Civil Law and UAE: PPP (Public-Private Partnership) Disputes

1. Introduction

A Public-Private Partnership (PPP) is a long-term contractual arrangement under which a public authority and a private-sector party cooperate to develop, finance, construct, operate, maintain or manage a public project or service.

Typical UAE PPP sectors include:

• transport;
• water and wastewater;
• electricity and energy;
• healthcare;
• education;
• waste management;
• infrastructure;
• public facilities; and
• technology-enabled public services.

PPP disputes are legally complex because they combine public-law considerations with private contractual obligations.

A PPP dispute may therefore involve:

Government authority + private investor + project company/SPV + lenders + contractors + operators + concession agreement + financing documents + public-interest obligations

The UAE's federal PPP framework is principally found in Federal Law No. 12 of 2023 on Regulating Federal Public-Private Partnerships. Article 31 provides that UAE state courts have jurisdiction over disputes arising from implementation of a project agreement, while permitting the parties to agree to ADR mechanisms applicable in the UAE, including mediation, arbitration and expert determination.

Importantly, PPP regulation in the UAE is not completely uniform across all Emirates. Federal Law No. 12 of 2023 concerns federal PPP projects, while Dubai and Abu Dhabi have their own PPP frameworks.

2. Meaning of a PPP Dispute

A PPP dispute arises when the public and private participants disagree concerning the performance, interpretation, modification, financing, operation, termination or consequences of a PPP arrangement.

Common disputes include:

1. payment disputes;
2. construction delays;
3. cost overruns;
4. variations;
5. performance standards;
6. availability payments;
7. tariffs;
8. government approvals;
9. land/access rights;
10. force majeure;
11. change in law;
12. termination;
13. compensation following termination;
14. concession rights;
15. step-in rights;
16. financing;
17. guarantees;
18. arbitration;
19. jurisdiction; and
20. public-interest intervention.

3. Hybrid Nature of PPP Disputes

PPP contracts are different from ordinary commercial contracts.

Ordinary commercial contract

Private Party A ↔ Private Party B

PPP

Government ↔ Private Party

with:

Public Service + Public Assets + Private Investment + Long-Term Contract

This creates a hybrid legal relationship.

The court may therefore need to consider both:

Private-law principles

• contract;
• breach;
• damages;
• good faith;
• causation;
• compensation;
• termination.

Public-law considerations

• statutory authority;
• public interest;
• government powers;
• public funds;
• regulatory requirements;
• administrative decisions.

4. UAE Federal PPP Law

Federal Law No. 12 of 2023 provides the federal framework for PPP projects.

The law's objectives include improving efficiency, increasing value for public funds and managing financial and operational risks.

It establishes a framework dealing with matters such as:

• identification of PPP projects;
• project teams;
• private-sector participation;
• procurement;
• project agreements;
• project companies;
• financing;
• implementation;
• amendment;
• termination; and
• dispute resolution.

Most importantly for litigation:

Article 31

Disputes arising from implementation of the project agreement fall within the jurisdiction of the UAE state courts, but the parties may agree to ADR mechanisms applicable in the UAE, including:

• mediation;
• arbitration; and
• expert determination. 

This is a very important feature of UAE PPP dispute resolution.

5. Main Types of UAE PPP Disputes

A. Construction disputes

PPP projects frequently involve major construction works.

Typical claims include:

• delay;
• defective work;
• extension of time;
• variations;
• additional costs;
• design responsibility;
• completion certificates.

B. Operation and maintenance disputes

After construction, the private partner may be responsible for operating the facility.

Disputes may concern:

• service standards;
• maintenance;
• availability;
• performance indicators;
• operational costs;
• environmental obligations.

C. Payment disputes

A PPP may involve:

• government payments;
• availability payments;
• concession fees;
• user charges;
• subsidies;
• performance payments.

A disagreement over payment can threaten the financial structure of the entire project.

D. Termination disputes

The public authority may seek termination because of:

• persistent underperformance;
• insolvency;
• breach;
• failure to achieve completion;
• regulatory violations.

The private party may challenge termination.

A major issue then becomes:

What compensation is payable following termination?

6. Case Law

There is an important qualification.

Publicly reported UAE cases specifically decided under Federal Law No. 12 of 2023 are still limited because the federal PPP statute is relatively recent.

