Dubai – Simply no rights for investors ‘Unclear law is threat to realty’ – The 100 % investor risk Dubai property market
Posted by 7starsdubai on June 29, 2008
|original published Emirates Business 24/7
Hamed Al Sewerky on Thursday, June 19, 2008
Legal expert Dr Habib Al Mulla says Dubai’s real estate market could suffer because of what he describes as “judicial vacuum”.
He believes there is conflict between the roles of a number of organisations responsible for the sector.
And he says many aspects of the real estate law are unclear and out of step with developments in the sector in Dubai.
In an exclusive interview with Emirates Business, Dr Al Mulla – founder and Managing Partner of a Dubai-based law firm that bears his name – calls on those responsible for the sector to end the confusion.
—How would you describe the legislation that applies to Dubai’s real estate sector?
Dubai experienced a real estate boom without full legislation being in place leaving a judicial vacuum in place. Although the period passed off peacefully there was a risk of disasters in the absence of adequate legal procedures and regulations. But now we are entering a stage where there is more organisation and we have seen the introduction of escrow accounts.
I wish such accounts had existed at the beginning of the period of real estate growth because they are the only guarantee for investors in the sector.
—What do you mean by judicial vacuum?
Recently a proposal to set up a committee to settle real estate disputes was put forward and it was followed by the idea of setting up a property court. The first idea is good, but the responsibilities of the committee are still unclear plus the committee has not yet been established even though its launch was announced in December. What is surprising is that after the decision to set up the committee was issued the courts refused to hear real estate cases, even though the committee had not yet been formed. Courts should not refuse cases before the committee is set up.
—But the Real Estate Regulatory Agency (Rera) deals with these kinds of complaints and disagreements.
—Are we heading for a legislation or a litigation crisis?
—The legislative reality of the property sector is like a fireball thrown by one responsible body to another without taking into consideration the requirements of justice. The setting up of the property court ignores the rights of people to resort to [general] courts to settle disputes as it gave the property court the right to look into arbitration decisions.
—How is Rera’s complaints procedure working out?
In addition not all complaints are accepted and receipts indicating that the complaints have been received are not given to clients.
—How would you resolve this crisis?
—If we are not able to set up specialised courts without federal legislation then let us leave it to the normal courts. General law is enough and we can add to it and develop it instead of robbing the legal system of the ability to handle issues in a comprehensive and thorough manner.
—What can investors in real estate sector, especially small ones, do?
—But does repeated intervention by legislators not conflict with the principles of a free economy?
—A free economy does not mean non-intervention by legislators. It means parties having the freedom to enter into contracts in a way that does not harm their interests. And what is happening now is that there is a large group of consumers who are suffering injustice at the hands of developers because of the absence of a legislative tool.
—Do some of these practices amount to criminal acts?
—What are the most significant negative practices that your firm comes across?
—Where can real estate legislative reform start?
—Do you prefer local or federal legislation?
PROFILE: Dr Habib Al Mulla, Founder and Managing Partner of Habib Al Mulla and Company
Dr Habib Al Mulla has a PhD from Cambridge in the United Kingdom, an LLM from Harvard and a BA in Shariah, civil and criminal law from the UAE University.
He is licensed to appear in all courts in the UAE and specialises in commercial and corporate transactions, internet technology, intellectual property rights and banking.
Al Mulla is a member of the Federal National Council and former Chairman of the Dubai Financial Services Authority.
He founded Habib Al Mulla and Company in 1984 and the firm has become one of the largest of its kind in Dubai.
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