'No official approval' not a 'force majeure' cause: Dubai Court

Not getting municipality approval for projects or the reason that municipality has rejected the architectural plan are not excuses for developers for delaying projects, according to a Court of Cassation legal principle.

The court explained that obtaining approvals is one of the basic requirements for any project.

Therefore, developers are not excused from the legal consequences of not getting such approval and are not subjected to force majeure.

The court also said that the compensation for affected investor cannot be more than that what is claimed in the petition.

The court was hearing a case of an investor who demanded dissolution of the contract he signed with a real estate development company.

The investor sought Dh1million from the developer for the delay in delivery of the project.

The plaintiff said that he had agreed with the developer to build a villa for Dh2.5 million, to be paid in five installments. And that the agreement was that the villa would be delivered within a year-and-a-half from the date of signing the contract.

The investor told the court that he paid the installments on time but was surprised when the developer rejected his last two installments and requested to postpone the delivery date by another year.

It was only two months later that he discovered that the developer had not begun the construction work and that the developer had not received permission from the municipality. He thus moved the court.

The Court of First Instance issued a judgment in the favor of the investor, which ordered to cancel the contract and asked the developer to refund the amount the investor paid with an additional Dh1.4 million as compensation.

The real estate development company challenged the verdict at the Court of Appeals, which upheld the verdict.

The developer then moved the Court of Cassation, which upheld verdict of ‘avoidance of the contract and refund’, but reduced the amount of damages to Dh1million.

The court stressed that it can’t compensate the investor by more than the mentioned amount even though he deserved it.

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