Accordingly, the following cases include direct UAE concession/PPP-type cases and closely analogous UAE/DIFC authorities involving concession agreements, long-term project arrangements, government-linked projects, arbitration, jurisdiction and contractual risk allocation.

They should not be described as cases formally interpreting the 2023 Federal PPP Law unless expressly stated.

Case 1 — Normand v Nathaniel [2024] DIFC SCT 125

This is one of the most useful UAE cases for PPP/concession analysis.

The dispute concerned a concession agreement relating to the operation and management of a business.

The claimant sought payment allegedly due under the concession agreement. The Court considered the contractual structure and, importantly, the doctrine of privity of contract.

The Court explained that contractual rights and obligations generally operate between the parties to the contract, although assignment or subrogation may alter the position.

Importance for PPPs

PPP projects frequently involve multiple parties:

Government → Project Company → Operator → Contractor → Lenders

A dispute may arise over who has the legal right to enforce a particular contractual obligation.

The case therefore illustrates:

PPP contractual rights must be traced through the contractual chain.

A government entity cannot necessarily enforce every obligation contained in a downstream contract unless there is a proper legal basis.

Case 2 — Golden Sands Hotel LLC v Brighton Rock Restaurant LLC [2025] DIFC CFI 106

This case concerned a concession agreement under which the defendant was permitted to provide services within a specified area of a hotel.

The Court examined the actual contractual structure and concluded that the arrangement was a concession rather than a lease because:

• access was restricted;
• the owner retained control;
• alterations required consent;
• assignment was prohibited; and
• the agreement expressly stated that no tenancy or proprietary rights were created. 

Importance for PPP disputes

The case demonstrates that courts look at the substance and contractual structure of an arrangement.

A PPP agreement may provide a private party with extensive operational rights without transferring ownership of the underlying public asset.

Thus:

Operational control ≠ Ownership

and:

Concession ≠ Lease

This distinction can affect:

• jurisdiction;
• remedies;
• termination;
• possession;
• property rights;
• compensation.

Case 3 — Paul v Paxton [2026] DIFC ARB 010

This recent case involved a long-running dispute arising from an Emirati Housing Programme construction framework.

The underlying structure included:

• a main contractor;
• a public/employer-side project structure;
• a subcontract;
• payment arrangements linked to upstream payments;
• an arbitration clause;
• proceedings before the Abu Dhabi Courts; and
• subsequent arbitration and DIFC proceedings.

The DIFC Court dealt with the interaction between the arbitration agreement, Abu Dhabi proceedings, an emergency-arbitrator order and anti-suit relief.

Importance for PPP disputes

This is highly relevant by analogy because large public infrastructure projects frequently contain several connected contracts.

It demonstrates the importance of:

• carefully drafted arbitration clauses;
• identifying the correct forum;
• distinguishing main contracts from subcontracts;
• avoiding parallel proceedings;
• respecting emergency-arbitrator mechanisms.

Principle

A complex infrastructure project does not automatically create a single forum for every dispute; jurisdiction depends on the contractual and statutory architecture.

Case 4 — Ledger v Leeor, DIFC ARB 016/2022

The dispute involved a major project agreement under which one party agreed to pay approximately AED 348 million for execution and completion of a project.

The contract contained an Engineer's decision mechanism followed by amicable settlement and arbitration.

The DIFC proceedings concerned the arbitration framework contained in the project contract.

Importance

This case illustrates a typical multi-tier project dispute-resolution mechanism:

Engineer → Amicable Settlement → Arbitration

Such mechanisms are particularly suitable for PPP projects because technical disputes may arise before a project reaches formal arbitration.

Examples:

• delay;
• valuation;
• defects;
• variations;
• performance standards.

PPP lesson

A well-drafted PPP agreement should clearly identify:

• technical determination;
• negotiation;
• mediation;
• expert determination;
• arbitration/court proceedings.

Case 5 — Investment Group Private Ltd v Standard Chartered Bank [2015] DIFC CA 004

This case concerned jurisdiction and contractual choice-of-court issues.

The DIFC Court of Appeal considered whether contractual language submitting disputes to the courts of the UAE could include the DIFC Courts and examined the statutory limits of DIFC jurisdiction.

