Dubai real estate court rejects lawsuit by investors
Both the plaintiff and the defendant will lose their right to proceed with a lawsuit if they had agreed to arbitration before the dispute started, according to a new legal principle established by the Dubai Real Estate Court.
But if one of the parties to the dispute opens a lawsuit before a court without invoking the arbitration cause and the other party does not object to it at the first hearing, the court may consider the arbitration clause null and void, the real estate court said.
Based on this legal principle, the court rejected the lawsuit filed by two real estate investors against two property developers. The investors sought the court's help to recover Dh2.119 million.
The court justified the rejection of the case due to the presence of an arbitration clause in the contract between the parties.
The contract had mentioned the British Chamber of Commerce as arbitrator in the event of a dispute.
In their lawsuit, the investors said they had bought six units in Victory Tower in Business Bay for Dh7.032 million to be paid in instalments.
Despite timely payment of instalments, the property developers did not complete the project and cancelled its escrow account.
The investors approached the court after the property developers failed to return the money they had invested.
The two plaintiffs urged the court to appoint a local jury in Dubai to help them avoid travelling to Britain.
The court refused their request to cancel the original contract and help them recover their payments, pointing to Article 52 of the Code of Civil Procedure, which gives priority to arbitration if both parties to the dispute agree.
The court said the case can proceed before the local judiciary only if one of the parties to the dispute files a lawsuit and the other party does not object to it at the first hearing, despite the existence of the arbitration clause.
The court said lawyers of the two real estate companies had urged the local judiciary to reject the plaintiff's plea at the first hearing, citing the existence of an arbitration clause.
© Emirates 24|7 2012
