Court must gain confidence of buyers

A new court dealing with property disputes in Dubai needs to "a good start" to gain the confidence of investors.

A new court dealing solely with property disputes in Dubai needs to "get off to a good start" if it hopes to gain the confidence of investors, says a lawyer specialising in the sector. The Property Court, which will be an arm of Dubai's Court of First Instance, will begin hearing cases next month. Confidence in Dubai's property market has been hit by a series of high-profile disputes between developers and investors, such as the ongoing dispute between offplan buyers and the developers of Ivory Tower in the International Media Production Zone (IMPZ).

The new court should help to promote a stronger property market, but a number of issues need to be considered for it to deal with disputes effectively, according to Nick Carnell, a partner at the ­Dubai office of the law firm, Kennedys. "The establishment of the Property Court is important," he said. "A crucial part of the evolution of Dubai is the appreciation that property and construction breed disputes, and so there must be appropriate ways to resolve or determine those disputes.

"But it's also fundamental that the court gets off to a good start - without an effective means to deal with such disputes, confidence will be eroded very quickly." Mr Carnell added that a large number of property buyers in Dubai came from overseas; a drawback of the court was that proceedings would only be dealt with in Arabic. "It will aid transparency if there is an alternative to conducting proceedings in Arabic," he said. "In addition, the need to translate documents adds costs and delay."

The disputes handled by the court, which will have 10 judges, are likely to fall into a small number of categories including project delays, non-conformity with the property's initial description and avoidance of contact with investors. "It would help all parties if the court is seen to be adopting a consistent approach from one case to the next," said Mr Carnell. The Dubai Real Estate Regulatory Authority (Rera) was set up last year as a mediator of disputes between developers and investors, although it is unclear if its decisions carry any legal weight.

"It would be helpful to have a clarification as to whether Rera's decisions have any legal authority," said Mr Carnell. "In due course, it would be helpful if Rera had the power to compel parties who are involved in the development process to do or abstain from particular actions - presently it is limited to acting as a mediator." Mr Carnell said that his firm had seen a rise in the number of cases from property investors who were aggrieved by what they saw as failures by developers to provide what they had purchased.

Many of the cases revolve around project delays, failure to conform to the original description of the property, or attempts to renegotiate or divert from the contract. "These [cases] range from large developers to private individuals," he said. For instance, in 2006, Emad Ayoub, a developer, fled the country leaving a project barely started and 450 investors high and dry. Even large developers have not been immune to disputes. Companies such as Damac Properties, Tameer Holding and more recently, Sokook Investment Group - the developer of the Ivory Tower project - have come under fire from investors for project delays.

"There is a perception that purchasers do not have any effective remedy," Mr Carnell said. @Email:[e-mail]