We can all observe the global developments in the real estate development field, especially in Dubai, which is considered one of the seven most advanced emirates in this sector. Some buyers in Dubai may face obstacles, including delays by some developers in completing their projects. This has raised concerns among some buyers and prompted them to seek legal protection to request contract termination, compensation for the delays, and a refund of the amounts already paid.
Such was the case with our client, which led them to reach our office, Al Safar & Partners Law Firm, for legal consultation and to file a lawsuit to reclaim their rights. In this article, we will briefly explain the lawsuit, the efforts made, and the remarkable results achieved through these efforts in favor of our client.
Background of the Legal Dispute:
According to a reservation form that was not signed by both parties, the plaintiff (our client - A.M.H) reserved the real estate unit shown in the newspaper for a total price of 632,000 dirhams, and the aforementioned reservation form stipulated the date for completing the unit and handing it over to the plaintiff (our client - A.M.H), and it also stipulated that the project be implemented The aforementioned unit is under the hotel apartments system, where the plaintiff (our client - A.M.H) paid a total amount of 581,781 dirhams to the first defendant (the opponent - Real Estate Company D.) according to the aforementioned reservation form.
However, the first defendant (the opponent - Real Estate Company D.) did not fulfill her legal obligations towards the plaintiff (our client - A.M.H), and in particular what was stipulated in the reservation form regarding the date for completing and handing over the unit, which the first defendant (the opponent - Real Estate Company D.) did not abide by, and she is still insisting on violating it despite the passage of more than 4 years from the date of completion, and the first defendant (the opponent - Real Estate Company D.) breached its commitment to draft a final sale agreement for the unit that includes a clause according to which the plaintiff (our client - A.M.H) gets an investment return on his money at a rate of 10% of the purchase amount according to what was agreed upon by the two parties, which prompted the applicant to refuse Signing the final sale agreement, and not only that, as the initial defendant (the opponent - Real Estate Company D.) did not comply with what was stipulated in the copy of the reservation form as well regarding the specifications of the implementation and finishing of the project and the unit subject of the lawsuit, as it became clear to the student upon his visit to the project site that the project is not hotel apartments, but rather it is just an ordinary residential building .
Whereas, the plaintiff (our client - A.M.H) was surprised by the fact that the first defendant (the litigant) notified him that she would resort to the Land and Property Department of the second defendant to cancel the registration of the unit in the name of the plaintiff (our client - A.M.H), with allegations by the first defendant (the opponent - Real Estate Company D.) that the plaintiff (our client - A.M.H) has breached its contractual obligations and is late in paying the price installments. Accordingly, the plaintiff (our client - A.M.H) responded to that notification and stated that the defendant (the opponent - Real Estate Company D.) is the party in breach of his obligations.
First Instance Judgment:
During the initial session, the court ruled on the admissibility of the lawsuit before deciding on the defenses and the subject matter. It accepted the procedural request and appointed a committee of experts in hotel apartment lawsuits to submit a report with several conclusions.
Based on the expert committee's report, the court of first instance ruled that it lacked jurisdiction to hear the case and referred it to the Dubai Land Department and Dubai Development Authority, as they were not parties to the lawsuit. The court also rejected the claim due to the presence of an arbitration clause. Regarding the claim for terminating the reservation form, the court ruled in favor of (our client- A.M.H), obligating the first respondent (Real Estate Company D.) to refund AED 594,738 to our client, along with legal interest at a rate of 5% per annum from the date of the legal claim until full payment. Additionally, the court ordered the first respondent to compensate our client with AED 200,000 and the rest.
Appeal Judgment:
Reasons for the Appeal:
Since the opposing party (the appellant - Real Estate Company D.) was dissatisfied with the final judgment, they filed an appeal requesting the acceptance of the appeal in form and the annulment of the appealed judgment. They also requested the court to rule again by rejecting the lawsuit based on the existence of an arbitration clause. Additionally, they requested that the appellant (our client - A.N.H.) be obligated to pay the expenses and fees for both instances of litigation. These reasons were stated in the explanatory memorandum.
Our Team's Arguments:
In response, our legal team submitted a reply memorandum requesting the rejection of the appeal and affirming the appealed judgment. We emphasized the arguments previously presented.
Appellate Court's Opinion:
Regarding the subject of the appeal and the appellant's arguments against the appealed judgment, which ruled against their payment due to arbitration, the Dubai Court of Cassation has determined that arbitration is an explicit agreement between the parties to confer jurisdiction to an arbitrator, excluding the courts from deciding their disputes. Whether the agreement is in the form of a condition or a mutual understanding, it must be proven in writing, either through a written document signed by both parties or through exchanged letters, telegrams, or other written means of communication.
Furthermore, it was mentioned in the seizure contract that the contracted apartment is a hotel apartment, without any obligation for the appellant to obtain the necessary permits allowing the buyer (our client - A.N.H.) to operate it as a hotel apartment. However, it is not accurate because according to the decree regarding licensing and classification of hotel establishments in Dubai, operating any hotel facility in the emirate is prohibited unless it is licensed and classified by the department. Constructing any hotel facility or converting an existing building into a hotel facility is also prohibited without obtaining prior written approval from the department and fulfilling the conditions stipulated by the applicable laws. Additionally, no residency permit should be issued for any building or conversion of an existing building into a hotel facility without the prior written approval of the department.
Regarding the awarded compensation, despite the lack of evidence of material damages suffered by the appellant (Real Estate Company D.), it is also unfounded. This is due to the fact that the appellant's funds have been held by the respondent company (the seller, the opposing party) since the contract date, depriving the appellant of benefiting from them. Moreover, the deprivation of using the real estate unit, which was the subject of the contract, constitutes, in the view of this court (based on logical and rational considerations), actual material damages suffered by the appellant, justifying their request for compensation. The court rejects the appellant's denial of such damages.
Therefore, the court ruled to accept the appeal in form, reject it in substance, affirm the appealed judgment, and oblige the respondent company (Real Estate Company D.) to bear its expenses. The court also ordered the confiscation of the insurance amount.
Conclusion:
The efforts made by Al Safar & Partners Law Firm on behalf of their client, A.M.H, in a legal dispute against a real estate company D., have yielded significant results. The client initially sought legal consultation and filed a lawsuit due to delays and breaches of contractual obligations by the real estate company regarding the completion and delivery of a reserved real estate unit in Dubai.
The first instance judgment ruled in favor of the client, ordering (the real estate company D). to refund a substantial amount to the client, along with interest and compensation for damages. However, (the real estate company D.) Appealed the Judgment, claiming the existence of an arbitration clause and requesting a reversal of the decision.
Al Safar & Partners Law Firm responded to the appeal, presenting compelling arguments to reject it and uphold the Initial Judgment. The Appellate Court, considering the arguments presented, concluded that arbitration is only applicable when explicitly agreed upon by both parties in writing. The court also highlighted discrepancies in the real estate company's claims and confirmed the damages suffered by the client.
Consequently, the Appellate Court accepted the Appeal in form but rejected it in substance, affirming the Initial Judgment in favor of the client. (The real estate company D). was ordered to bear its expenses, and the insurance amount was confiscated.
Through their diligent efforts, Al Safar & Partners Law Firm successfully protected their client's rights, ensuring compensation and legal redress for the delays and breaches they experienced. This outcome demonstrates the firm's commitment to providing effective legal representation and advocating for its client's interests in real estate disputes.
For further assistance please contact Al Safar & Partners on +971.4.4221944 email reception@alsafarpartners.com - www.alsafarpartners.com