Commercial parties often keep working after a fixed-term contract lapses, never quite getting round to signing the renewal. This July 2026 arbitrateAD final award — in which our team acted for the successful claimant — confirms that the original terms continue to govern that conduct, that a property manager may lawfully down tools when it is not paid, and that a counterclaim founded on a different contract has no home in the arbitration. The claim succeeded in full; both counterclaims fell away.
1. The dispute
Our client, a real estate management company, managed a residential tower in Abu Dhabi under a property-management agreement (the PMA). The agreement had been novated to our client with the respondent’s written consent. Our client continued to provide services for roughly nineteen months after the PMA’s fixed term expired, invoicing throughout, but was not paid. It claimed the outstanding management fee and a contractual performance fee.
The respondent, a general trading company, denied liability on several grounds and counterclaimed for lease-renewal fees said to be due under an entirely different, earlier agreement, together with moral damages for the alleged abandonment of the site.
2. Novation, and performance after expiry
Two threshold points were resolved quickly. The novation had been effected by a letter that the respondent itself signed and stamped; its validity was never challenged, so our client was entitled to enforce the PMA.
More useful is the arbitrator’s treatment of the period after the fixed term ended. No renewal was ever signed, and the respondent argued that no binding agreement therefore governed the later period. The arbitrator disagreed. The parties had continued to perform on the same terms: services were rendered, invoices issued, and neither side objected at the time. Tellingly, the respondent’s own defence accepted that the agreed rate was 1.3%. The “expired contract” defence was unsustainable, and the original rate continued to apply.
3. Silence at the time defeats criticism later
The respondent alleged weak and deficient services, tenant complaints and a decline in the building’s value. None of it appeared in the pleadings until the hearing stage, and none was supported by a complaint log, a notice of breach, or any contemporaneous record. The arbitrator held the respondent had not discharged its burden: a party that raises no objection while services are being delivered cannot manufacture a performance defence once the invoices fall due.
4. Suspension for non-payment was lawful
The PMA allowed the manager to suspend its obligations if unpaid by the due date, on at least fourteen days’ notice with reasons. Our client issued a written notice of default identifying the outstanding balance and the property, gave the full fourteen days, and suspended only after the period had long lapsed. The arbitrator found each contractual requirement satisfied.
She also rejected the suggestion that a longer notice period or further courtesy negotiation was required: that is a subjective standard the contract does not impose. Withholding performance in the face of the counterparty’s own default is expressly supported by Article 247 of the Civil Transactions Law.
5. The threshold clause means what it says
The performance fee was payable if rental income reached AED 17 million, the contract defining “actual rental income” by reference to the active occupational leases on the last contractual day of the term. Our client’s expert valued those leases at about AED 18.2 million, clearing the threshold.
The respondent argued the threshold was missed, first on the basis of sums actually collected, later because the calculation included leases commencing before the PMA. Both failed: the contract nominates a lease-based test, not a collections-based one, and it says nothing about lease commencement dates. As the arbitrator put it, no reasonable reading could substitute a different methodology for the one the parties expressly agreed. A late allegation that the invoice was “fabricated” sat poorly with the respondent’s earlier engagement with it on the merits.
6. Two contractual mechanisms, not one inflated rate
Much of the defence rested on the claim that our client had charged 2.3%. It had not. The pleaded case was always the 1.3% management fee plus the separate 1% performance fee under a different schedule. The arbitrator found the respondent had conflated two distinct mechanisms into a single inflated rate that no one had ever charged — and that the respondent’s own pleaded figure for the management fee matched our client’s almost to the fil.
7. Expert evidence that strays into law carries no weight
A practical warning for both sides. The respondent’s accounting expert opined on entitlement, breach, jurisdiction and the validity of the claim — matters for counsel and the tribunal, not a quantum expert. The arbitrator gave those portions no weight, and noted the report was internally inconsistent, accepting that management fees were due while concluding that non-payment was no breach. A reply report filed after the hearing without leave was admitted in the interests of due process, but the procedural irregularity was recorded.
8. Where our client did not succeed
Two aspects went the other way, and both are instructive:
- Pre-award interest was refused. Although Article 72 of the Commercial Transactions Law permits interest up to 9%, our client had not pleaded the individual invoice dates, when each was received, or the date from which interest ran. The arbitrator declined to construct that case, and awarded post-award interest at 9% only.
- Compensatory damages were dismissed. The claim under Articles 292–293 was advanced without quantum or proof of causation, and so could not succeed.
- Legal costs were cut by 30%. Three senior associates had billed simultaneously for substantially the same tasks at the request-for-arbitration stage — over a quarter of the total costs claim for a short, straightforward filing. Without task-specific narratives the arbitrator could not verify the time as reasonably incurred. Expert fees were allowed in full, and 85% of the arbitration costs were shifted to the respondent.
9. A counterclaim under another contract has no home here
The counterclaim for lease-renewal fees was founded on an earlier agreement between different parties — one that contained no arbitration clause at all, but instead referred disputes to the Abu Dhabi courts. The respondent pointed to a chain of transfer letters, but produced nothing amounting to an effective assignment or novation of that agreement to either party.
The arbitrator held she had no inherent jurisdiction and could decide only what the parties had agreed to arbitrate. Nothing in the PMA incorporated the earlier agreement or extended the arbitration clause to it, so the counterclaim was dismissed for want of jurisdiction. The moral-damages counterclaim also failed: it depended on the suspension being wrongful, which it was not, and no financial evidence of loss was produced. The record in fact showed a substantial handover pack had been delivered to the incoming manager.
Practical takeaways
- Working on after expiry is not a legal vacuum — conduct carries the old terms forward. But sign the renewal; it removes a whole line of defence.
- Object in writing, at the time. Service complaints first voiced at the hearing carry no weight.
- Follow the suspension clause to the letter: written notice, stated reasons, the full notice period, then act.
- Threshold clauses are construed as drafted. If you mean collections rather than contracted leases, say so.
- Keep quantum experts to quantum; legal opinions in an expert report get discounted.
- Plead interest properly — invoice dates, receipt dates, due dates and the accrual date — or lose the pre-award period.
- Staff proportionately and keep task-specific time narratives, or expect a percentage cut to recoverable costs.
- A counterclaim must arise under the contract containing the arbitration agreement; a different contract needs its own forum.
Sources & citations
- Judgment: arbitrateAD Case No. 2025-008 (arbitrateAD (Abu Dhabi International Arbitration Centre) — sole arbitrator, 2024 Rules; seat: Abu Dhabi, UAE). Final award dated 20 July 2026 in arbitrateAD Case No. 2025-008 (seat: Abu Dhabi). Arbitral awards are confidential and are not publicly published; a copy is on file with the firm. See the ADGM Courts judgments database.
Rules & practice directions cited
- arbitrateAD Arbitration Rules 2024 — incl. Arts. 31 (evidence) and 50 (costs)
- UAE Federal Arbitration Law No. 6 of 2018
- UAE Commercial Transactions Law No. 50 of 2022 — Art. 72 (interest, capped at 9%)
- UAE Civil Transactions Law — Arts. 246 (good faith), 247 (withholding performance), 253 (privity), 292–293 (compensation)
This case note is for general information only and does not constitute legal advice. For advice on an ADGM debt-recovery, enforcement or set-aside matter, please contact us. Last updated: 20 July 2026.