The geopolitical situation in the Middle East is escalating. In particular, the recent attack by Iran on the United Arab Emirates (UAE), and specifically on Dubai, has caused significant uncertainty among international investors. Many buyers of off-plan properties (properties under construction) or existing real estate in Dubai are currently asking themselves anxiously: How can I withdraw from my property purchase agreement and get my invested money back?
The legal options depend heavily on how and through whom the contract was concluded. In particular, three legal mechanisms must be examined: revocation, rescission, and the frustration of contract (force majeure).
Role of the broker: Germany vs. Dubai
A crucial factor in the legal assessment is the location of the mediating broker, as this can have far-reaching consequences for the applicable law and jurisdiction.
- Broker based in Germany: If the contact, consultation, and conclusion of the contract were handled via a broker or sales partner in Germany, German consumer protection regulations frequently apply. Particularly in the case of contracts concluded purely electronically, by telephone, or outside of business premises (distance selling), there is a good chance that German courts will have jurisdiction and German consumer law will apply.
- Broker based in Dubai/UAE: If you concluded the contract directly with a developer in Dubai or via a locally based broker, the case is generally subject to the law of the United Arab Emirates. The place of jurisdiction is then usually also in Dubai (e.g., before the courts of the Dubai Land Department or in arbitration).
Revocation of a purchase agreement for real estate in Dubai
A statutory right of revocation exists primarily in German and European consumer protection law. If the purchase agreement was concluded via a broker based in Germany as a distance selling transaction (e.g., via Zoom, e-mail, or telephone) or as a doorstep transaction, consumers generally have a 14-day right of revocation. If the buyer was not properly informed of this right, the revocation period can be extended to up to one year and 14 days. Upon successful revocation, the contract is unwound, and the buyer receives their down payments back.
For contracts concluded under UAE law (e.g., via local brokers), such a consumer-protecting right of revocation is generally not provided for by statute. In such cases, buyers must rely on contractually agreed rights of withdrawal.
Rescission of the purchase agreement for real estate in Dubai
Rescission is possible in both legal systems, but it usually requires a breach of contract by the other party.
- If construction work is permanently halted due to acts of war, or if the developer encounters payment and delivery difficulties, rescission can be declared after setting a grace period.
- Under UAE law (Art. 272 of the UAE Civil Code), a party may also demand the dissolution of the contract if the other party fails to fulfill its obligations. Often, however, developers refuse to voluntarily return down payments, making the route through the courts or arbitration tribunals in Dubai inevitable.
Frustration of Purpose/Force Majeure
The attack on Dubai and the associated threat of war constitute a classic scenario for “Force Majeure”.
- Under German law, this is referred to as the “frustration of contract” or interference with the basis of the transaction (§ 313 BGB). If the circumstances that became the basis of the contract have changed significantly after the conclusion of the contract, and adherence to the contract is unreasonable, an adjustment of the contract or even its termination can be demanded. It is also particularly important to consider whether the crisis was already foreseeable at the time of the conclusion of the contract, and whether the economic fluctuations lie within a normal framework of entrepreneurial risk (cf. Koblenz Regional Court, judgment of December 11, 2024, 14 O 278/24).
- Under UAE law, the concept of “Force Majeure” exists (Art. 273 of the UAE Civil Code). If the performance of a contract becomes impossible due to unforeseeable events of force majeure, the corresponding obligations are extinguished, and the contract is dissolved. The parties must then be restored to the position they were in before the contract was concluded – which means a refund of the purchase price.
Thorough review of real estate purchase agreements is essential
The crisis situation in the Middle East certainly offers legal starting points for exiting investments in Dubai. However, whether a revocation, a rescission, or an invocation of force majeure is promising cannot be answered in general terms. The legal assessment always depends on the specific individual case, the exact wording of the purchase agreement, the applicable law, and the sales structure (location of the broker).
Have you invested in Dubai and would like to have your legal options examined? Our experts in international contract law are happy to assist you with an individual review of your case. Please feel free to contact us.
