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A New Chapter in Rental Disputes in Dubai

Guiding Principle

As of 17th November 2013 Dubai has a new Rental Disputes Settlement Center, which will replace the Rent Committee, and a new procedure for the settlement of rental disputes.

As the prices – especially for residential units- are constantly rising all over Dubai, it is a crucial question for many tenants, whom they can turn to in case of a dispute (e.g. over the increase of the rent or the renewal of the contract) with the landlord.

Since 1993, rental disputes in Dubai were exclusively referred to the “Special Judicial Committee” or as it is widely known the “Rent Committee”. On the 18th of September 2013, a new Decree (Decree No. 26 of 2013 concerning Rent Disputes Settlement Center in the Emirate of Dubai, hereinafter referred to as “the Decree”) was issued to set up the “Rental Disputes Settlement Center in Dubai”. The new Center shall be based at the Dubai Land Department, in opposition to the Rent Committee which operated in the Dubai Municipality. The law will come into force 60 days after its publication in the Official Gazette.

A.  Jurisdiction of the Center

Generally the new Center shall have exclusive jurisdiction over any residential or commercial rental dispute in Dubai mainland and in the free zones and may enforce its decisions and judgments.However, the Decree excludes disputes arising inside of those free zones, which may have their own special judicial committees or courts to settle rent disputes. Therefore, before one can take any official steps, it is to be determined based on the location of the object rented, whether the new Center is in charge of the dispute at all.  The Jebel Ali Free Zone has not established a special judicial committee for rental disputes. On the other hand, in the case of the Dubai Technology and Media Free Zone Dubai Law No. 1 of 2000 expressly states, that companies and individuals operating in the free zone shall not be subject – among others – to the laws and regulations of the Rent Committee. And the courts of Dubai International Financial Centre do hear their own rental disputes. Until now, rental disputes, where the free zone authority was party to a lease contract, were also excluded from the jurisdiction of the Rent Committee (see Article 2 of Dubai Law No. 15 of 2009). This clause has been omitted in the new Decree, therefore it is to conclude, that the new Centre shall be also empowered to hear such disputes unless there is a special committee as described above.

Furthermore, the new Center shall not hear any cases of finance lease or long-term leases (Article (6) (B) of the Decree).

B.  Process and Departments

I.    Department of Reconciliation

The Decree has introduced a new department: the “Reconciliation Department” (Article 10 of the Decree). For the purpose of a speedy and amicable settlement of rental disputes, a conciliation hearing before one of the committees of this Department shall be mandatory. Excluded from this compulsory requirement are only cases for temporary and summary orders, applications and actions, which cases can be presented to the First Instance Department directly.

As a rule, the Committee shall within 15 days after the conciliation hearing try to settle the dispute.

The Reconciliation Department may appoint experts or specialized persons to provide their technical expertise.

The committees of the Department consist of a chairman and two members of experience. The chairman of the committee shall be a judge. Previously the participation of a judge in the committees was not mandatory.

II.  First Instance Department

If an agreement can be achieved, then it will be signed by the parties and be approved by the judge. Such a reconciliation agreement shall have the power of an executive instrument, i.e. it can be executed without further proceedings, and otherwise the dispute is referred to the First Instance Department, which shall come to a verdict within 30 days from the date of referral of the action file.

III. Appeal Department

Decisions of the Rent Committee were binding and final. An appeal against them was previously not possible. By the Decree, a new instance shall be introduced against the decisions of the First Instance Department in cases in which the rental claims are over AED 100.000. In many residential rent disputes, the claims remain, however, usually below this amount. Thus, the lawmaker included the following cases, in which the parties may appeal against a decision of the First Instance Department (Article 17 of the Decree):

1.    If an eviction judgment is issued,

2.    If a judgment is issued in violation of the jurisdiction rules.

3.    If a judgment is issued with something not requested by the parties, or with more than what they requested or it disregarded some requests.

4.    If a judgment is issued against a person who has not been correctly represented in the action or there was a nullity in the service thereupon;

5.    If a judgment is based on papers or documents which were declared to be forgeries after the judgment was issued or a judgment of their forgery was issued or the judgment was based on a testimony that was judged as a false testimony after the judgment was issued and

6.    If a party to the lease hides data or documents from the First Instance Department that would have changed the judgment on the action.

The time period for an appeal is 15 days from the day following the issuance of the judgment or in case of absence of the convicted party, from the date of serving the judgment to him.

If a financial claim (not eviction) is to be appealed, then the convicted person shall deposit the 50% of the amount judged until the appeal is decided. However, an exception can be granted.

The judgments of the Appeal Department are final and unchallengeable.

Further specifics on the new procedures and rules (e.g. on registration of the actions) shall be issued by the Chairman of the Judicial Council shortly.

IV. Law Enforcement Department

All final judgments of the new Center shall be executed by the Law Enforcement Department. But the Center may use the Execution Department of Dubai Courts as well (Article 21 of the Decree).

C.  Fees

Until a new order has been issued, the fees according to the Local order No. 1 of 2004 by the Dubai Municipality shall remain in force. Thus, generally the fees amount to 3.5% of the claimed sum, but they should not be less than AED 500 and not more than AED 20.000. However, if the dispute can be settled amicable, 50% of the fees advanced will be refunded to the applicant.

D.  Result

The new procedure of a mandatory reconciliation with the professional help of the committees may reduce the number of court actions and help the parties to find a solution within a few weeks. The further possibility to challenge a judgment by the First Instance Department will lead to a consequent and predictable jurisprudence in rental disputes. These changes thus serve both the interests of the parties and the real estate market as well.

October, 2013 Agnes Urbancsek
Meyer-Reumann & Partners, Dubai Office
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