Last week, the people of Haiti suffered a terrible natural disaster. If I were buying or selling a new building there that had been turned to rubble, it would be classified by the lawyers as a force majeure event. Last week also saw a property developer inform its buyers in an off-plan project in Dubai that a force majeure event had taken place, right here in the UAE. In doing so it was relieving itself of all obligations under contract with the buyers and would not be continuing with the building works for which they had paid.
As you may know force majeure is French for "superior force" and is readily found in contracts freeing both parties from liability or obligation when an event beyond their control takes place and so prevents either party from completing their obligations under the contract. A force majeure event may be war, strike, riot, crime or what in legal parlance is termed an "act of God", such as a natural disaster.
This particular UAE-based developer has blamed the global financial crisis as an event beyond its control and so invoked force majeure. In November 2008, Donald Trump tried the same strategy. He blamed the world financial crisis for the non-payment of a US$334.2 million (Dh$1.22 billion) construction loan to Deutsche Bank. The jury is still out on that one.
The developer in question has a project consisting of 5 million square feet of sellable area, of which 50 per cent has been sold at an original price of Dh2,000 per sq ft. It has collected 30 per cent from customers, or Dh1.5bn, in receivables. It is extremely unlikely that customers will see any of their money returned since the majority of it has been spent in infrastructure and sub-structure works. The developer by contract did what it was supposed to do: it used the funds for building the project. Unfortunately it is impossible for the developer to complete the project because further receivables from customers will not be forthcoming. Neither is bank financing available and, most critically of all, there is an oversupply of units in the market that will last for a long time to come.
Before you draw your daggers and make for the developer's office, there is one thing I have not told you. This particular developer was a sub-developer within a master development owned by a master developer, and it is the latter that stopped all works and demobilised its contractors. So the sub-developer in question may have collected a massive amount from buyers and used it legitimately on the project, but it cannot continue because the master developer has effectively shut down the entire site.
By closing shop, the master developer is no longer building out the infrastructure - roads, pipes, electricity - or signing off design approvals from the sub-developer for the different stages of construction. The sub-developer's hands are tied.
So surely the situation is something beyond the control of the sub-developer, but under the contract or the sales and purchase agreement (SPA) signed with the buyer, the sub-developer is directly obligated to the buyer. There is no fallback on the master developer. Yes, there may have been an unwritten convention in the market that the master developer will effectively underwrite all of the sub-developers, but that convention is not in writing and so offers no practical protection for buyers.
That, plus the fact that the master developer is in absentia with buyers, then leaves the sub-developer and the buyer in an extremely difficult position.
If we repeat the formula across hundreds of other projects where a sub-developer may go this route, you would need a scientific calculator just to read all of the zeros after the first couple of digits.
"What is permitted to be a force majeure event can be the source of much controversy in the negotiation of a contract," says Rima Jameel, a partner at the Dubai-based legal firm Motei and Associates. "For a developer [defendant] to invoke force majeure, the event proposed as force majeure must pass three tests.
"First, externality; the defendant must have nothing to do with the event's happening. Second, unpredictability; if the event could be foreseen, the defendant is obligated to have prepared for it. Being unprepared for a foreseeable event leaves the defendant culpable. This standard is very strictly applied. And finally, irresistibility; the consequences of the event must have been unpreventable.
"Although suspension by the master developer constitutes an extraordinary circumstance beyond the control of the sub-developer, if it does not fulfil the three aforementioned elements, it would not ascend to a force majeure event."
Where force majeure is invoked, then the sub-developers' obligation to build and the buyers' obligation to pay ceases until force majeure is remedied. Once the matter is resolved, then the obligation on both parties continues again.
Most SPAs will outline what should happen in terms of the obligations under a force majeure event, and for how long an event can continue. A contract will normally allow for between six months and one year, but will depend on circumstance.
If the force majeure period delays completion beyond the completion plus overrun date, where does that leave the buyer? According to Ms Jameel, the SPA should clearly state the consequences and entitle either party to terminate, should the event continue for a specified period of time. Otherwise she refers to Article 273 of the UAE Civil Code (Federal Law No. 5 of 1985), which she says provides that if in a "mutual binding contract, an obligation is discharged because of impossibility of performance, all other counter obligations shall discharge and the contract shall then be automatically rescinded".
But she says that this relates only to that part of the contract that is impossible to perform, and so the discharge of obligation also only relates to that part.
