The language of contracts is a matter of their construction

The use of a common language when drawing up contracts enables a clearer understanding of agreements. But, as Nick Carnell, lead partner, Kennedys, explains, the true meaning can be interpreted in different ways.

COMMENT, Business

George Bernard Shaw famously described the English and Americans as: "Two nations divided by a common language." Applied to the UAE, this seems especially pertinent - its construction industry is comprised of people from every corner of the world. And the single feature most have in common is that, in the majority of instances, the language in which they do business and hence the preferred language of contracts is English.

Most of the time this works extremely well. For a lawyer this provides a useful reminder that what matters is that language is a means of communication and becoming obsessive over grammar or style is unhelpful. But should disputes occur, the importance of what the parties have actually said and written becomes crucial. Here there are some acute differences between the approaches adopted under UAE law and that which would be encountered under a common law system such as England and Wales.

The use of English owes much to the fact that it is the most commonly spoken second language, and many of those for whom it is a first language cannot speak anything else.

The problem is easier to identify than to solve, especially where the parties have entered a contract incorporating a series of amendments "borrowed" from a previous contract, and without a great deal of thought as to whether what they have agreed really suits their requirements. They may well then have undertaken various changes to the contract which have been recorded - or not - in correspondence which might be described as meaning one thing and saying another.

The UAE Civil Transactions Code Article 258(1) makes it clear that: "The criterion in the construction of contracts is intentions and meanings and not words and form." A little confusingly, Article 265 provides that if the wording is plain it may not be departed from, by way of interpretation, to ascertain the intention of the parties. Article 265(2) then provides that if there is scope for an interpretive approach an enquiry shall be conducted to ascertain the true intentions of the parties.

Therefore, in all but the clearest cases, regard will be had to external evidence as to the intentions of the parties. The common law position contrasts with this; documents will be construed according to the words used. No regard may be had to what the parties may have intended, although in determining the meaning of the words used, a court can look at the surrounding matrix of facts.

There is much to be said for each. The classic explanation of the common law approach appears in the 1971 House of Lords case Prenn-v-Simmonds where it was said that evidence of prior negotiations ought not to be admitted because it was unhelpful - parties' positions would change as discussions took place and only with the final document would it be clear what they had agreed. Subsequent decisions have made it clear that the courts will not ‘undo a bad bargain'.

However, this approach has limitations, especially if the words on the page do not reflect what the parties meant or understood. It is also easy to see that if documents need to be translated into Arabic, attempting to apply a policy of strictly interpreting the words used begins to look unwise. The presumption that what is said actually reflects what the parties have agreed simply does not follow.

It is even less helpful where the words on the page have been adapted from an earlier version or where the contract simply represents what the parties had done last time or what they thought they had done. In these circumstances, construing the document itself may produce absurd results; but since the parties' intentions may bear little relation to the document, taking a more subjective approach may simply result in the contract becoming largely meaningless.

Of course this works both ways - where the parties have approached the task effectively, and where what they have recorded not only makes sense but reflects what they meant, then either approach ought to produce the same end.

At first blush this may look like another call for English cultural hegemony over the industry - imposing dominance through the use of language. But if anything the opposite is the case - the use of English owes much to the fact that it is the most commonly spoken second language, and many of those for whom it is a first language cannot speak anything else. What is undeniable is that as the construction industry in this country continues to develop the task of documenting agreements and obligations will continue to grow in importance.

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