Real Estate & Commercial Litigation

Client: A Commercial Company Owning Leased Real Estate Properties

Practice Area: Real Estate & Commercial Litigation

Outcome: Judgment in favor of the Client, ordering the defendant to pay AED 48,728,382 plus 5% statutory interest and to return management and administration of the properties to the Client.

Facts of the Dispute

The client, a commercial company owning leased real estate properties, was subjected to unlawful actions by the defendants, led by the first defendant. Through void contracts, the defendants seized the client’s shares, unlawfully assumed management of its properties, and appropriated revenues over several years.

Although a final and binding judgment had already invalidated the transactions and restored matters to their original state, the defendants persisted in exercising control and profiting from the properties.

The client (claimant) filed a new lawsuit seeking:

• Restitution of the misappropriated revenues with statutory interest at 5% per annum, and
• Restoration of its right to manage and administer its properties.

The defendants sought to obstruct the case by raising several defenses, including:

• Lack of subject-matter jurisdiction (claiming the dispute was a tenancy issue within the Rental Disputes Settlement Center’s jurisdiction).
• Suspension of proceedings pending resolution of related ownership disputes.
• Inadmissibility of the claim due to lapse of time under Article (474/1) of the Civil Transactions Law.
• Absence of unjust enrichment elements.

Court’s Findings

After appointing an expert to calculate revenues and identify the actual beneficiary, the court issued judgment in favor of the claimant. It established the following principles:

• 1- Subject-Matter Jurisdiction: The dispute did not concern a valid lease but an unlawful appropriation of real estate, thus falling within the jurisdiction of the ordinary courts, not the Rental Disputes Settlement Center.
• 2- Finality of Judgments: The court rejected suspension of proceedings, emphasizing that ownership of the company had already been conclusively resolved by binding judgments that could not be relitigated.
• 3- Revenues vs. Rent: Revenues from unlawful possession were deemed compensation for wrongful appropriation, not “periodic rent.” Consequently, they were not subject to the five-year limitation period applicable to rent claims.
• 4- Individual Liability: Based on the expert’s findings, only the first defendant was held liable, as the actual possessor and beneficiary. Liability was not extended to other defendants where no benefit had been proven.
• 5- Statutory Interest: The court awarded statutory interest at 5% per annum from the date of judicial claim until full payment, ensuring adequate compensation for delay in restitution.
• Judgment: The defendant was ordered to pay the claimant AED 48,728,382, plus interest at 5% per annum, and to deliver back full management and administration of the properties.

Significance of the Judgment

This judgment is significant for its breadth and the principles it reinforced:

• Protection of Ownership: The court emphasized that ownership rights extend not only to the property itself but also to its revenues and fruits, which must be fully restored in cases of unlawful appropriation.
• Clarification of Legal Distinctions: By distinguishing between genuine tenancy disputes and claims arising from void contracts or unauthorized possession, the court closed potential loopholes for unlawful occupiers.
• Res Judicata Strengthened: The ruling reaffirmed the binding effect of final judgments, preventing attempts to reopen settled issues.
• Individualized Liability: Liability was confined strictly to the party proven to have received revenues, ensuring fairness.
• Statutory Interest as Compensation: The award of interest underlined the principle that delay in restitution must also be compensated.

The judgment firmly established the judicial principle:

“Whoever unlawfully takes possession of another’s property without legal basis is bound to return the full revenues thereof, as compensation for unlawful appropriation, not as periodic rent subject to prescription.”

This ruling serves as a strong precedent safeguarding private ownership and deterring unlawful exploitation of real estate.