The Court also emphasised the fundamental principle that parties cannot simply confer jurisdiction on a court where the law does not provide that jurisdiction.

Importance for PPPs

PPP contracts frequently involve:

• federal authorities;
• Emirate-level authorities;
• DIFC entities;
• foreign investors;
• offshore lenders;
• international contractors.

Therefore, jurisdiction clauses require careful drafting.

A PPP contract should distinguish:

Governing law

from:

Jurisdiction

from:

Arbitration seat

from:

Place of enforcement

Case 6 — Lural v Listran & Lokhan [2021] DIFC CA 003

The DIFC Court of Appeal considered an exclusive jurisdiction clause and parallel proceedings before the Abu Dhabi Courts.

The Court held that the DIFC Courts had exclusive jurisdiction in relation to the relevant contractual dispute and dealt with the consequences of proceedings being brought elsewhere.

Importance for PPP disputes

PPP projects can generate disputes involving several jurisdictions.

For example:

Federal authority + Dubai project + DIFC financing vehicle + foreign contractor

can create difficult jurisdictional questions.

Lural illustrates the importance of:

• exclusive jurisdiction clauses;
• forum selection;
• parallel proceedings;
• judicial coordination.

Case 7 — YYY Ltd v ZZZ Ltd [2017] DIFC ARB 005

This dispute arose from a 30-year Hotel Management Agreement containing an arbitration clause.

The dispute focused on whether the individual signing the arbitration clause had sufficient authority to bind the company.

The Court considered the earlier Dubai Cassation decision concerning the authority of the company's director to agree to arbitration.

Importance for PPP disputes

PPP projects often involve a special-purpose company and numerous corporate approvals.

A major PPP agreement should therefore establish:

• who has authority to sign;
• whether board approval is required;
• whether government approval is required;
• whether arbitration requires special authorisation;
• whether amendments were properly authorised.

Principle

A technically well-drafted arbitration clause may fail to operate if the person agreeing to it lacked the required authority.

7. Additional Relevant Authority — Oswin v Otila & Ondray [2025] DIFC ARB 032

This case involved a joint-venture arrangement and an operation and maintenance agreement for a plant.

The contractual framework included:

• UAE governing law;
• negotiation;
• arbitration;
• Abu Dhabi jurisdiction provisions;
• operational responsibilities.

The Court considered the interaction between the different agreements and maintained the contractual allocation of dispute resolution. It also addressed circumstances where maintaining the operational status quo was important because damages alone were inadequate and interruption of plant operations presented significant public risk.

PPP relevance

This is particularly useful for infrastructure PPPs.

A public utility cannot necessarily be allowed to stop operating simply because the private parties are in dispute.

Therefore:

Project continuity can become an important consideration in interim relief.

8. PPP Dispute Resolution Structure

A sophisticated UAE PPP agreement may use a multi-stage system:

Stage 1 — Project-level negotiation

Government representative + private partner.

↓

Stage 2 — Senior management negotiation

Senior representatives attempt settlement.

↓

Stage 3 — Independent expert

Technical issue determined by an engineer/expert.

↓

Stage 4 — Mediation

Confidential settlement process.

↓

Stage 5 — Arbitration

If contractually agreed and legally permitted.

↓

Stage 6 — Court supervision/enforcement

Courts remain relevant to:

• interim relief;
• enforcement;
• annulment/set-aside;
• recognition;
• jurisdictional questions.

Federal PPP Law Article 31 expressly recognises mediation, arbitration and expert determination as possible ADR mechanisms agreed under the applicable UAE framework.

9. PPP Arbitration

Arbitration is particularly attractive for PPP projects because disputes can involve:

• technical evidence;
• large financial claims;
• international investors;
• confidential commercial information;
• complex project documents.

However, arbitration should not be assumed automatically.

The PPP agreement must contain a legally effective arbitration mechanism.

The parties should specify:

• arbitration institution;
• seat;
• governing law;
• number of arbitrators;
• appointment procedure;
• language;
• emergency relief;
• expert evidence;
• consolidation;
• joinder;
• confidentiality.

10. Government and Sovereign Authority

A major PPP question is:

Can a government entity agree to arbitration?

Under the federal PPP framework, Article 31 expressly allows parties to agree to ADR including arbitration.

But this does not mean every government-related dispute is automatically arbitrable.

