Saudi Arabia: Abu Dhabi Court Of Cassation Addresses The Arbitrability Of Real Estate Disputes

Last Updated: 1 October 2015
Article by Hassan Arab and Dalal Al Houti

In recent years, the UAE property market has experienced significant changes due to the enactment of new laws regulating the registration of off-plan property sales.

By virtue of these laws all dispositions over real estate units sold off plan must be registered, failure to do so would render such disposition void. This is a matter of UAE public policy.

Given that it is generally accepted that the enforcement of an arbitral award may be refused if the subject matter of the dispute is not capable of resolution through arbitration and if enforcement would be contrary to public policy, it is understandable, that due to the mandatory nature of these laws, questions concerning the arbitrability of real estate disputes have arisen. This is supported by the fact that as a result of the court's broad interpretation of Article 3 of the UAE Civil Code, concerning public policy, a number of awards settling property disputes have been refused. Article 3 defines public policy in fairly wide terms including all matters concerning 'the circulation of wealth' and 'rules of private ownership' which the articles goes on to say are matters for the state and not a private arbitration tribunal. That said, we have witnessed the courts slowly refining their interpretation of the said provision and in turn narrowing their application of the public policy rule.

This is most recently evident in the Abu Dhabi Court of Cassation Case No.55 of 2014 where the court made a distinction between circumstances in which the subject matter of the dispute does not relate to a public interest concerning the system of society but relates instead to the private interests of the parties in which conciliation is permitted. An arbitration clause may be successfully invoked in the latter case.

The facts of the case

The Claimant had entered into a sale and purchase agreement for a residential unit in Sky Gardens Tower, Reem Island, Abu Dhabi. The Respondent defaulted in its obligation to achieve timely handover of the unit.

In accordance with the arbitration clause in the agreement, the Claimant commenced proceedings before the Abu Dhabi Commercial, Conciliation and Arbitration Centre ("ADCCAC") to cancel the agreement and recover the payments made to the Respondent totaling AED 590,169.5. An award was rendered by the arbitrator in the Claimant's favour.

The Claimant filed for enforcement proceedings before the Abu Dhabi courts. The Court of First Instance confirmed the award and the Respondent sought by way of a cross-application to annul the award. The Court of Appeal relied on Article 3 of the Civil Code which views the circulation of wealth and rules of individual ownership as matters of public policy and therefore non-arbitrable to overturn the Court of First Instance's ruling.

The Court of Cassation

The Claimant successfully appealed this decision on the basis of misapplication of the law and insufficient reasoning. The Court of Cassation held that "the arbitrator correctly applied the law in declaring his jurisdiction and taking up the application filed for termination of the sale and purchase agreement and recovery of payments made to the Respondent. Such rights can be the subject of conciliation. The dispute is about the termination of a contract for a freehold unit and a claim for the recovery of payments already made due to breach of contract which is not a public policy issue."

The Court of Cassation explained that a rule of law enacted to regulate the circulation of wealth and individual ownership of a state in terms of possession and the acquisition of rights in rem, and the nature and scope of such rights, the means by which they are acquired and extinguished, including rules pertaining to their registration on the property register "are all provisions relating to the monetary system of the State which are essentially public policy." As such, they cannot be subject matter for arbitration and any related dispute would fall within the ambit of the local courts even in circumstances where there is a valid arbitration agreement. This reasoning is further supported by the fact that conciliation is not permitted in matters relating to public policy and since, as a matter of public policy, arbitration is not permitted in matters in which conciliation is not permissible, there can be no arbitration for dispositions of property involving existing rights or creating new ones if a mandatory provision has not been complied with in terms of registering the property since this would be contrary to public policy.

If, however, the claimant's action strictly seeks to terminate the sale contract due to non-performance or breach by the opposing party, the arbitration clause in the contract should be applied. It follows that an arbitral award declaring the termination of the contract in an arbitration proceeding, conducted pursuant to such clause, should not be void.

In this instance, the arbitrator issued an award ordering the termination of a sale purchase agreement and the refund of monies by the respondent. The Court considered the arbitral award to be valid, as the settlement of the dispute did not involve the circulation of wealth or public policy, as explained above. The Court of Cassation reasoned that "there is no justification for invoking public policy grounds to apply this mandatory rule of law, which, being unrelated to public policy, can be the subject of conciliation and, in turn, a subject matter for arbitration."

Therefore, whilst it is still essential that the disposition of property be registered, the Abu Dhabi Court of Cassation's recent interpretation of public policy does not preclude a party from invoking an arbitration clause to enforce or rescind a contract, or claim a refund of monies paid, provided it is based on breach of contract.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions