Dubai court cancels 99-year land deal after finding violation of rules on granted property

Dubai: A Dubai civil court has abolished a long-term investment agreement for a government-granted plot in Al Warqa’a 2, ordering the defendant to vacate the property and hand it back to the owner free of occupants, while also settling outstanding electricity and water bills up to the date of eviction.

The ruling came after the court found that the 99-year investment agreement violated regulations governing the use and disposal of government-granted land, which prohibit leasing or investing such land for more than three years without special approval.

According to court records, the owner of the plot, granted to him by the government, filed a lawsuit claiming that the defendant had unlawfully occupied and exploited the property. He asked the court to confirm the encroachment, order the eviction, and award Dh1.2 million in compensation for the use of the property since 2021.

The claimant told the court that the relationship between the parties was governed by a 10-year lease agreement valued at Dh300,000 annually, but alleged that the defendant stopped paying rent.

However, the defendant argued that the true agreement between the parties was not a lease but a 99-year investment contract, under which she paid Dh5 million for the right to develop and use the land. She told the court that she had constructed a residential villa on the plot at a cost exceeding Dh3 million.

She also claimed that the lease submitted by the owner was merely a nominal contract created to facilitate the connection of utilities and services to the property. According to her defence, she received the land as an empty plot and built the villa at her own expense, relying on an investment agreement and a legal power of attorney authorising her to manage and exploit the property throughout the investment period.

During the proceedings, the defendant also challenged the jurisdiction of Dubai Courts, arguing that the investment agreement included an arbitration clause.

The court rejected the objection, confirming that Dubai Courts have jurisdiction because the dispute concerns real estate located within the emirate. The court also noted that claims seeking the nullification of a contract fall within the court’s authority even if the agreement contains an arbitration clause.

Agreement voided

Upon reviewing the documents, the court concluded that the land in question was a government grant allocated to a UAE national, and that granting the defendant a 99-year investment right without official approval contravened the regulations governing granted lands.

Based on these findings, the court ruled that the investment agreement was legally void, and ordered the defendant to vacate the property and return it to the owner free of occupants, while settling all electricity and water dues until the date of handover.

The court, however, rejected the owner’s compensation claim, noting that he had already received Dh5 million in consideration for granting the investment right during the period the defendant possessed the property.

It also stated that the defendant’s claim seeking reimbursement of the amounts she paid and the construction costs was not accepted, because the required court fees had not been paid.

The court clarified that the defendant remains entitled to file a separate lawsuit to pursue those claims.