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Challenge 'force majeure' in civil courts: experts
09/08/2010 06:06:46 AM GMT

Emirates Business 24-7, 09 August 2010

property buyers will have to file a civil case to seek judicial remedy, unlike the earlier system of approaching property courts, if a developer&invokes the "force majeure" clause and refrains from paying compensation, experts say.

"There are some developers who will provide all types of excuses to explain why compensation is not due (i.e. force majeure), even though it may&be provided for under contract. In such scenarios, it is likely the purchaser would have to file a civil case to seek compensation, even though

we would like to see Rera play a bigger role in this respect and regulate/penalise developers that delay without pre determined reasons," Ashraf&Sayed, Associate, Hadef & partners, told Emirates 24/7.

Ameya Salatry, Head of Legal, Better Homes, says that if parties have entered into an agreement that has a compensation clause, then the investor&can make a request for compensation as a matter of right.

"However, if the developer fails to fulfill the requirements of such a request, then the investor has no remedy than to approach courts to get&the claim enforced."

Mohanad Alwadiya, Managing Director, Harbor Real Estate says this really depends on the contractual agreement between both parties as some&developers excluded the option of going to court and opted instead for the arbitration route.

"In general, investors try to avoid the hefty costs of going to court and in most cases if they have strong negotiation skills will be able to&cut a deal with the developer without having to incur a lot of cost and time."

Youcef Betraoui, Managing Director, Land Sterling-Mena, says the court should deal with any compensation claims to settle a fair amount, adding,&"Some developers delay projects due to master developer not preparing the plot for development and lack of infrastructure... so sometimes it is

force majeure case and it is outside the developers hands to complete on time because he did not start on time."

According to Sayed, to the extent that developers willfully agree compensation is due, then this may be monetary or compensation in kind, which&may include waiver of service charges, additional parking, furniture package or waiver of last installment.

"Where compensation in required pursuant to a court order, it is almost always monetary compensation," he adds.

However, Betraoui says investors will prefer compensation in cash because the amount might be a lot bigger than just reimbursement of maintenance&fees.

By parag Deulgaonkar

© Emirates Business 24/7 2010
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