How has Dubai’s existing legislation evolved with respect to the current crisis? Is more legislation on the way?
The existing laws are under constant revision and we saw a significant development last year with Law No. 9 (which was an amendment to Law No. 13 concerning regulating the initial real estate register). This law received a lot of criticism from purchasers who viewed it as being too developer friendly as it gave developers the right to cancel purchases and charge penalties. It didn’t however, seem to give many rights to purchasers when a developer wasn’t complying with its obligations. Recently, however, we have become aware that the long-awaited Decree No. 6 has been signed. Although this is not yet law, when gazetted it is expected to (amongst other things) allow the Dubai Land Department (DLD) to cancel projects that will not be constructed and order the developer to pay refunds. If this works as intended it will hopefully go a long way towards satisfying the concerns of the large number of purchasers who have been stuck in no-man’s land by being contractually bound to projects that are not being constructed. In addition, it will also aid developers in their bid to clear their books of non-performing purchasers.
Is there open dialogue between the legal profession, the various regulatory authorities and inter-emirate?
Our Abu Dhabi office has a close relationship with the government, and in Dubai we have worked closely with the DLD and other bodies by, for example, giving feedback on new laws. A group of Dubai law firms has also had preliminary discussions with the DLD regarding setting up a form of pro bono scheme to provide initial advice to individuals involved in property disputes who may not have the resources to hire a lawyer or go to court.
The communication and consultation process is something I believe could be improved, and in general if a
greater degree of consultation was allowed, and more people could view and comment on proposed draft laws before they are issued, it may result in more effective laws which better meet the combined objectives of the market stakeholders. In addition, public access to information and communication is definitely something that can be improved. It
should be remembered that a lot of investors and residents here come from democratic jurisdictions where property regimes have been developed with public consultation over hundreds of years. In Dubai however, the real estate management regime has been introduced relatively quickly so it will take time to get things right. Laws need time to adapt and develop, hence the need for greater consultancy to ensure that any new law is properly thought through, and achieves a balance between the competing interests.
Will the implementation of Dubai’s long-awaited Strata Law be a huge vote of confidence for the market and for potential investors?
Law No. 27 became operative over two years ago now and affected parties have been growing increasingly impatient for the implementing regulations to be issued. Although market factors and some
objections from larger developers may have contributed to the delay, I suspect another significant issue is that the philosophy behind the law is very different from what people are used to in the UAE.
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A group of Dubai law firms has also had preliminary discussions with the DLD regarding setting up a form of pro bono scheme to provide ini- tial advice to individuals involved in property disputes who may not have the resources to hire a lawyer or go to court
apr-may 2010
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