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Sales down, disputes up

Sales down, disputes up

One aspect of business in the economic slowdown has seen a huge increase: The number of property disputes has surged. Good for lawyers, bad for everyone else.

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June 8, 2010 3:25 by



The number of property and construction disputes heard at the Dubai International Arbitration Center (DIAC) more than doubled last year, reports the National.

The massive surge in cases is a direct result of the financial crisis, which really took hold in Dubai last year, and which hit the real estate sector particularly hard. The DIAC handled 206 cases in 2009, compared with just 100 in 2008. Of these, 126 were property related, and 80 in construction.

The report says that the center’s workload is expected to increase again this year, as the fallout to the crisis continues to be felt, and because the recovery will be slow.

The rise in cases represents bad news for almost everyone involved – it’s in everyone’s interest to successfully raise the finance, complete the project, pay the contractors, sell the properties and fulfill obligations to investors. But for those in the legal profession, business has been good: DIAC has had to hire more legal experts to handle the backlog, and law firms have seen a big rise in demand for their services.

The confirmation of the increase in cases – which was, of course, expected – follows the news last month that hundreds of cancellation notices were being sent out by Dubai developers to purchasers who had not kept up with their repayments. Developers including Emaar, Omniyat Properties and Al Fajer Real Estate took the step, through the Land Department. It’s the first on the way towards repossessions.

The trouble is, many of those behind in payments have yet to receive the keys to their investments (even in high profile developments, such as the Burj Khalifa) and some have seen projects grind to a halt. For these investors, the devil is in the detail – did their contracts specify a payment schedule relative to building process? Was there a specified completion date? Does the contract contain a RERA approved repayment schedule? These are just a few of the many questions that unlucky purchasers may have to ask themselves. Once again, a gift for those in the legal profession.

Fortunately, the successful and transparent resolution of these cases seems to be a priority for the government. Just days ago UAE Minister of the Economy Sultan Bin Saeed Al Mansoori inaugurated the conference for the “Draft Federal Law of Arbitration.”

Al Mansoori highlighted the importance of professional arbitration to boost investor confidence and strengthen the investment environment of the UAE. “Arbitration is one of the key instruments to resolve disputes amicably and thus enhance investor confidence in the economy’s fundamentals to support businesses,” he said.

The government recognizes that a recovery in the real estate sector depends on investor confidence, and this confidence comes in part from how disputes are handled.



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