Dubai Municipality suspends two engineering firms: new rules and risks for construction consultants

Dubai Municipality has announced that the Committee of Registration and Licensing the Practice of Engineering Consultancy and Contracting has issued a decision to suspend two engineering consultancy firms and bar them from licensing any new projects for a period of six months.

According to the Municipality, the consultants’ conduct not only breached established standards but also posed potential harm to property owners and developers, leading to swift regulatory action.

The Dubai Municipality’s actions indicate increased scrutiny on how professional construction consultants conduct their work, particularly regarding adherence to licensing conditions, compliance with technical regulations, upholding professional and ethical standards and protecting the interests of clients. Firms that fall short risk not only reputational damage but also severe penalties, including the suspension of operations, which could in turn expose them to potential legal or contractual claims. This development serves as a reminder to all professional consultants operating in Dubai’s construction sector that regulatory compliance and professional integrity are not optional – they are essential to avoiding operational disruptions and the financial consequences of enforcement.

Pursuant to the laws regulating engineering consultancies in Dubai, the engineering profession may only be practiced through an entity holding a valid licence issued by the competent authority. The term “engineering profession” is broadly defined under Local Order No. (89) of 1994 and its implementing regulations to encompass, among other disciplines, architecture consultancy, architectural engineering and civil engineering consultancy. Accordingly, any entity seeking to provide engineering services in Dubai should do so through an appropriately licensed engineering office and ensure it is complying with local laws and regulations.

In parallel, the Dubai Municipality has also announced a significant update to its Contractor and Engineering Consultancy Rating System, set to come into force in early 2026.  This new framework aims to provide a more integrated and comprehensive method of evaluating the performance of construction companies and engineering consultancies across the emirate.

Key features of the revised system will include expanded performance indicators, stricter assessment criteria, alignment with global best practices and greater focus on sustainability, innovation and digital transformation.

This initiative is part of Dubai’s broader strategy to elevate its construction industry to a more intelligent, sustainable and globally competitive standard.

Given the new enforcement climate and upcoming regulatory changes, we recommend that all construction consultants:

1. conduct a comprehensive internal audit of current licensing, regulatory compliance, and ethical standards;
2. reassess contracts and service agreements to ensure they reflect and reinforce updated professional obligations;
3. prepare for the new rating system by aligning current operations with anticipated performance criteria; and
4. invest in training and governance to ensure all staff and project teams are aware of and compliant with evolving legal requirements.

These developments also have potential implications for professional indemnity (“PI”) and directors’ and officers’ liability insurance (“D&O”). Increased regulatory scrutiny and the risk of penalties, including suspension or loss of licence, heighten the likelihood of claims arising from alleged professional negligence, regulatory breaches, or management failures. Insurers may respond with higher premiums, stricter policy conditions, or more rigorous disclosure requirements. Firms should proactively review their PI and D&O cover to ensure adequate protection considering the evolving regulatory environment.

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