By: Adv. Shamsudeen Karunagapally

Email: advshamsudeen@hotmail.com, info@ayshamslaw.com

Senior Legal Consultant of Ayesha Al Dhaheri Advocates and Legal Consultants Dubai and a practicing lawyer in the High Court of Kerala.

 

Many purchasers across the various emirates of the UAE have lost substantial amounts of money invested in real estate projects. Even after obtaining favourable judgments from the courts, many have been unable to recover their investments due to a range of legal, financial, and practical challenges. Recognising the need to safeguard the interests of bona fide purchasers, the Ruler of the Emirate of Dubai issued a decree establishing a Special Tribunal for Unfinished and Cancelled Real Estate Projects. The Tribunal was created to provide an effective mechanism for resolving disputes arising from stalled or cancelled developments and to enhance the protection afforded to affected investors.

In a landmark Case No. 36 of 2024, the Special Tribunal for Unfinished and Cancelled Real Property Projects in Dubai delivered a judgment that reiterated the important role of the Tribunal in disputes relating to unfinished and cancelled real property projects. The judgment highlighted that an innocent purchaser who acquires property in good faith should not bear the consequences of fraudulent actions or disputes involving former developers, owners, or sellers.

In this case, a property was initially transferred through a gift deed to a party and was later sold to two purchasers who constructed a villa on the property and resided there peacefully. Subsequently, an arbitration dispute arose between the original owner of the project and another party, which led to execution proceedings for recovery of a substantial arbitral award. During the execution process, an investigation into the assets of the judgment debtor revealed that several properties had allegedly been transferred through gift deeds to shield valuable land from execution and creditor claims.

The property in question had ultimately been purchased by the current owners in good faith after payment of the full purchase price, and the transfer had been properly registered with the Dubai Land Department. The purchasers had also constructed a house on the property and had been residing there continuously.

However, the earlier gift transfers were later declared null and void on the grounds that they were allegedly intended to shield assets from creditors. As a result, the current owners were informed that their property was included in the execution proceedings and was being offered for public auction.

The purchasers initially approached the Real Estate Court seeking protection of their ownership rights. However, the case was dismissed for lack of jurisdiction because the dispute was considered an execution-related matter connected to a larger project dispute rather than a pure real estate ownership dispute.

The purchasers then approached the Special Tribunal for Unfinished and Cancelled Real Property Projects, which ultimately ruled in their favour. The Tribunal emphasized that the plaintiffs were bona fide purchasers who had lawfully acquired and registered the property without knowledge of the earlier disputes or alleged fraudulent arrangements.

The Tribunal relied on several important legal provisions, including:

  1. Article 1277 of the Civil Transactions Law — Real estate ownership and property rights cannot be transferred between parties or enforced against third parties except through registration. Since the plaintiffs had properly registered their purchase, they acquired a legally protected real estate right that could not be extinguished by a judgment issued in proceedings to which they were not parties.
  2. Article 302 of the Civil Procedures Law No. 42 of 2022 — A third party may file a claim over attached property if they possess:
  • title documents, such as a registered title certificate;
  • possession documents, including utility bills, lease agreements, and proof of occupation; and
  • the right to recover the property based on payment of the purchase price.

3. Article 304 of the Civil Procedures Law — Where a purchaser has a valid claim to recover attached property, liability shifts to the parties responsible for the fraudulent transfer scheme rather than the innocent purchaser acting in good faith.

This judgment demonstrates the importance of the Special Tribunal established under Decree No. (33) of 2020 Concerning the Special Tribunal for Unfinished and Cancelled Real Property Projects in the Emirate of Dubai. The Tribunal was established to provide an efficient and specialized mechanism for resolving disputes arising from unfinished and cancelled real estate projects and to protect affected investors and purchasers.

The Decree applies to unfinished and cancelled real estate projects located within Dubai, excluding projects situated within the boundaries of the Dubai International Financial Centre. The Decree reflects broader governmental intervention aimed at strengthening investor protection and ensuring stability within Dubai’s real estate sector.

Jurisdiction of the Tribunal

  1. Jurisdiction over Pending Cases – The Tribunal has jurisdiction over unresolved cases transferred from the previous tribunal.
  2. Jurisdiction over Unfinished Projects – The Tribunal may hear disputes relating to unfinished projects, including contractual disputes, delays, purchaser claims, developer obligations, and financing disputes.
  3. Jurisdiction over Cancelled Projects – The Tribunal oversees the liquidation of cancelled projects and settles the rights of stakeholders.
  4. Authority to Assign New Developers – The Tribunal may transfer the completion of unfinished projects to another developer.
  5. Jurisdiction over Execution Proceedings – The Tribunal handles execution proceedings, objections, and grievances linked to unfinished or cancelled projects.

Arbitration-Related Powers of the Tribunal

  1. Jurisdiction over Arbitration Awards – The Tribunal has the authority to ratify or annul arbitration awards connected to disputes falling within its jurisdiction.
  2. Relationship with DIFC Court Proceedings – The Tribunal may hear matters connected to proceedings before the DIFC Courts concerning projects located outside DIFC boundaries.
  3. Powers Equivalent to the Court of Appeal – The Tribunal exercises powers equivalent to those granted to the competent Court of Appeal under Federal Law No. 6 of 2018.

Exclusive Jurisdiction of the Tribunal

Restriction on Other Courts and Judicial Bodies – The Tribunal has exclusive jurisdiction over disputes relating to unfinished and cancelled real estate projects, and Dubai courts and judicial entities cannot hear matters falling within its jurisdiction.

Finality and Enforcement of Tribunal Decisions

  1. Tribunal decisions are final and binding on all parties and are not subject to ordinary appeal procedures.
  2. Enforcement through Dubai Courts – Tribunal decisions are enforced through the Dubai Courts Execution Court.

Conclusion

The judgment in Case No. 36 of 2024 highlights the significant role played by the Special Tribunal for Unfinished and Cancelled Real Property Projects in protecting innocent purchasers and ensuring fairness in complex real estate disputes. The decision reinforces the principle that bona fide purchasers who lawfully acquire and register property should not lose their rights due to fraudulent arrangements or disputes involving prior owners or developers.

The case also demonstrates the importance of Decree No. (33) of 2020 in creating a specialized legal framework for resolving disputes connected to unfinished and cancelled projects. By centralizing jurisdiction, strengthening execution oversight, and protecting investor rights, the Tribunal continues to play a crucial role in maintaining confidence and stability in Dubai’s real estate sector.

We at Ayesha Al Dhaheri Advocates & Legal Consultants successfully represented several clients with similar subject matter. Our firm regularly advises and represents clients in complex real estate disputes, including matters relating to unfinished and cancelled real estate property projects, execution proceedings, investor protection, property ownership disputes, arbitration-related real estate claims, and disputes before the Special Tribunal for Unfinished and Cancelled Real Property Projects in Dubai.