The analysis can involve:

1. statutory authority;
2. arbitration agreement;
3. subject-matter arbitrability;
4. public policy;
5. procedural validity;
6. enforcement requirements.

11. Public Interest in PPP Disputes

A PPP project often provides an essential public service.

Examples:

• electricity;
• water;
• transport;
• hospitals;
• waste treatment.

Therefore, a court may face a situation where:

Private contractual rights

conflict with:

continuity of public services.

This is one reason why interim relief and project-continuity provisions are particularly important.

The reasoning in Oswin illustrates the relevance of maintaining operational continuity where interruption would create significant public risk.

12. Termination of PPP Agreements

Termination is one of the most complicated PPP disputes.

It may occur because of:

Private-party default

• insolvency;
• failure to perform;
• serious contractual breach;
• failure to meet performance standards.

Government default

• failure to pay;
• failure to provide promised access;
• unlawful interference.

Neutral termination

Sometimes a contract allows termination for reasons not attributable to either party.

Public-interest termination

A PPP may permit government intervention where continued private operation is no longer compatible with public requirements.

13. Compensation After Termination

A termination dispute may require calculation of:

• outstanding payments;
• unpaid investment;
• debt;
• termination value;
• asset value;
• lost profits;
• costs of transition;
• replacement-operator costs;
• damages.

The contract should ideally establish a clear formula.

For example:

Termination Compensation = Debt + Investment Component + Contractual Compensation − Deductions

The exact formula depends on the PPP agreement and applicable law.

14. Force Majeure in PPPs

PPP projects operate for long periods, sometimes decades.

Unexpected events may include:

• natural disasters;
• pandemics;
• war;
• government restrictions;
• major infrastructure failures;
• supply-chain disruption.

The dispute usually concerns:

1. whether the event qualifies as force majeure;
2. whether it caused the delay;
3. whether mitigation was possible;
4. whether payment continues;
5. whether termination becomes available.

The new UAE Civil Transactions Law, effective from 1 June 2026, modernises UAE civil-law rules and includes updated treatment of contractual issues including unforeseen circumstances and restoration of contractual balance.

15. Change in Law

This is particularly important in long-term PPPs.

Suppose:

2027 — PPP signed

2035 — New regulation introduced

The new regulation substantially increases operating costs.

The contract may contain a change-in-law clause.

Possible outcomes include:

• tariff adjustment;
• compensation;
• extension of concession period;
• renegotiation;
• cost sharing;
• termination.

The contract therefore becomes the principal mechanism for allocating regulatory risk, subject to mandatory law.

16. Delay and Extension of Time

PPP construction projects often contain complex schedules.

A delay may result from:

• government approval;
• land access;
• design changes;
• contractor default;
• force majeure;
• utility relocation;
• regulatory intervention.

The dispute may involve:

Delay → Critical Path → Causation → Extension of Time → Cost

Technical expert determination can be particularly useful before formal arbitration.

17. PPP and Project Finance

PPP projects frequently use project financing.

The structure may look like:

Government

↓

PPP Agreement

↓

Project Company/SPV

↓

Construction + Operation

↓

Revenue

↓

Lenders

This creates multiple agreements:

• PPP agreement;
• concession agreement;
• financing agreement;
• direct agreement;
• construction contract;
• O&M agreement;
• shareholder agreement;
• government support agreement.

A dispute under one agreement can therefore affect several others.

18. Step-In Rights

Lenders may negotiate step-in rights.

If the private operator defaults, lenders may be permitted to:

• intervene;
• replace the operator;
• cure defaults;
• appoint a substitute contractor.

This is important because the government may prefer continuation of the public service rather than termination of the entire PPP.

19. Concession vs PPP

Not every concession is necessarily a PPP governed by the federal PPP statute.

The distinction matters.

Concession

Private party receives rights to operate or provide services.

PPP

Broader long-term partnership involving public-sector and private-sector responsibilities, risk allocation and project delivery.

The Golden Sands case demonstrates why the contractual substance matters when determining whether an arrangement is a concession rather than a lease.

20. PPP and Privity of Contract

PPP structures can contain many entities.

For example:

Government → SPV → Operator

A dispute may arise when the government attempts to enforce a contract between:

SPV ↔ Operator

The principle illustrated by Normand v Nathaniel is that contractual rights generally belong to the contractual parties unless assignment, subrogation or another legal mechanism provides otherwise.

