Most people believe that an email is an informal form of communication. Thus, offers, counter offers are often exchanged through emails bearing in mind that they are just for initial negotiations. Our generation is an era of speed considering our primary dependence on technology which is making our life more comfortable, faster and internationally connected. However, the question is that whether such emails correspondences exchanged between the parties are legal and binding on the parties. The Lawyers of Dubai through several decisions passed by Dubai Courts will explain the view of Dubai Courts towards the importance of emails in a real estate dispute.
Dubai is experiencing a vast change in the technology in a different sector where real estate is being overwhelmed due to digitalizing. Accordingly, the current article will discuss as for how the rights of individuals can be protected if they have digital evidence in a civil claim. Federal Law Number 10 of 1992 regarding UAE Law of Evidence (the Evidence Law) as amended governs the evidences that can be submitted before the courts. Article 17 of the Evidence Law states that “electronic writings, correspondence, documents and registers have the same probative force given by this Law to formal and informal writings and correspondence, whenever it satisfies the conditions and provisions set out in the Law of Electronic Transactions and Commerce.”
UAE has promulgated a federal law on electronic transactions by virtue of Federal Law Number 1 of 2006 concerning Electronic Transactions and Commerce.
Article 2 of the said law provides the following list of cases on which it will be applicable:
- Matters for which there are no specific provisions shall be regulated by commercial laws and this law along with civil laws;
- It is applicable to Electronic Records, documents, signatures in relation to electronic transactions, however, does not apply to issues pertaining to family matters; title deed for immovable property; financial instruments; transactions related to immovable property and its registration; document attested by Public Notary or any other material not governed under this Law.
Furthermore, the Emirate of Dubai has issued Law Number 2 of 2002 regarding Electronic Transaction and Commerce Law for regulating such transactions within Dubai. It is apparent from the Federal Law on Electronic Communications that electronic documents have limited significance in relation to real estate matters. Dubai Courts have witnessed numerous cases where parties submit electronic evidence in their claim.
Dubai Court’s Perspective
Facts
The above discussion will be verified through this case study, where an individual (buyer) signed a sale and Purchase agreement (SPA) with a real estate company (seller) for several units. Accordingly, the part payment was given by the buyer, however, later he terminated the original SPA and entered into two different SPAs for different Units. The further deposit was made by the Buyer under the new agreement, and the balance was agreed to be paid upon completion. Accordingly, the property was registered with the Land Department under the name of the Buyer.
Issues
Dissension arose between the parties regarding the purchase price of the property and the issue outlined was whether the amount deposited under the old SPA should be considered under the under the new agreement on the basis of emails exchanged between the parties. Buyer contended that the parties have agreed to settle the amounts under the agreement as opposed by Seller. The latter argued that the buyer had violated the new SPA for failing to oblige by the payment schedule.
Court’s Ruling
Following the court’s protocol, the matter was first referred to the Centre for Amicable Settlement, wherein the parties requested an expert to determine the violation of the parties. The expert drafted the report and mentioned that the Buyer asked the Seller via email to send a statement of account for the amount paid under both the contracts and accordingly, Buyer has a credit balance based on the transfer made.
The matter was referred to Court of First Instance by the Seller for claiming the outstanding amount against the Unit. The seller contended that since the Buyer requested to cancel the original SPA, the amount paid under that contract was retained as compensation for the loss incurred by the Seller.
On the other hand, a counterclaim was filed by the Buyer on several grounds as follows:
- To seek confirmation of the new SPA being valid and enforceable;
- To force the seller to fulfil his obligations under the contract;
- To register the property under Buyer’s name with the Department;
- To force Seller to pay compensation for the loss incurred by his denial to enjoy his rights.
The court rejected Buyer’s claim and held that Buyer is entitled to pay the Seller the balance amount basis on Expert report. Both the parties filed an appeal in the matter, and the Court of Appeal appointed a committee which opined that the Seller did not transfer the amount paid under the old contract to the new contract. The Appeal court overruled the decision of the lower court, wherein the sale contract was held valid and enforceable.
The Court of Cassation again overturned the decision of Appeal Court and held that the contract was neither valid nor enforceable as the evidence for settlement of amount was through emails. Relying on Article 2 of the Federal Law on Electronic Communication, the electronic proofs for the sale of immovable property shall not be covered under the definition of Electronic Communication.
Analysis
In this era of technology, an amendment to the Federal Law is the need of the hour. As emails nowadays a medium to correspond with international parties and holds high importance. Thus, the law should be at par with the technological advancements in all the sectors, be it real estate. As for now, it is advised by Commercial Lawyer of Dubai to use physical letters in real estate transactions.
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