Dubai Court rejects Dh24m refund for The World investor

Investor wanted to terminate contract with Nakheel due to lack of infrastructure

The Dubai Real Estate Court has rejected a lawsuit filed by an investor against Nakheel, the developer of The World project, demanding Dh24.87 million in refund.

The investor had decided to buy one of the islands in the World project for Dh92 million, payment of which was to be made in installments. The plaintiff (the investor) said he paid Dh27 million as down payment and the first installment.

Court documents revealed the investor was surprised when the company (Nakheel) did not issue a sales and purchase agreement. He also realised that it would not be possible to start any project on the plot he had bought due to the absence of any services or facilities or infrastructure.

The investor, hence, asked the court to terminate the contract and agreed to pay 10 per cent of the amount already paid as compensation to Nakheel. He asked a refund of Dh24.87 million, stating the contract.

The court, however, rejected the investor’s case on the basis of Article 267 of the Civil Transactions Act, which stipulates that a contract can be terminated only by mutual consent or litigation or under the letter of the law.

Article 246 of the Civil Transactions Act stipulates that the investor’s commitment is not limited to what was mentioned in the contract, but includes everything that is on the periphery.

The judgment also took into account the failure on the investor’s part to comply with the terms of the contract which he signed with Nakheel.

The court, in its ruling, said that the agreement between the parties stipulates that the buyer signs “sale and purchase agreement”, and it will be handed over to the seller within 30 days from the date of “contract of reservations”.

If the buyer fails to do so within the period specified, the seller is entitled to return to the buyer 10 per cent of the down payment and the installment, in addition to any other premiums received from him.

The agreement stated that this amount deducted is a fair compensation for the seller as a result of the lack of commitment of the buyer, and the seller is free then to sell the plot to any third party.

The Court explained that the terms of the agreement signed between the two parties, confirmed that the right to rescind the reservation contract because of not signing of an agreement for sale and purchase, is the right alone for the seller without the buyer.

The Court also said that as it is clear from the documents of the case that the buyer is the one who wanted to breach the contractual relationship and did not sign the contract of sale and purchase within the period specified in the agreement.

The seller was entitled to then terminate the contract, as a penalty for the buyer due to his failure to perform his contractual obligations, the judgement said.

The Court explained that the expressions of the buyer in his lawsuit, "the impossibility of implementing any projects on the plot of land due to the absence of any services or facilities or infrastructure in this area” has no support in the reservation contract.

The Court added “where the contract articles were free of the existence of any obligation on the seller to implement the infrastructure or facilities to the plot the buyer bought. Particularly since the booking contract stipulated that the buyer is binding to submit the development proposal, containing schemes develop a piece of the island that was purchased.”

The Court dismissed the investor’s case.


The World

The World project is nine kilometres wide and seven kilometres long.

It covers an area of 931 hectares and will add 232km to Dubai’s natural 67km of beachfront.

The islands range from 150,000 to 450,000 square feet in size.

The project is divided into private estate island zones, commercial zones, which have low/mid/high density resorts, hubs for ferry transfer points and public visitor areas.


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