Dubai Property Court Disaster – Four Judges and over 1000 cases
Posted by 7starsdubai on May 24, 2010
The hearing begins and a few words and papers are exchanged between the judge and the lawyers representing each side.
Within minutes, it is all over. Claimants and defendants are quickly ushered out of the courtroom as their respective lawyers whisper a roughly translated version of the judge’s ruling. Moments later, the next case begins.
Welcome to Dubai’s Property Court, a division of the emirate’s legal system that has been dealing with the fallout of its property crisis since September 2008.
As case files spill out of a room one floor down from the court, officials decline to reveal how many property disputes are under way or pending. A clerk in charge of registering cases hints that the figure may be in the “thousands”.
“We are overwhelmed … it is too much work,” says the clerk, who does not want to be named. “Some cases are small, some are big. People should try and settle with the developer as they will spend more bringing the problem here.”
Just a few months after it opened in 2008, the Property Court had a mammoth challenge on its hands after the property downturn.
The court is a “work in progress”, says Dr Jamal Alsumaiti, the director general of the Dubai Judicial Institute. “You can see there’s movement from the government for regulation and for developing the judicial system as well … it’s a very critical period.”
Ron Oakeley is more than familiar with the Property Court, and the huge investment of money and time that come with a lawsuit.
The British businessman, who has been in Dubai since 1985, is about to attend his 15th hearing in a case filed more than a year ago against Alternative Capital Investment (ACI), a German developer.
Mr Oakeley is trying to recover more than Dh1.2 million (US$327,000) he spent on two offices at ACI’s long-delayed Niki Lauda Twin Towers, one of a trio of projects launched in late 2007.
His efforts, in part, paid off in February when the court rendered his agreement with ACI for one of the units “void” and ordered the company to repay him Dh569,585, plus 5 per cent interest from the date he started proceedings.
The court ruled for Mr Oakeley because ACI had failed to register the property with Dubai’s Land Department, according to court documents. A property contract is valid only when it is registered with the department.
But Mr Oakeley lost the case for the second unit, which cost Dh695,000, because the court found that the property had been registered, although it has since emerged it was under somebody else’s name.
ACI was quick to appeal the decision on the first unit. At yesterday’s hearing, the court decided to appoint an official to check on construction progress at the site, which appears to be at a standstill.
If there is still no conclusion at the next hearing, scheduled for June 23, then the case could go to the Court of Cassation, the final stage in the judicial process.
Mr Oakeley is one of dozens of investors with suits against ACI. He says it has so far cost Dh400,000, including fees and the cost of lawyers. But with the project showing little sign of progressing, he says he has no choice but to fight on.
“It’s the principle … most people can’t afford to keep fighting,” he says. “Unlike elsewhere in the world, you’ve got to spend so much more money to get your rights.
There are hundreds of other projects in the same boat but nobody seems to be helping the people.”
Robin Lohmann, the chief executive of ACI, was unavailable for comment in the past two days.
Property disputes are generally filtered through the Dubai Land Department, where the department’s legal team tried to resolve them before they reach a courtroom.
While there is a surge in the number of investors turning to the department after the financial crisis, fewer people are approaching it today, says Mohammed Sultan Thani, the assistant director general of the Land Department.
“We are now seeing a lot of agreements between the buyer and seller,” Mr Thani adds. “There’s been a lot of movement of buyers between a project that hasn’t started to one that has.”
Since the Property Court is costly, it has mainly been used by major investors such as Mr Oakeley, who have the funds to pursue a case.
It costs Dh30,000 to register each case with the court, so if an investor has bought 10 apartments from one developer, simply lodging the dispute will cost Dh300,000.
As well, all cases require a local lawyer, who will charge a commission of up to 5 per cent of what the client is claiming. The proceedings are in Arabic so a claimant would have to pay for the translation of court documents as required.
“For an investor contemplating filing a legal case against a developer, it is advisable to first seek consultation with a lawyer who can advise whether filing a case makes sense based on the circumstances,” says Ludmila Yamalova, a partner at Al Sayyah Advocates and Legal Consultants.
Some cases have been settled out of court, Ms Yamalova adds, with developers agreeing to reimburse claimants in instalments.
With just four judges at the Property Court, cases can be long. But more than 18 months after it was established, steps are being taken to refine the system, says Dr Alsumaiti – a move that will likely boost confidence among investors.
“Four judges are not enough,” he says. “The concept of having a specialised property court isn’t new but the implementation is. The judges need to have the skills and knowledge to understand every single detail of a case. As long has you have provisions to speed up your procedures, you have a very strong legal system.”
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