A progressive step in rental dispute resolution

New dispute centre has work cut out though some provisions need more clarity

His Highness Sheikh Mohammad bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, issued Decree No. 26/2013 establishing the Rental Disputes Resolution Centre. The Centre aims to provide a specialised judicial framework to deal with rental disputes and to improve the resolution thereof through a simple and expeditious mechanism.

Finding an efficient mechanism to resolve rental disputes in Dubai goes back to the ‘70s when a committee was formed in Dubai Municipality. The logic behind a quasi-judicial committee outside of the Court’s framework was that the market for rentals was governed by norms that required special knowledge that the regular courts may not necessarily possess. In addition, it was thought that delays associated with the court system would damage the real estate market, which could not afford having properties vacant or not generate income pending a court ruling.

The initial jurisdiction of the Rent Committee was confined to evacuation orders, which required swift decisions and actions. The decisions of the Rent Committee enjoyed judicial force and were as such enforced by the courts. There was no recourse to appeal or any sort of opposition as promptness was the main drive for the Committee.

However, its role expanded with time to cover any claim relating to rents and not merely evacuation cases. This meant it had to deal with legal issues that in some cases were complex and beyond the layman expertise of its members.

An added element was that the Committee worked in a vacuum of proper written proceedings and rules, which was a source of confusion for the parties dealing with it. With the real estate boom of the past decade, the number of cases the Committee had to deal with exploded and despite the increase in members and extended working hours, it was simply unable to cope with the volume of cases before it. In addition, the rise in the level of legal complexity led the Committee, composed fully of laymen, to struggle in dealing with these cases in spite of the sincere efforts and good intentions of its members.

So what is new in Decree No 26? The starting point is the jurisdiction is wide enough to capture all disputes relating to rents. However, it excludes rental disputes arising in free zones that have courts or special committees to deal with them (in a reference to the DIFC), those arising out of financial leasing and long leases, which are governed by Law No. 7 of 2006 in respect of Real Estate Registration.

The major development in the Decree is that the Centre is presided by a judge and all committees has a judge as a member in addition to two laymen members. Thus, the formation of the committees preserves the expertise that rent disputes require while adding a legal element that the previous ones lacked. The Centre has four divisions: for Conciliation and Settlement, First Instance, Appeal and Execution.

The other interesting development is that the decisions of the committees are subject to appeal, a process that the previous ones did not have and which attracted a lot of criticism. The appeal committees is an indication that appeals have more legal elements that require consideration. In an attempt to strike a balance between the requirements of justice and the seriousness of appeals, the Decree requires for the admittance of an appeal, the judgment debtor must deposit 50 per cent of the decreed amount with the Centre.

The Decree provides that claims where the value thereof is less than Dh100,000 are final and not subject to appeal except in cases of evacuation, lack of jurisdiction, where the parties were not properly summoned or where forged documents were presented. It is most likely that parties to disputes will lodge appeals based on the many exceptions that the Decree allows which will render in effect the threshold impractical.

The Decree requires that committees render decisions within 30 days of the file being referred to them. However, this period can be extended indefinitely, which is most likely to happen in the majority of cases.

There is no doubt that it is a major development in resolving rental disputes in Dubai. The ultimate extent of success of this mechanism will depend on how efficiently it will be implemented.

— The writer is the chairman of Baker & McKenzie Habib Al Mulla.

Source: gulfnews

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