Dubai Court of Cassation (General Assembly), Appeal No. 7 of 2021, judgment of 10 November 2021
Article 3 of Dubai Law No. 13 of 2008 voids sales of off-plan units not entered in the interim real property register. The General Assembly held that the Law covers units that are still under construction and exist only on plan. Where a unit not previously entered in the interim register was completed before the dispute was brought to court, or is registered in the property register under Dubai Law No. 7 of 2006 at any stage of the proceedings, the 2008 Law does not apply, even if the contract was concluded off-plan; the dispute is then governed by the general rules of contract. The Assembly departed from judgments holding such contracts void from the outset for lack of interim registration, regardless of later completion or registration.
In August 2018 a public joint-stock developer agreed to develop a tower in Al Jaddaf on land owned by the other party and transfer it to that party for AED 120 million, AED 30 million on signing and the balance on completion. Dubai Municipality issued the completion certificate on 14 August 2019, but the owner refused to pay and in March 2020 purported to terminate for delay and changed specifications. The developer sued for validation of the contract and AED 90 million; the owner counterclaimed for rescission and return of AED 30 million. The court of first instance found for the developer; the Court of Appeal declared the agreement void because it had not been entered in the interim register and ordered the developer to repay AED 30 million. The developer appealed in cassation.
The chamber referred the appeal to the General Assembly to reconsider the line holding that an off-plan contract not entered in the interim register is void from the outset, even if the unit is later completed or registered in the property register.
The Assembly analysed Articles 2 (as amended by Law No. 9 of 2009), 3(1) and 8(1) of Law No. 13 of 2008 and Articles 9, 22 and 24 of Law No. 7 of 2006 on Real Property Registration, under which all dispositions creating or transferring real rights must be registered and title deeds have absolute evidential force. It held that off-plan units subject to interim registration are units under construction, existing only as drawings when the contract is made. Once a unit exists, or is registered in the property register under the 2006 Law, it is governed by that Law, not the 2008 Law, even if the contract was made off-plan, provided it was not previously entered in the interim register. The 2008 Law therefore does not apply where the unit was completed before the dispute reached court, or is registered at any stage of the litigation, and the general law of contract governs. The Assembly adopted that principle by the required majority.
The building had been completed before the claim was filed in March 2020, so the 2008 Law did not apply. The Assembly quashed the judgment and remitted the case to the Court of Appeal.
Nullity for want of interim registration had become a common route for parties wishing to undo off-plan deals after the property was finished. The ruling closes that route once the property is completed before the claim or registered in the final register, leaving the dispute to be decided under ordinary contract law.
| Articles 2, 3 and 8 of Dubai Law No. 13 of 2008 regulating the Interim Real Property Register, Article 2 as amended by Dubai Law No. 9 of 2009 — text of articles 2, 3, 8 |
| Articles 9, 22 and 24 of Dubai Law No. 7 of 2006 on Real Property Registration in the Emirate of Dubai — text of articles 9, 22, 24 |
| 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) |
“لا يسري في حالتين الأولي هي تمام إنجاز الوحدة محل التداعي قبل بدء النزاع أمام المحاكم”Short quotation from the judgment as published by the court. The full judgment is on the court’s official service.
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