Dubai's 2020 off-plan termination rules apply to earlier contracts, and courts may set the developer's retention below the maximum

Dubai Court of Cassation (General Assembly), Appeals Nos. 2 and 3 of 2020 (joined), judgment of 27 January 2021

Court
Dubai Court of Cassationمحكمة التمييز - دبي
Case
Dubai Court of Cassation (General Assembly), Appeals Nos. 2 and 3 of 2020 (joined), judgment of 27 January 2021
Arabic citation
الطعنان رقما 2 و3 لسنة 2020 هيئة عامة، جلسة 27/1/2021
Bench
General Assembly of the court General Assembly
Topics
Real estate · Company law
Laws applied
Dubai Interim Real Estate Register Law
Civil Transactions Law 1985 (repealed)
The judgment
Read it on dc.gov.ae ↗ (Dubai Courts, judgment publication service (نشر الأحكام), Court of Cassation, General Assembly appeals Nos. 2 and 3 of 2020 (one judgment, published under each number))
Summary written
1 November 2026
Print

The principle

Dubai Law No. 19 of 2020, which replaced Article 11 of Law No. 13 of 2008 on the Interim Real Property Register, applies retroactively to off-plan contracts governed by the 2008 Law, including terminations already made (except those annulled by a final judgment before it took effect), provided they followed the procedures in force at the time; the Court of Cassation applies it of its own motion. A developer may terminate for the buyer's breach, chiefly non-payment, and retain up to the percentage set for the project's completion level. But when the developer or buyer goes to court, the trial court may fix the percentage it finds fair in the circumstances, without exceeding the legal maximum. The Assembly abandoned the earlier view that courts had no such discretion.

The case and the decision

In June 2007 a buyer agreed to buy six units in a Business Bay tower for AED 30,085,688, paying 40 per cent and the registration fees. The developer, which the buyer said was a foreign company licensed to develop in Dubai only in 2011, did not deliver by the contractual date. In 2018 the buyer sued for annulment or rescission and refund; the developer, having completed the project, counterclaimed to rescind and keep 40 per cent of the price. The Court of Appeal rescinded the contract and allowed the developer to keep only 20 per cent, treating the difference as compensation for more than seven years' delay. Both sides appealed, and the chamber referred the appeals to the General Assembly to reconsider the principle that courts could not reduce the statutory percentages.

The Assembly explained that laws are not retroactive unless they say so or concern public order. Law No. 19 of 2020, published on 13 December 2020, replaced Article 11 and declared valid and unchallengeable all earlier procedures and terminations of off-plan contracts made since the 2008 Law, except terminations annulled by a final judgment, provided they followed the rules then in force. It allows the developer, after receiving the Land Department's document, to terminate and deduct up to 40 per cent where completion exceeds 60 per cent, up to 25 per cent where work has started but completion is below 60 per cent, and up to 30 per cent of sums paid where work has not started for reasons beyond its control. The Court of Cassation applies that law of its own motion. When a case is brought, the trial court may award the percentage it considers fair, up to the maximum. The Assembly adopted this by the required majority.

It rejected the buyer's appeal: under Articles 313 to 316 of Federal Law No. 8 of 1984, acts done for an unlicensed foreign company are not void but bind those who acted, jointly; an off-plan sale is a complete sale; and the buyer, who stopped paying after completion, was the party in default. It rejected the developer's appeal against the reduction to 20 per cent as a matter for the trial court. Both appeals were dismissed.

Why it matters

Many disputed off-plan contracts in Dubai pre-date 2020. The judgment confirms that the 2020 termination scheme governs them and that courts are not bound to award the developer the full statutory retention: they may reduce it, for example to reflect the developer's own delay. It also holds that a developer's lack of a licence when the contract was signed does not by itself make the sale void.

Laws applied

Article 11 of Dubai Law No. 13 of 2008 regulating the Interim Real Property Register, as replaced by Dubai Law No. 19 of 2020 — text of article 11
Articles 313 to 316 of Federal Law No. 8 of 1984 on Commercial Companies (foreign companies operating before completing formalities)
Decided under this law; it has been replaced by Commercial Companies Law.
Articles 268 to 270, 272 and 489 of Federal Law No. 5 of 1985 (Civil Transactions Law) — text of articles 268, 269, 270, 272, 489
Decided under this law; it has been replaced by Civil Transactions Law 2025.
Article 20 of Dubai Law No. 13 of 2016 on the Judicial Authority in the Emirate of Dubai (referral to and majority of the General Assembly)

In the court’s words

“الحكم بالنسب التي تراها عادلة بما يتناسب مع ظروف الحال وما تقدره تلك المحكمة دون مجاوزة الحد الأقصى المقرر لها قانوناً”

Short quotation from the judgment as published by the court. The full judgment is on the court’s official service.

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Source. Summary written by Polaris from the judgment published by the Dubai Court of Cassation on dc.gov.ae (Dubai Courts, judgment publication service (نشر الأحكام), Court of Cassation, General Assembly appeals Nos. 2 and 3 of 2020 (one judgment, published under each number)), read on 1 November 2026. Party names are anonymised in the court’s publication.
Published for general information by Polaris Corporate Services FZ-LLC. It is not legal advice. This page is a summary written by Polaris; it is not the judgment and is not an official translation. Read the judgment on the court’s official service before relying on it. A judgment decides the dispute before the court; its weight in a later case depends on the court, the facts and any later change in the law or in the court’s own case law.

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