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Real estate broker’s register in the Emirate of Dubai is regulated by regulation No. 85/2006. Article 26 of said regulation stipulates that the brokerage agreement shall be registered in the real estate register, which created a controversy on the legal effect of non-registration of the agreement with the Dubai Land Department.

The broker’s commission is usually determined either in a separate brokerage agreement or in a sale agreement. In practice, we have come across situations where buyers, sellers, or both refrain from settling the brokerage commission as stipulated under the provisions of the sale or the brokerage agreement which will leave the broker with the option to resort to courts for the recovery of his / her fees. As a part of their defense strategy, buyers and sellers would raise the argument that the sale or brokerage agreement is not duly registered with Dubai Land Department as required under the above-mentioned Article 26 and therefore the agreement should be considered null and void.

The Court of Appeal in Dubai considered in a final judgment on 22/12/2022 that a brokerage agreement should be registered with Dubai Land Department for the broker to be entitled to a commission and given that the broker did not provide evidence pertaining to such registration, the agreement is null and rejected the broker’s claim.

In a similar situation where we represented the broker, the Court of Cassation rendered recently, on 9/5/2024, a final judgment upholding the first instance and appeal judgments in relation to dismissing the defense pertaining to the nullification of the agreement due to non-registration with Dubai Land Department, as this is an administrative matter and the law does not clearly state that the effect of not registering the agreement would be the nullification.

Further, in another case where we acted for the broker, the Court of Appeal overturned the first instance judgment and considered in its final judgment dated 7/8/2024 that Chapter 6 of Regulation No. 85/2006 determine disciplinary penalties such as notices, warnings, suspension from work etc., which means that non-registration of the agreement led to administrative penalties without nullification of the agreement which remains valid between the signatory parties. 

Pursuant to the issuance of a final judgment from the Court of Cassation on this matter we anticipate that Onshore Courts will adopt the same interpretation when facing a similar situation. 

The matter of nullification of any agreement pursuant to a violation of a certain text of law will always be dialectic when the law is silent in this regard and subject to Court’s absolute discretion considering more than legal general principle such as good faith, agreements must be kept, and the impact of the violation on the stability of certain transactions.

This article was written by litigators Bassel Boutros and Hassan El Shahat Mohamed, who imply that while Dubai’s regulations require the registration of brokerage agreements with the Dubai Land Department, the courts have recently ruled that non-registration does not necessarily nullify the agreement, leaving the decision to the court’s discretion based on broader legal principles.

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