Another landmark ruling by the Dubai Courts nullifying the Sale and Purchase Agreement (SPA) of 30 units, which are not registered with the Dubai Lands Department (DLD) in terms of the Law no. 13 of 2008 i.e., Regulating Initial Property Registration in the Emirate of Dubai.
Our lead Counsel in the Middle East (Mr. Ashraf El Motei) representing the Claimant explains.
FACTS of the case
On 30 December 2015, our Client entered into a Sale and Purchase Agreement (SPA) with one of the renowned developers in Dubai, (Developer/Defendant) for the purchase consideration of AED 36 Million, of a 30-unit Hotel at the iconic World Islands project in Dubai, out of which our client had already paid 20% of the amount. As per the SPA, the project was to be completed by December 2017, an extension for 24 months was granted, however until the end of December 2019, the project was still not completed, and possession of the unit was not delivered to our Client.
Following unsuccessful attempts to resolve the matter amicably with the Developer, our Client decided to file a case before the Dubai Courts to terminate the SPA and for the Developer to refund the advanced amount along with the interest.
The Developer primarily argued that our Client did not pay the registration fees, and it was because of this error the units were not registered in the real estate registry of DLD. The Developer further argued that it was due to Force Majeure Force Majeure clauses in property contracts - what are they and when can they be invoked (judicaregroup.com) events, that the project completion was delayed. These delays were on account of several factors. Firstly, given the project is built on an island at sea, weather fluctuations stopped the project at various intervals, as such the marine tankers were unable to transport the labourers and materials to the project site. Especially since this event is a natural event, it falls under the Force Majeure clause of the SPA. Secondly, issuing the No Objection Certificate (NOC) for construction of this project was delayed by the authorities, thereby, causing further delay in completion of the unit.
We argued that the registering of units in the DLD is an obligation of the Developer according to the terms of Law No. 13 of 2008 Regulating Initial Property Registration in the Emirate of Dubai. Also, the invalidity of the SPA is related to public order and must be judged under any circumstances. There is a legal obligation of the Developer, before starting the project or selling units, to obtain the NOCs and all the necessary licenses, whether it is from the main Developer or from government agencies Therefore, the delays occurred as a result of its own mistakes. We strongly argued that a case of Force Majeure cannot be made out, as alleged by the Developer. The delays accruing to weather fluctuations, as claimed by the Defendant are not unexpected accidents, and it should have taken them into consideration prior to determining the date of completion.
The Court found for our Client and ordered the Nullity of the SPA and for the Developer to refund the paid amount of (AED 7,200,000/-) plus 5% interest as of the date of filing the case until full payment of said compensation is discharged, along with entire litigation fee.
The judgment was passed by the Court of Instance. However, aggrieved by this decision, the Defendant appealed before the Court of Appeal, which rightly upheld this decision. Thereafter, the Defendant again challenged the judgment of the Court of Appeal to the Court of Cassation. The Dubai Court of Cassation decided to uphold the judgment passed by the First Court of Instance, making it final and enforceable against the Defendant.
For further details on the above case, or if you are encountering problems with an investment in the UAE or simply would like more information on our services, a member of our team will be happy to take your call on a confidential basis at 01438 840258 or via email to email@example.com or even arrange a teleconference with Mr. Motei via Zoom/Skype conference to discuss the matter.
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