She adds: "These provisions also apply in continuing contracts to the temporary impossibility of performance. And the creditor [buyer] may in these cases rescind the contract after serving notice upon the debtor [seller]. In this case, pursuant to Article 274 of the UAE Civil Code, the creditor is to be put back in the position he was in prior to entering into the contract."
Although one sub-developer has started down this track and others may follow, the law certainly appears to protect buyers. It is much more sensible for both seller and buyer to collaboratively work out a situation in which both parties can be discharged of their obligation towards one another in dead-end projects, without making it too onerous on either side.
There will definitely be some pain, but it should be limited through the use of the right surgical instruments available in the law.
Rehan Khan is a consultant and writer based in Dubai
RESULTS
5pm: Wathba Stallions Cup – Handicap (PA) Dh70,000 (Turf) 2,200m
Winner: M'A Yaromoon, Jesus Rosales (jockey), Khalifa Al Neydai (trainer)
5.30pm: Khor Al Baghal – Conditions (PA) Dh80,000 (T) 1,600m
Winner: No Riesgo Al Maury, Antonio Fresu, Ibrahim Al Hadhrami
6pm: Khor Faridah – Handicap (PA) Dh80,000 (T) 1,600m
Winner: JAP Almahfuz, Royston Ffrench, Irfan Ellahi
6.30pm: Abu Dhabi Fillies Classic – Prestige (PA) Dh110,000 (T) 1,400m
Winner: Mahmouda, Pat Cosgrave, Abdallah Al Hammadi
7pm: Abu Dhabi Colts Classic – Prestige (PA) Dh110,000 (T) 1,400m
Winner: AS Jezan, George Buckell, Ahmed Al Mehairbi
7.30pm: Khor Laffam – Handicap (TB) Dh80,000 (T) 2,200m
Winner: Dolman, Antonio Fresu, Bhupath Seemar
Factfile on Garbine Muguruza:
Name: Garbine Muguruza (ESP)
World ranking: 15 (will rise to 5 on Monday)
Date of birth: October 8, 1993
Place of birth: Caracas, Venezuela
Place of residence: Geneva, Switzerland
Height: 6ft (1.82m)
Career singles titles: 4
Grand Slam titles: 2 (French Open 2016, Wimbledon 2017)
Career prize money: $13,928,719
The specs: McLaren 600LT
Price, base: Dh914,000
Engine: 3.8-litre twin-turbo V8
Transmission: Seven-speed automatic
Power: 600hp @ 7,500rpm
Torque: 620Nm @ 5,500rpm
Fuel economy 12.2.L / 100km
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The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
The specs
Engine: Long-range single or dual motor with 200kW or 400kW battery
Transmission: Single-speed automatic
Max touring range: 620km / 590km
Price: From Dh250,000 (estimated)
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MEDIEVIL%20(1998)
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Call of Duty: Black Ops 6
Developer: Treyarch, Raven Software
Publisher: Activision
Console: PlayStation 4 & 5, Windows, Xbox One & Series X/S
Rating: 3.5/5
Moon Music
Artist: Coldplay
Label: Parlophone/Atlantic
Number of tracks: 10
Rating: 3/5
COMPANY PROFILE
Name: Qyubic
Started: October 2023
Founder: Namrata Raina
Based: Dubai
Sector: E-commerce
Current number of staff: 10
Investment stage: Pre-seed
Initial investment: Undisclosed
Citadel: Honey Bunny first episode
Directors: Raj & DK
Stars: Varun Dhawan, Samantha Ruth Prabhu, Kashvi Majmundar, Kay Kay Menon
Rating: 4/5
A new relationship with the old country
Treaty of Friendship between the United Kingdom of Great Britain and Northern Ireland and the United Arab Emirates
The United kingdom of Great Britain and Northern Ireland and the United Arab Emirates; Considering that the United Arab Emirates has assumed full responsibility as a sovereign and independent State; Determined that the long-standing and traditional relations of close friendship and cooperation between their peoples shall continue; Desiring to give expression to this intention in the form of a Treaty Friendship; Have agreed as follows:
ARTICLE 1 The relations between the United Kingdom of Great Britain and Northern Ireland and the United Arab Emirates shall be governed by a spirit of close friendship. In recognition of this, the Contracting Parties, conscious of their common interest in the peace and stability of the region, shall: (a) consult together on matters of mutual concern in time of need; (b) settle all their disputes by peaceful means in conformity with the provisions of the Charter of the United Nations.
