civil Code 2026: Decennial liability and subcontractors - subrogation and recovery implications

The new UAE Civil Code - Federal Decree-Law (No. 25 of 2025) - effective from 1 June 2026, represents the most wide-ranging changes in decades. This bulletin forms part of Kennedys’ series analysing how selected reforms may affect insurers.

The decennial liability regime in the UAE exposes contractors and design consultants to strict liability (i.e. liability not requiring proof of fault) for serious defects in the structure or safety of buildings for a period of ten years following completion. 

The current law is silent on the extent to which a contractor or designer held liable under this statutory regime could pursue recoveries against other responsible parties in the contractual chain, and in particular whether decennial liability itself could be relied upon as a basis for recovery against subcontractors or suppliers.

The new Civil Code introduces an express provision, stating: “The provisions of this Article do not apply to any right of recourse the contractor may have against subcontractors”.

This clarification confirms two things. Firstly, the law anticipates and expressly preserves the possibility of recovery against subcontractors. Secondly, it makes clear that strict decennial liability does not extend to such recovery actions. A contractor or designer seeking recovery will therefore need to establish fault or breach of contract, together with causation of loss.

This liability landscape gives rise to practical obstacles for those subject to decennial liability and their insurers. The applicable limitation period for claims under commercial construction contracts is five years. This means that recovery actions against subcontractors could become time-barred well before a decennial claim is asserted against the contractor or its insurers.

For insurers, the key takeaways are:

• Subrogated recovery after a finding of decennial liability is available, but not on a strict liability basis. 
• Where decennial liability is in issue, insurers should be alert to potential limitation concerns on possible recoveries. Ten-year liability may not apply to the downstream recovery, and an early and proactive recovery strategy should be considered.
• Successful recoveries will depend on careful analysis of contractual obligations and early collection of supportive evidence.

To discuss these changes and how they will affect your organisation, please contact a member of our team. Stay tuned for the latest updates in this series.