The Special Judicial Committee for Incomplete and Cancelled Real Estate Projects in the Emirate of D

Overview

On the 15th of December 2020, Decree no. 33 of 2020 regarding the establishment of the special judicial committee for incomplete and Cancelled Real Estate Projects in the Emirate of Dubai “New Decree” has entered into force, (supersedes Decree no.21 of 2013 regarding the establishing of a special judicial committee for the liquidation of cancelled real estate projects in the Emirate of Dubai “Old Decree”) which directly impacts the Real Estate Project Dispute Resolution Cases in the Emirate of Dubai, the Decree aims to specify the criteria and conditions upon which the New Committee has jurisdiction as well as the settlement of related rights, and the rights of investors in the Real Estate Project, furthermore, its impact on the parties' agreement to arbitration.

Preamble

The UAE legislator addressed the shortcomings of Decree-Law No. 21 of 2013 “the Old Decree”, by issuing Decree-Law No. 33 of 2020 “the New Decree” where the new legislator remedied the above-mentioned shortcomings as follows:

• The New Decree explicitly states the committee's jurisdiction to settle the rights of investors, developers, and buyers associated with the incomplete real estate project.

Whereas in the Old Decree. Although the UAE legislator, through the issuance of Decree-Law No. 21/2013, granted the appointed committee the authority to consider and adjudicate requests and claims arising between developers and buyers that are related to or caused by a cancelled real estate project, here the decree limited the Committee’s jurisdiction to disputes between developers and buyers only, without addressing the disputes of investors and their rights in the same project.

• The New Decree also explicitly grants the committee all the powers conferred to the Court of Appeal under Federal Arbitration Law No. 6/2018, including the authority to review and validate arbitration provisions.

Therefore, the establishment of the committee does not contradict the parties' agreement to arbitration whereas the legislator has entrusted the committee and its chairman with the same role assigned to the Court of Appeal and its president in this regard, in accordance with the provisions of Arbitration Law 6/2018.

On the other hand, the Old Decree did not discuss the impact of the committee's establishment on the agreed arbitration and whether this agreement remains valid between the parties, or whether the committee resolves the dispute disregarding this agreement. Additionally, the decree did not address the effect of the committee's establishment on the jurisdiction to consider arbitration measures, including the nullity and validity of arbitration provisions, in accordance with the provisions of Federal Arbitration Law No. 6 of 2018.

Investors' Rights Related to The Incomplete or Canceled Project.

The legislator in Old Decree did not explicitly address the rights of investors related to incomplete or cancelled Real Estate projects. It only focused on the committee's jurisdiction to consider and decide on the rights of developers and buyers of the cancelled Real Estate Project. This left the jurisdiction to consider the rights of investors related to the project to the courts. However, in the New Decree, the legislator addressed this issue in paragraphs (6) and (8) of Article (6) of the decree specifically assigned the Special Judicial Committee the jurisdiction to determine the rights of developers, investors, and buyers associated with the incomplete or cancelled Real Estate Project. Therefore, the legislator granted exclusive jurisdiction to the judicial committee to consider and settle the rights of developers, investors, and buyers in the incomplete or cancelled real estate project.

The Consistency of the Judicial Committee with the Arbitration Agreement.

In the Old Decree, the legislator did not explicitly or implicitly address the impact of the committee's jurisdiction on the arbitration agreement in cases where a decision was issued to cancel the Real Estate Project. However, the legislator addressed this issue later in the New Decree, specifically article (8) of the decree clearly states in paragraphs (a) and (b) that the committee has the authority to exercise all the powers and jurisdictions granted to the Court of Appeal under Federal Arbitration Law No. 6/2018, including considering the nullity of arbitration provisions and their validation. The chairman of the committee also has the authority to exercise all the powers specified for the chief judge of the Court of Appeal under the Arbitration Law No. 6 of 2018. Therefore, the establishment of the judicial committee does not affect the parties' agreement to arbitration, nor does it prevent the parties from resorting to arbitration according to their agreement. In this case, the committee acts as a substitute for the Court of Appeal and examines all arbitration measures, including considering and ruling on challenges to arbitration provisions and requests for the validation of such provisions, following the procedures, cases, and deadlines stipulated in Arbitration Law No. 6 of 2018 as well as the requests submitted to the Dubai International Arbitration Center and the committee’s jurisdiction to said requests for Real Estate Projects located outside the geographical scope of the Dubai International Financial Center.

Conclusion

The judicial committee established under Decree no. 33 of 2020 “the New Decree” in Dubai is specialized in resolving the rights of buyers, developers, and according to the said Decree “investors” in incomplete or cancelled Real Estate Projects. Furthermore, this committee does not contradict the Arbitration Agreement between the parties but replaces the Court of Appeal in arbitration matters and settling any disputes related to them, including challenges to arbitration awards and their enforcement.