Among other friendly solutions that were welcomed in the real estate sector
"Dispute Resolution" creates "profit sharing" as an alternative to fare during the "Corona" crisis
Reducing the rental value of cases affected by the pandemic in the commercial and residential sector is a welcome solution.
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Judge Abdel Qader Moussa: “(Covid-19) prompted us to devise ways to resolve rental disputes, without entering the litigation phase.”
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The Rental Dispute Resolution Center, the judicial arm of the Dubai Land Department, confirmed that the new Corona virus (Covid-19) created a challenge related to intervening to solve problems between landlords and tenants, which prompted the center to devise ways to solve these problems, without entering the litigation stage. And he avoided canceling the lease contracts, based on the directives of His Highness Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai and Chairman of the Judicial Council.
The center explained to "Emirates Today" that one of the most prominent solutions provided by the center is sharing in profits, as an alternative to rent for commercial establishments, pointing out that it is the first solution of its kind in the world to address the effects of the crisis, in a way that benefits both parties, in addition to The solution to reducing the rental value, which was welcomed by hotel owners and tenants, and the solution to prolonging the rental contract period without charge, which was also welcomed by the owners of industrial establishments and workers' housing, as well as the owners and tenants of residential units.
The center added that it received 1500 disputes through its reconciliation department, 1,450 disputes of which varied between commercial and residential leasing.
Corona Challenge
In detail, the head of the Rental Disputes Settlement Center, Judge Abdel Qader Musa, said that the new Corona virus (Covid-19) has created a challenge for many parties, including the Center, with regard to intervention to solve problems between landlords and tenants.
He added that this prompted the center to devise ways to solve problems, without going into the litigation stage, to reconcile between the owner and the tenant, by distributing the burdens and effects resulting from this pandemic, which fall within the "force majeure" that no one has access to.
He stressed that these friendly solutions came based on the directives of His Highness Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai and Chairman of the Judicial Council, initiated by His Highness to stop the implementation of rental evictions for housing and commercial establishments, for which a decision was issued to close them in whole or in part, for non-payment of the rent. During March and April 2020, and stopping the imprisonment of debtors with rental debt.
Procedures and references
Judge Moussa explained that the center relied on these procedures on four references, which were stipulated in the decree of establishing the center, which are the legislation in force in the emirate, the provisions of Islamic Sharia, the principles of prompt justice, the rules of right and fairness, in addition to custom, indicating that many Solutions to support judges in making decisions that would distribute fatigue or "burdens" resulting from the repercussions of the pandemic, in a manner that guarantees the interest of both parties (the tenant and the owner), provided that each case is dealt with according to its circumstances.
Share in profits
Judge Moussa stated that one of the most prominent solutions provided by the center to resolve rental disputes during the pandemic is sharing in profits, as an alternative to the rental value for commercial establishments, which were damaged and unable to pay the rent compensation to the owner.
He said that the center adopted this consensual solution, the first of its kind in the world, to deal with the effects of the crisis, for the benefit of both parties, and to ensure the continuity of the economic activity of these commercial establishments, which is in the interest of the emirate's economy.
Judge Moussa detailed: “The fee in this consensual solution is part of the profit, and if the activity does not achieve a profit then there is no fee, and if it makes a profit then the fee is a percentage of it agreed upon by the two parties, and this ends with the return of the activity to normal, so that the fee agreed upon in the signed contract returns between two sides".
Moussa emphasized that this solution is unprecedented, at a time when the Center is the first judicial body to reach in the world, and it depends on the owner’s participation to the tenant in a percentage of the profits, according to what the two parties agree upon as a substitute for the rent. Thus, the owner guarantees that the tenant will pay the rental allowance, and the tenant guarantees Not affected by the conditions of commercial activity, as the two parties depend on market conditions, and share the risks, if any, stressing that this solution was welcomed by many owners and tenants of commercial centers.
Two judicial circuits
Al-Qassi Moussa said: “Immediately after the outbreak of the pandemic, the monitoring unit at the center discovered the beginning of its impact on the rental sector, with the high rate of cases in which tenants request the dissolution of rental relations, or the reduction of the rental value, given that their income or commercial activity was affected by the pandemic, and therefore the center took several measures. To deal with these negative effects, and to ensure the stability of rental relations, including the allocation of two judicial circuits at the primary stage, to look into those cases based on the effects of the pandemic, and an appeals department headed by the head of the center, to ensure the unification of the judicial visions and approaches towards them with a priority to consider these cases.
"Value" and lengthening the contract
Judge Moussa pointed out that one of the most important other friendly solutions that were presented to the parties is to reduce or reduce the rental value for cases affected by the pandemic in the commercial and residential sector, according to the effects of the activity, as hotel owners and renters welcomed this solution.
He mentioned that among the solutions provided by the Center as well: Extending the lease period without charge, to compensate for the affected period of activity, pointing out that this solution was welcomed by the owners of industrial facilities and workers' housing, as well as the owners and tenants of residential units.
Sultan bin Mejren: Consensus solutions are consistent with the spirit of the Emirate of Dubai
The Director General of the Dubai Land Department, Sultan Butti bin Mejren, said that the consensual solutions reached by the Rental Dispute Settlement Center, especially in commercial lease contracts, represented a buffer against the exit of many commercial projects from the market, especially those that were directly affected by the crisis. The health related to the "Covid-19" pandemic, as these solutions supported the continuity of commercial activity, despite the crisis that greatly affected a number of economic activities, pointing out that the department took into account the negative effects of the pandemic when updating the "rental calculator".
Bin Mejren emphasized that such solutions, which took into account the distribution of burdens between the two parties to the rental relationship, are consistent with the spirit of the Emirate of Dubai, which supports the investment environment, as well as showing cohesion between government agencies and working within one team under the directives of our leadership.
"Litigation according to circumstances"
The head of the Rental Dispute Settlement Center, Judge Abdel Qader Moussa, confirmed that the center focused on taking into account the social dimension in light of the global health crisis, as it worked to mitigate its negative repercussions on society and protect it, pointing out that the center found great cooperation among the owners of buildings and real estate, which included consideration The conditions of the tenants and mitigating the impacts on them.
These consensual solutions were based on the Civil Transactions Law, including Article (249), which states that in the event of exceptional incidents that could not be expected, and as a result of their occurrence, the implementation of the contractual obligation, and if it did not become impossible, would become burdensome to the debtor, threatening him with loss. Fatal, litigation is permissible depending on the circumstances, and after weighing the interests of both parties.
Any agreement to the contrary shall be null, as the article indicates the possibility of suspending the agreements in the contract, according to what the judge considers.
This suspension of agreements is based on Article (287) of the Civil Transactions Law, which states that if the damage arose out of a force majeure, the debtor was not bound by the guarantee, unless otherwise stipulated in between them.
Article (273) of the same law indicates that “in contracts binding on both sides, if a force majeure arises that makes the implementation of the obligation impossible, the corresponding obligation expires, and the contract is terminated on its own, and if the impossibility is partial, what corresponds to the impossible part has lapsed.”
1500 dispute
The judge, Abdul Qader Musa, revealed that the innovative friendly solutions have contributed to resolving rental disputes resulting from the negative effects of the pandemic in the rental sector in Dubai, pointing out that the center received 1,500 rental disputes based on the repercussions of the Corona crisis. 1450 disputes were resolved at a rate of more than 95 % By consensual solutions, which varied between commercial and residential rental disputes.
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