Arbitration For Real Estate Disputes In The UAE
Owing to its advantages, arbitration has come to being preferred as the ultimate means of resolving disputes in almost every sphere. Most contracts will have a dispute resolution clause at the end, stating arbitration as the primary method of resolving any dispute between the parties. Arbitration is ideal for commercial matters, since it allows the parties to focus on restoring the terms of the contract, as opposed to exercising their legal rights against each other. The UAE boasts of an extremely well-developed framework of alternate dispute resolution, with arbitration as a chief component. Consequently, a large number of legal disputes, commercial and otherwise, are referred to arbitration, as it ensures a win-win solution for both sides.
While choosing arbitration may seem to be a priority for those looking to get their case determined, it must be kept in mind that not every dispute is arbitrable. This essentially implies that legal issues which affect the public at large may not be suitable for arbitration. For instance, criminal offenses which are punishable with long imprisonment terms or heavy fines may not be ideal for arbitration morally. The UAE Arbitration Law, Federal Law No. 6 of 2018 On Arbitration, clearly lays down, under Article 53(2), that if an arbitration award is presented for enforcement before the Court, it may nullify it if:
- The subject-matter of the dispute is not capable of settlement through arbitration
- The arbitral award is in conflict with public order and public morality of the UAE
Combined with this, Article 3 of the Civil Transactions Law, Federal Law No. 5 of 1985, states the following as matters of public policy if they are consistent with imperative provisions as well as fundamental principles of Sharia:
- Personal status, such as marriage, inheritance, lineage
- Provisions related to system of governance
- Freedom of trade
- Circulation of wealth
- Private ownership
- Rules and foundations on which the society is based
Real estate transactions
Though it may seem reasonable to decide matters pertaining to real estate transactions through arbitration, certain specific matters which are related to public morality or public policy may not be arbitrable.
One such matter is when a developer unilaterally terminates a contract for an off-plan real estate property when the purchaser fails to fulfill the obligations of the same. Article 11 of Dubai Law No. 13 of 2008, on the Interim Real-Estate Register in the Emirate of Dubai, mentions the steps to be taken in case such a situation arises, and Clause (f) of the Article clearly states that the procedure laid down in Article 11 is covered under the definition of public order, non-compliance of which will mean invalidity.
If the subject matter of a dispute involves Article 11 of Dubai Law No. 13 of 2008, and the same is referred to arbitration, it would fall within the jurisdiction of the local courts, and an arbitrator shall not be deemed competent to decide on the matter. Therefore, if the arbitration award of such a dispute is presented before a court for enforcement, it will have the power to nullify it, as per Article 53(2) of the Arbitration Law.
While deciding a method for dispute resolution, the parties need to go through the relevant laws to understand which method will actually be applicable.
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