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Success Story – Real Estate Dispute against a Developer

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We, Khairallah Advocates & Legal Consultants represented a Client (Purchaser) in real estate dispute against one of the leading property Developers in Dubai. The dispute arises from an agreement concerning the sale of a property unit in Dubai entered into in 2008.

Estimated completion date for the property was December 2009 which may be extended for a period not exceeding twelve (12) months. The property was not completed by the original Completion Date. Beyond this, the facts were heavily contested.

The Developer raised jurisdictional objections and claimed that person who signed the SPA on behalf of the Developer had no authority to agree on arbitration hence case must be rejected. The Developer referred to articles from the UAE Companies Law stating that an arbitration agreement must be “expressly granted” by the company’s Articles of Association or objectives. In case of a Limited Liability Company, there are only three ways in which an individual can validly bind the company to arbitration: (i) it is expressly permitted in the Articles of Association (ii) or the company’s objectives; and/or (iii) the General Manager either enters into the arbitration agreement himself or expressly authorizes another individual to do so.

As none of these scenarios came to pass, the Developer asserted that person who signed had no authority to agree to arbitration and submitted witness statement to support their claim.

We firmly challenged above to prove that person who signed the SPA had authority and capacity to agree to all the terms therein, including the arbitration clause and relied on principles of good faith, implied and apparent authority and argued that signatory’s authority can be ratified at a later time.

The Tribunal accepted our arguments and rejected jurisdictional objections raised by the Developer confirming jurisdiction to hear and adjudicate this case. On merits of the case the Developer stated that the Purchaser defaulted since December 2008 when the third instalment of the property was due and relied on Article 247 of the UAE Civil Code to highlight there position to suspend performance of its obligations to carry out the construction of the property and deliver the property by the Completion Date for as long as the Purchaser remained in breach and also challenged that the Purchaser had no right to serve Termination Notice as he was in payment default and property was completed.

The Developer claimed that they served three notices to the Purchaser on 25 May 2009 to extend completion date to June 2010, notice in July 2011 to extend completion date to March 2012 and Property Completion Notice in June 2014.

We challenged authenticity of documents submitted by the Developer and based our claim as per UAE Civil Code particularly Article 272 which states that: 1. In bilateral contracts, if one of the parties does not perform his contractual obligations, the other party may, after serving a formal notification to the debtor, demand the performance of the contract or its rescission. 2. The judge may order the debtor immediate performance of the contract or grant him specified additional time, as he may order rescission with damages, in any case, if deemed justified.

We supported our arguments with principles from Dubai Court of Cessation. Taking our arguments into consideration, the Tribunal ordered the termination of the SPA.

For real estate disputes, feel free to contact us.

Khairallah Legal

Khairallah Advocates & Legal Consultants, a law firm based in Dubai, is one of the leading Law firms in UAE. We have some of the best lawyers in Dubai and provide excellent legal assistance in various areas. Please check out our law practice areas page for more details. Should you require any legal assistance, feel free to contact us.

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