Dubai Moves to Liquidate Cancelled Projects

Dubai Moves to Liquidate Cancelled Projects

Residential News » Middle East and Africa Residential News Edition | By Kevin Brass | July 30, 2013 11:39 AM ET

In a move to resolve lingering disputes over unbuilt projects, the Dubai government is setting up a special legal committee to liquidate cancelled developments and settle disputes. 

Hundreds of projects were proposed and marketed in Dubai but never built, leaving thousands of home buyers and investors in limbo. In many cases, developers were unresponsive to demands for refunds.

The special legal committee is "tasked with the settlement of disputes between property developers and investors over cancelled projects in addition to the liquidation of projects that have been decisively cancelled by the Real Estate Regulatory Agency (RERA)," according to a statement released on the emirate's new agency, WAM.

More than 200 projects have been cancelled in Dubai as of May 31, 2011, according to government records.

"In order to carry out its tasks, the committee is authorized to seek assistance of experts and consultants and to appoint auditors whose expenses shall be paid by the developers, to audit the financial position of the stalled projects and to verify the amounts paid by the buyers and the amounts spent by the developers," according to the WAM statement.

But the language of the statement creating the new committee won't satisfy some investors. The committee will focus on projects that have been "decisively" cancelled by RERA, but some critics say the agency has been slow to cancel long-stalled projects. Many projects are still listed as delayed indefinitely. And many developers have long argued that they have already spent investor money on pre-construction and marketing activities and there is no money to return.

But the new decree could have far-ranging repercussions. It also "halts the implementation of relevant verdicts and resolutions issued by all courts" in Dubai, including decisions by the Dubai International Financial Centre courts.

The DIFC courts, which operate in English and follow international standards, were a popular venue for international investors seeking resolution for cases under the DIFC jurisdiction. 

The decree also states that all resolutions and decisions made by the special committee are "final and not subject to review."

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