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Dubai property court first ruling welcomed by real estate sector

The ruling that Mizin, a development arm of the government owned property investment company Tatweer, must pay back Dh7.4 million (US$2 million) plus 9% interest to an investor because Mizin did not register the transaction with the Dubai Land Department within 60 days, has been widely welcomed.

Judge Omar Miran, one of the presiding judges in the Property Court, wrote in his ruling that any transfer of ownership or other property transaction not registered in either the Land Department's property register or its preliminary property register is null and void.

The ruling refers to Law 13 which was introduced last August and requires all property transactions to be registered with the Land Department. At the time developers were given 60 days to register existing transaction records with the Land Department.

Lawyers in Dubai said the decision was notable because it represented the first insight into the thinking of the judges at the Property Court.

The ruling has triggered discussion among investors and lawyers who believe the court is planning to take a literal interpretation of laws relating to the property sector, which could mean many investors getting their money back.

One lawyer said his phone is ringing constantly with inquiries relating to property disputes as investors now feel more confident about going to court. 'Clients who were sitting on the fence or who didn't have faith that the Property Court would provide closure are now taking an entirely different view. They want to file cases,' said Jonathon Davidson, the managing partner of MAC Davidson and Associates in Dubai.

The global economic downturn has led to a rash of disputes over property in Dubai. Some involve speculators trying to escape repayment obligations now that they can no longer resell the units for a profit, but in many other cases property investors are trying to get their investments back because developers have not made significant progress on construction, have cancelled or delayed projects or don't have the resources to finish them.

Davidson said that property litigation had increased recently because of the financial downturn and his firm has hundreds of cases on similar issues of non-compliance by developers.

Mizin is to appeal against the decision. If a Civil Court of Appeal decision goes against the company it can go to a final Court of Cassation judgment. Even that judgment would not necessitate that other decisions fell in line with Judge Miran's because the Dubai judicial system does not operate a system of precedent.

'The Courts here are not bound by precedent or previous decisions but a final judgment could be a persuasive argument on interpretation,' said Alexis Waller, a partner in the property group at Clyde and Company.