ARTICLE 2 The Contracting Parties shall encourage education, scientific and cultural cooperation between the two States in accordance with arrangements to be agreed. Such arrangements shall cover among other things: (a) the promotion of mutual understanding of their respective cultures, civilisations and languages, the promotion of contacts among professional bodies, universities and cultural institutions; (c) the encouragement of technical, scientific and cultural exchanges.
ARTICLE 3 The Contracting Parties shall maintain the close relationship already existing between them in the field of trade and commerce. Representatives of the Contracting Parties shall meet from time to time to consider means by which such relations can be further developed and strengthened, including the possibility of concluding treaties or agreements on matters of mutual concern.
ARTICLE 4 This Treaty shall enter into force on today’s date and shall remain in force for a period of ten years. Unless twelve months before the expiry of the said period of ten years either Contracting Party shall have given notice to the other of its intention to terminate the Treaty, this Treaty shall remain in force thereafter until the expiry of twelve months from the date on which notice of such intention is given.
IN WITNESS WHEREOF the undersigned have signed this Treaty.
DONE in duplicate at Dubai the second day of December 1971AD, corresponding to the fifteenth day of Shawwal 1391H, in the English and Arabic languages, both texts being equally authoritative.
Signed
Geoffrey Arthur Sheikh Zayed
COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
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From Zero
Artist: Linkin Park
Label: Warner Records
Number of tracks: 11
Rating: 4/5
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The specs
Engine: 6.2-litre supercharged V8
Power: 712hp at 6,100rpm
Torque: 881Nm at 4,800rpm
Transmission: 8-speed auto
Fuel consumption: 19.6 l/100km
Price: Dh380,000
On sale: now
The specs
Engine: 2-litre or 3-litre 4Motion all-wheel-drive Power: 250Nm (2-litre); 340 (3-litre) Torque: 450Nm Transmission: 8-speed automatic Starting price: From Dh212,000 On sale: Now
Electoral College Victory
Trump has so far secured 295 Electoral College votes, according to the Associated Press, exceeding the 270 needed to win. Only Nevada and Arizona remain to be called, and both swing states are leaning Republican. Trump swept all five remaining swing states, North Carolina, Georgia, Pennsylvania, Michigan and Wisconsin, sealing his path to victory and giving him a strong mandate.
Popular Vote Tally
The count is ongoing, but Trump currently leads with nearly 51 per cent of the popular vote to Harris’s 47.6 per cent. Trump has over 72.2 million votes, while Harris trails with approximately 67.4 million.
Company%20Profile
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Kanguva
Director: Siva
Stars: Suriya, Bobby Deol, Disha Patani, Yogi Babu, Redin Kingsley
Wicked
Director: Jon M Chu
Stars: Cynthia Erivo, Ariana Grande, Jonathan Bailey
Gully Boy
Director: Zoya Akhtar
Producer: Excel Entertainment & Tiger Baby
Cast: Ranveer Singh, Alia Bhatt, Kalki Koechlin, Siddhant Chaturvedi
Rating: 4/5 stars
COMPANY%20PROFILE
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Our legal columnist
Name: Yousef Al Bahar
Advocate at Al Bahar & Associate Advocates and Legal Consultants, established in 1994
Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers
If you go
Where to stay: Courtyard by Marriott Titusville Kennedy Space Centre has unparalleled views of the Indian River. Alligators can be spotted from hotel room balconies, as can several rocket launch sites. The hotel also boasts cool space-themed decor.
When to go: Florida is best experienced during the winter months, from November to May, before the humidity kicks in.
How to get there: Emirates currently flies from Dubai to Orlando five times a week.
Company%20Profile
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Singham Again
Director: Rohit Shetty
Stars: Ajay Devgn, Kareena Kapoor Khan, Ranveer Singh, Akshay Kumar, Tiger Shroff, Deepika Padukone
Rating: 3/5
Landfill in numbers
• Landfill gas is composed of 50 per cent methane
• Methane is 28 times more harmful than Co2 in terms of global warming
• 11 million total tonnes of waste are being generated annually in Abu Dhabi
• 18,000 tonnes per year of hazardous and medical waste is produced in Abu Dhabi emirate per year
• 20,000 litres of cooking oil produced in Abu Dhabi’s cafeterias and restaurants every day is thrown away
• 50 per cent of Abu Dhabi’s waste is from construction and demolition
Disclaimer
Director: Alfonso Cuaron
Stars: Cate Blanchett, Kevin Kline, Lesley Manville
Rating: 4/5