The developer's default in completing/handing over the project on account of its novelty and the delay in obtaining the NOCs from the main developer or delay in obtaining the necessary licenses from government agencies, do NOT tantamount to Force Majeure events.
On 30 December 2015, our client entered into sale purchase agreements (SPA) with one of the renowned developers in Dubai, (Developer/Defendant) for the purchase of two floating villas at the iconic World Islands project in Dubai, for a consideration of AED 12 million out of which our client has paid 80%. As per the SPA, the project was to be completed by 1 March 2017, however until the end of 2019, the project was still not completed, and possession of the villas were not delivered to our client.
Following unsuccessful attempts to resolve the matter amicably with developer, our client decided to file a case before the Dubai Court to terminate the SPA and for the developer to refund the paid amount along with the interest.
Motei & Associates(M&A) was retained to represent the client in his dispute against the developer.
The developer primarily argued that the case is not maintainable and cannot be heard before the Dubai Real Estate Court as it pertains to floating villas which are deemed ships and are not subject to trail before the Real Estate Court. It further argued that it was because of Force Majeure events that caused delay in completion of the Floating villas project. These delays were on account of several factors. First, since the project was the first of its kind in the UAE and the Middle East at the time, the main developer delayed in issuing the No Objection Certificate (NOC) for the construction of this project. Second, the government agencies also delayed in issuing the necessary licenses. Third, the project is built on an island at sea, therefore weather fluctuations stopped the project at various intervals, as such the marine tankers were unable to transport the labourers and materials to the project site. Especially since this event is a natural event, it falls under the Force Majeure clause of the SPA. Fourth and final, the project was not registered with the Dubai Land Department (DLD), because floating villas are ships and not real estate properties.
We argued that the villa is neither a ship nor a boat, according to UAE Maritime Laws, since floating villas cannot sail by themselves, they cannot be termed as ‘ships’, thus, in terms of the applicable UAE Real Estate laws, floating villas or boathouses are deemed real estate properties. We also argued that there was no case of Force Majeure as argued by the Defendant. There is a legal obligation of the developer, before starting the project or selling units, to obtain the NOCs and all the necessary licenses, whether it is from the main developer or from government agencies, so the delays occurred as a result of its own mistakes. Thereafter, the delays accruing to weather fluctuations, as claimed by the Defendant are not unexpected accidents, and it should have taken them into consideration prior to determining the date of completion.
The Court found for our client and ordered the termination of the SPA and the Developer to refund the paid amount of (AED7,400,000/-) plus 5% interest as of the date of filling the case until full payment of said compensation is discharged, along with entire litigation fee.
This judgment was passed by the Court of Instance, however, aggrieved by this decision, the Defendant appealed before the Court of Appeal, which rightly upheld this decision. Thereafter, the Defendant again challenged the judgment of the Court of Appeal to the Court of Cassation. The Dubai Court of Cassation decided to uphold the judgment passed by the First Court of Instance, making it final and enforceable against the Defendant.
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