DIFC Courts have Limited Jurisdiction over Property Disputs
Judge Sir Anthony Colman has thrown out a case brought by an investor against Damac Properties because the Dubai International Financial Centre (DIFC) Courts does not have jurisdiction over the claims. Union Properties is also contending that the DIFC is not the correct venue for the case of 31 investors against failed against the developer, according to the DIFC Courts registry.
Lothar Hardt, a German investor, alleged in the original filing that Damac and four individuals had broken their contractual agreements and several laws by failing to deliver the property projects on time, mismanaging escrow accounts relating to some of the projects, and not registering the transactions with the Dubai Land Department. Mr Hardt had paid US$9.7 million (Dh35.6m) as downpayments for the purchase of 37 properties in five developments: Park Towers, Water’s Edge, Lotus Residences, Wildflower and Ocean Heights. He sought the return of his investment, as well as damages and lost profits, court documents show.
In addition to Mr Hardt’s case, 31 investors have filed a case against Union Properties alleging that the company failed to deliver contracts to buyers and did not finish construction on time.
Hannah de Figueiredo, the lawyer for Damac, argued that the DIFC Courts did not have jurisdiction over the case. Justice Sir Anthony Colman ruled yesterday in favour of Damac’s argument.
DIFC Real Property Law was passed in June 2007. Therefore, all agreements signed before that should be resolved by Dubai courts, claim the lawyers.
The contracts Mr Hardt signed with Damac included a provision that they would be “governed by the Laws of the United Arab Emirates and the Laws of Dubai”, and that “the Parties agree that any legal action or proceedings with respect to this agreement shall be subject to the exclusive jurisdiction of the Courts of Dubai, United Arab Emirates”, legal documents show.
The parties had “contracted out of the jurisdiction of the DIFC courts under each of the many contracts entered into, including the Park Towers contracts, and the DIFC Courts have no jurisdiction”, Justice Colman wrote.
The lawyer for Mr Hardt, Ludmila Yamalova, said in an interview for The National that she disagreed with the judge’s interpretation of the contracts and was considering filing an appeal.
The DIFC Courts have only recently been used as a venue for disputes arising from the property downturn in Dubai.
Union Properties is also contending that the DIFC is not the correct venue for the case, according to the DIFC Courts registry.
Michael Lunjevich, the head of the property practice at Hadef and Partners, said the DIFC Courts was a preferred venue for disputes because its laws provided for a discovery process that allowed each side to get more information to argue its case.