DUBAI - A slowdown in Dubai's real estate and construction sector will lead to more cases being filed with the emirate's arbitration centre, the body's chairman said.
The number and value of disputes soared following Dubai's property crash that began in 2008, with 871 cases claiming a combined 14 billion dirhams (S$5.3 billion) logged in 2010-11, data from the Dubai International Arbitration Centre showed.
Case numbers fell to a six-year low in 2014 as property prices rebounded, but sales dropped about 15 per cent last year and are expected to decline further in 2016.
"Due to market conditions in the region, this year is going to be challenging and as a result I expect there will be another rise in disputes," arbitration centre Chairman Dr. Habib Al Mulla told Reuters.
"This doesn't necessarily mean it will be like what happened in 2008-10, but overall disputes will be on the rise for a few years before it settles back."
DIAC was established in 2007 as a means for disputes to be heard behind closed doors by expert arbiters, which was seen as big step in establishing Dubai's credentials as a commercial and financial hub.
Of DIAC's 519 cases pending, more than 80 per cent relate to real estate, construction and engineering. "It's very difficult to find any construction project that doesn't have a few disputes arising out of it," Mulla said.
Contracts usually state any arbitration awards will be binding, but losers often appeal to other courts. These consider technical aspects, but do not question whether the verdict itself was correct.
"In many cases, parties like to challenge arbitration awards before courts and test their luck," Mulla said.
"The final end will come when the court ratifies an award and declares it as enforceable instrument."
Contractors are being pushed by auditors and lawyers to resolve long-standing disputes or remove the money owed from their balance sheet, a Gulf legal source said.
"There's been a discernible increase in historic claims being reactivated and taken to a court or tribunal," the source said.
"Everyone is trying to protect their cash pool after what happened a few years back."