Dubai’s real estate market continues to demonstrate resilience and dynamism, solidifying its position as one of the world’s most attractive investment destinations. Fueled by strong economic growth, investor-friendly regulations, and a steady influx of foreign capital, the market has witnessed sustained demand across residential, commercial, and luxury property segments.
Strategic government initiatives such as long-term residency visas, and infrastructure expansion have further boosted investor confidence. As a result, Dubai’s property sector remains a cornerstone of the emirate’s diversified economy, offering both local and international buyers promising returns and long-term value.
Having said that, investing in property is not risk free especially when buying off-plan, and buyers need to understand their rights and obligations especially since in most cases, developers force their terms in the sale in purchase agreement as non-negotiable.
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Among the standard terms found in off-plan property sale agreements is the arbitration clause, intended to govern dispute resolution between the developer and buyer. These clauses are often unilaterally included by developers as part of non-negotiable contractual terms. However, the enforceability of such clauses is not absolute.
Arbitration clauses remain subject to compliance with the UAE’s public policy and mandatory legal rules. If an arbitration clause contravenes these provisions, it may be declared void and unenforceable by the local courts.
Article 3 of Dubai Law No. 13 of 2008
A key example can be found in Article 3 of Dubai Law No. 13 of 2008, which requires all off-plan property sale agreements to be registered with the initial real estate register maintained by the Dubai Land Department (DLD). If this mandatory registration is not completed, and a dispute arises leading the buyer to seek nullification of the sale contract on this basis, the Dubai Courts retain jurisdiction to hear the matter, regardless of the existence of an arbitration clause. In such cases, both the sale agreement and the arbitration clause may be deemed invalid.
Whereas if the dispute concerns the developer’s failure to fulfill contractual obligations such as delays in construction or handover, the arbitration clause will generally be upheld provided that the clause complies with formal and procedural requirements.
Legal review is essential
The presence of an arbitration clause in an off-plan property contract does not guarantee its enforceability. Its validity depends on several legal and procedural factors. Investors are strongly advised to seek legal guidance before signing any off-plan real estate agreements. Proper legal review of the contract and related documents can ensure full awareness of the obligations being undertaken, and the legal avenues available should a dispute arise.
In cases where the buyer is able to negotiate certain terms, understanding the difference, cost and timeline between arbitration and litigation could help investors in making their decision on which dispute resolution method to include in the contract.
Abdullah Ishnaneh is partner at BSA Law.
