Dubai Court of Cassation (General Assembly), Appeals Nos. 2 and 3 of 2020 (joined), judgment of 27 January 2021
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.
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 The Court of Appeal rescinded the contract and allowed the developer to keep only 20 per cent, treating the difference as compensation for more than seven years' delay.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.
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.
| 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) |
“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.
A signed off-plan reservation form is a binding sale, and without interim registration the developer must refund
A sale is concluded when offer and acceptance meet on the property and the price; no written form is required, and agreement may be shown by conduct or by exchanged corre…
A developer that sues instead of terminating lets the off-plan buyer avoid termination by paying before final judgment
Once the Land Department has issued its document confirming the procedure under Article 11 of Dubai Law No. 13 of 2008 (as amended by Law No. 19 of 2020), a developer may…
On termination of a completed-unit sale, the contractual late-payment penalty falls away and damages follow general rules
Dubai Law No. 13 of 2008 applies only to units still under construction; once a unit exists or is registered in the Real Property Register under Law No. 7 of 2006, that L…
Group companies behind one property project are jointly liable, and VAT charged on an undelivered hotel unit is refundable
In real estate investment several companies with separate legal personality and assets may share a single project and so be jointly liable for its obligations; whether th…
An entry in Dubai's interim real property register is an official record binding on all unless forged
Under Dubai Law No. 13 of 2008 every disposition of an off-plan unit, whether made before or after the Law, must be entered in the interim real property register kept by …
Unregistered sales of land granted to UAE nationals in Dubai give the buyer no title and no limitation defence
Under the Ruler of Dubai's instructions of 2 September 1994 (published on 18 November 1994), dispositions of land granted by the government to UAE nationals without the R…
Whether you are establishing a new venture, restructuring an existing enterprise, or exploring residency pathways — we are here to advise.
Arrange a Consultation →