Questions abound on Dubai edict about stalled property projects

News that Dubai is to set up a new judicial committee with the powers to take over and decide all court cases regarding stalled property schemes going through the Dubai and DIFC courts has raised a flurry of questions from lawyers in the emirate.

About 217 property projects were cancelled in Dubai between 2009 and 2011, according to Rera data. Pawan Singh / The National

A decree establishing a new judicial committee with the powers to take over and decide all court cases regarding stalled property schemes going through the Dubai and DIFC courts has raised a flurry of questions from lawyers in the emirate.

According to an announcement late on Monday by the state news agency Wam, a decree issued by Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, all court cases for stalled projects currently going through the Dubai Courts or the courts at the Dubai International Financial Centre, including appeals, will be transferred to the new committee.

The decree will halt all relevant verdicts already issued by the courts. And decisions by the committee will be final with no right of appeal.

The announcement said that the new committee would be responsible for settling all legal disputes between property developers and investors in schemes that have been cancelled by Dubai's Real Estate Regulation Agency (Rera).

No information was given as to who would sit in judgement on the committee or whether its decisions would be public.

"The decision leaves hanging questions about how each case will be handled or who will be handling it and what the eventual outcome will be," said David Nunn, a partner in commercial real estate at Berwin Leighton Paisner's Dubai office.

"But from a purely pragmatic point of view, going to any Dubai court is a very expensive and slow process and this new committee has clearly been set up to speed up cases over stalled property and sort them out, so that may prove to be a positive."

According to Rera data published last year, about 217 property projects were cancelled in Dubai between 2009 and 2011.

Lawyers say there could be as many as 3,000 property cases currently going through the Dubai courts that would be affected by the decree. Many others have never come to court due to the expense and difficulty of bringing a case against developers who have often gone bust or fled the country.

"Investors who have been successful in court or arbitration (against subsequently cancelled developments) will watch closely to determine if their position is treated differently from other purchasers who may or may not have legitimate claims relating to that development, which were not pursued," said Joe Durkin, a partner at Davidson & Co legal consultants.

"It will also need to be addressed as to how cases which are currently sub-judice are addressed by the special committee," Mr Durkin said.

"What will be of interest to investors is whether or not classes of investors will be treated differently, ie, whether or not different groups of investors would receive different returns depending upon if they have pursued a successful legal action against a developer, where the project is cancelled," he added.

Ludmila Yamalova, the founder and managing partner of HPL Yamalova & Plewka, said the new committee would help to consolidate cases in one place