Therefore:

PPP complexity does not automatically eliminate contractual privity.

21. PPP and Arbitration Clauses

The YYY v ZZZ case provides an important warning.

The person signing an arbitration clause must have the necessary authority.

For PPPs, this can require checking:

• corporate authority;
• government approvals;
• board resolutions;
• ministerial authority;
• delegated powers;
• project-company constitutional documents.

22. PPP Disputes and Parallel Proceedings

A PPP dispute can generate proceedings in:

• state courts;
• DIFC Courts;
• ADGM Courts;
• arbitration;
• emergency arbitration;
• expert determination.

Lural and Paul v Paxton demonstrate why carefully drafted jurisdiction and arbitration clauses are important in multi-forum disputes.

23. Remedies in PPP Disputes

Possible remedies include:

Monetary remedies

• damages;
• unpaid contractual amounts;
• compensation;
• restitution;
• interest.

Equitable/interim remedies

• injunction;
• preservation orders;
• security;
• emergency relief.

Contractual remedies

• termination;
• suspension;
• extension;
• price adjustment;
• performance orders.

Project-continuity remedies

In appropriate cases, maintaining operations may be particularly important where interruption threatens public services.

24. Important PPP Dispute Issues

25. Six-Case Revision Table

26. Key Principles

Principle 1 — PPP disputes are hybrid disputes

They combine:

Public law + Civil law + Contract + Finance + Infrastructure

Principle 2 — Contract drafting is critical

The PPP agreement should clearly allocate:

• risk;
• payment;
• termination;
• change in law;
• force majeure;
• dispute resolution.

Principle 3 — Jurisdiction must be carefully determined

A PPP may involve several legal systems and institutions.

Contract + statute = jurisdictional starting point.

Principle 4 — Arbitration is possible but not automatic

Federal PPP Law Article 31 allows the parties to agree to ADR, including arbitration.

Principle 5 — Public interest matters

The government is not simply an ordinary commercial counterparty because the PPP may provide an essential public service.

Principle 6 — Project continuity is important

An unresolved dispute should not necessarily result in immediate interruption of a public facility.

Oswin provides a useful illustration of this issue.

27. Simple Example

Suppose a private company builds and operates a desalination plant for a government entity.

The PPP contract says:

• private party finances construction;
• government pays availability payments;
• private party operates the plant for 25 years.

A dispute occurs because the government claims that the plant has failed performance standards.

The private party responds:

“The government changed the technical requirements, causing the failure.”

The legal analysis becomes:

PPP Agreement

↓

Performance Standard

↓

Government Change?

↓

Causation

↓

Contractual Risk Allocation

↓

Expert Determination

↓

Mediation/Arbitration/Court

↓

Compensation or Other Remedy

This is the typical structure of a PPP civil dispute.

28. Conclusion

UAE PPP disputes occupy a distinctive position within civil law because they combine long-term contractual relationships with public infrastructure and government responsibilities.

Federal Law No. 12 of 2023 is particularly important at the federal level. Its Article 31 provides state-court jurisdiction for disputes arising from implementation of PPP project agreements while permitting agreed ADR mechanisms, including mediation, arbitration and expert determination.

The reported UAE/DIFC authorities show several recurring principles. Normand demonstrates the importance of privity in concession arrangements; Golden Sands demonstrates contractual characterisation of concessions; Paul v Paxton and Ledger illustrate the importance of dispute-resolution architecture in major projects; Investment Group and Lural demonstrate jurisdictional problems; YYY v ZZZ highlights authority to agree to arbitration; and Oswin demonstrates the importance of maintaining operational continuity where public services are involved.

Quick Revision Formula

UAE PPP Dispute =

Public Authority + Private Partner + Long-Term Project + Risk Allocation + Contractual Performance + Public Interest + Dispute Resolution

Most important legal sequence

PPP Agreement → Risk Allocation → Performance/Breach → Causation → Expert/Negotiation → Mediation/Arbitration/Court → Remedy

Core principle:

A UAE PPP dispute is not merely an ordinary commercial contract dispute; it requires simultaneous attention to contractual rights, statutory authority, public-interest obligations, project continuity, financing structure and the agreed dispute-resolution mechanism.