New law for cancelled and unfinished projects in Dubai: How Sheikh Mohammed’s new Tribunal will impact real estate
His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai recently issued Decree No. (33) of 2020, in a bid to update the law of governing unfinished and cancelled real estate projects in Dubai. The Decree has led to the formation of a new committee, the Special Tribunal for Liquidation of Cancelled Real Property Projects(1), to liquidate unfinished or cancelled real estate projects in Dubai and settle the disputes from the previous committee which was set up back in 2013.
The new law will better define the rights and obligations of investors and purchasers of unfinished real estate projects in the region, while streamlining the process for resolving disputes, grievances and complaints. It also results in significant changes from a legal perspective, by granting the Tribunal sole authority to issue final decisions and judgements, in matters the previous committee did not. Additionally, the Decree forbids all courts in Dubai, including DIFC courts, from accepting any disputes, appeals or complaints related to the projects that fall under the jurisdiction of the Tribunal.
How will this impact the CRE landscape in the region?
The new Decree does come across as very positive news, as it may open doors to the completion of stalled projects in Dubai. It will also be of interest to customers who have transactions related to the unfinished or cancelled projects, as the second decree issued in relation to the emirate’s Interim Real Estate Register states that the developer has to refund the entire amount paid by purchasers(2). This applies to situations where a developer failed to start the construction for reasons beyond their control, or if the project was cancelled by the Real Estate Regulatory Agency (RERA). The other major directive issued as part of the new law is the settlement of issues where the previous committee failed to provide a judgement. The Decree promises a more efficient route for resolution of the pending cases and authorizes the Tribunal to make amicable settlements in both normal and urgent matters.
While the new committee will oversee the disputes related to the stalled projects and offer settlement inputs, the decisions they make will stand final and incontestable. Preventing the court from interfering into affairs, it facilitates a sole mandate in decision making. The Real Estate Regulatory Agency (RERA) will support the Tribunal in putting together detailed reports of unfinished and cancelled real estate projects and provide recommendations to assist the Tribunal in dispute settlements.
Another investor friendly initiative, UAE real estate
It isn’t unprecedented for a building project to not make it to completion. Projects can get stalled for a number of reasons, including financial difficulties, political interventions and several other factors. The Tribunal will offer a clearer route for resolution of pending cases and value the interest of investors while doing so. Efficiency is still a matter of discussion for the future, but at the moment, the investors can hope for a faster, more decisive and agreeable settlement of issues related to unfinished projects in the region.