When an Off-Plan Project Is Cancelled in Dubai: the Full Refund Rule and the Tribunal That Decides

Most off-plan buyers in Dubai know, vaguely, that there is a protection. Money goes into an escrow account, a regulator watches the project, and if it all goes wrong something happens.

What actually happens is more specific than that, and more favourable than most buyers expect — but only in one of the two directions the law runs in.

Article 11 of Law No. 13 of 2008 regulating the Interim Real Property Register, as amended by Law No. 19 of 2017, governs both. One half deals with a purchaser who stops paying. The other deals with a project that RERA cancels. They produce opposite outcomes, and the gap between them is the single most useful thing an off-plan buyer can know.

If you default, the developer can terminate and keep a slice of the value — up to 40% where the building is well advanced.

If RERA cancels the project, the developer must refund all payments made by the purchasers. There is no retention band. There is no sliding scale. The percentage the developer keeps is zero.

What "Cancelled" Actually Means

The word does a lot of work here, and buyers use it far more loosely than the law does.

A project is cancelled when RERA issues a reasoned decision cancelling it. That is a formal regulatory act, and it is the trigger for everything that follows. It is not a developer announcing a pause. It is not a site going quiet. It is not a handover date passing. It is not a developer's own termination of its project, and it is not your own decision to walk away.

The text is explicit about the consequence. Where the project is cancelled pursuant to a reasoned decision of RERA, the developer must refund all payments made by the purchasers in accordance with the procedures and rules stipulated in Law No. 8 of 2007 — the law governing real property development trust accounts, which is to say escrow.

That cross-reference is the mechanism. Law No. 8 of 2007 requires money paid by off-plan buyers to go into an escrow account dedicated to the project's construction, requires the escrow agent to protect the depositors' rights, and contemplates refunds where an event prevents the project being completed, cancellation included. Amounts in a project escrow account are also insulated from the developer's general creditors — which is the whole point of having one, and the reason the refund obligation is not merely a promise from a company that may have run out of money.

If You Default, the Numbers Are Very Different

It is worth setting the two halves side by side, because the asymmetry is the argument for understanding which situation you are actually in.

Where a purchaser breaches, the developer cannot simply cancel. It notifies the Dubai Land Department, which serves a 30-day notice on the purchaser requiring performance and attempts to mediate. If the breach is unresolved after 30 days, the DLD issues an official document confirming the procedure was followed and recording the percentage of completion of the unit. That percentage decides what the developer may keep.

Two details inside that table matter more than the headline percentages. The retention in the first three rows is a share of the unit's value, not of what you have paid — so on a unit where you have paid 30% and the developer may retain 40% of value, the retention can exceed everything you have handed over. And where the developer retains a capped share, the excess must be refunded within one year of the termination or within 60 days of reselling the unit, whichever is earlier; in the not-commenced case the refund window is 60 days.

The Tribunal Is the Only Forum

If the project is cancelled, the venue for everything that follows is not the Dubai Courts, and it is not arbitration.

Decree No. (33) of 2020, issued on 15 December 2020, created a dedicated judicial body for exactly these disputes. It replaced the committee that had existed under Decree No. (21) of 2013, which Article 16 of the new decree supersedes.

What the decree does is best read article by article.

• Article 6 — jurisdiction. The Tribunal determines claims, applications and orders concerning unfinished projects where construction commenced but was suspended, cancelled projects and their liquidation, grievances brought by developers against RERA, and the rights of investors and purchasers in unfinished projects, together with the related execution proceedings, grievances and objections.
• Article 7 — powers. The Tribunal may issue orders to the escrow agent or the developer concerning the refund of amounts deposited in the escrow account or paid to the developer. It may form subcommittees and appoint auditors to verify what purchasers actually paid and what actually reached escrow.
• Article 9 — RERA's role. RERA must prepare detailed reports on each project, covering its current situation, proposed solutions and the actions taken, and provide them to the Tribunal.
• Article 10 — exclusivity. Other courts, expressly including the DIFC Courts, may not hear applications, claims or appeals falling within the Tribunal's jurisdiction, must stop considering them, and must refer them on.
• Article 11 — finality. Awards, orders and decisions of the Tribunal are definitive and not subject to ordinary appeal procedures, and are executed through the Dubai Courts execution department.
• Article 13 — cost. Applications to the Tribunal are exempt from judicial fees, which matters for a buyer whose capital is already tied up in the project.
• Article 4 — the carve-out. Projects located inside the DIFC are excluded from the decree's scope. If your project sits in the DIFC, this entire framework does not apply to it and you are back in the DIFC Courts.

Article 10 and Article 11 together are the practical headline. You cannot forum-shop into the DIFC Courts because your contract has a DIFC clause or your developer is a DIFC entity, and you do not get a second instance. The Tribunal's decision on your claim is, in the ordinary course, the end of it.

What the Decree Does Not Say

Honesty about the gaps matters more here than anywhere, because the gap is where buyers' expectations and reality diverge.

The decree gives the Tribunal wide power over liquidation and over the escrow agent. It does not publish a distribution waterfall — an order of priority setting out who is paid first out of a liquidated project's assets when there is not enough to go round. There is no article you can read that tells you where a purchaser ranks against a contractor, a lender, or the government.

So the "full refund" rule in Article 11 should be understood for what it is: an obligation on the developer, enforced through the escrow mechanism and the Tribunal. It is not a guarantee that a specific sum will be in the account. Where a project was properly funded and the escrow was properly maintained, buyers have recovered. Where money left escrow improperly or the project was underfunded from the start, the Tribunal is dividing a smaller pot, and the auditing powers in Article 7 exist precisely because that is a real scenario.

The honest summary: your legal entitlement on cancellation is 100%, your recovery depends on what is there, and the two are not the same number.

Stalled Is Not Cancelled

This is the distinction that causes the most wasted effort, and it cuts in the buyer's favour as often as against.

A project that is late is not a cancelled project. A late project is a contractual matter governed by your sale and purchase agreement — its anticipated completion date, its grace period, and whatever remedies the contract gives you. Dubai has no statutory late-delivery compensation, and the grace clause in most Dubai SPAs runs six to twelve months. Our guide to off-plan handover delays deals with that situation in full, and it is a different situation from this one.

A project that has stalled, where construction began and stopped, sits in between. It falls squarely inside the Tribunal's Article 6 jurisdiction over unfinished projects even before any cancellation decision exists — which means the Tribunal is available to you earlier than most buyers realise, and RERA's Article 9 reporting duty is already engaged.

The sequence in practice is: delay is contractual, stalling is for the Tribunal, cancellation is a RERA decision that converts your claim into a refund claim. Know which one you are in before you spend money on the wrong remedy.

If Your Project Has Stopped

• Check the project's status with the DLD, not with the developer. The project status enquiry publishes a completion percentage, and it is the only progress number that does not come from the people selling you the unit.
• Confirm the escrow account exists and is named in your SPA. Payments made outside the escrow account are the single most common reason a recovery is harder than the law suggests it should be.
• Keep every receipt and every transfer confirmation. Article 7 lets the Tribunal appoint auditors to establish what you paid and what reached escrow; your evidence is what that exercise runs on.
• Do not stop paying on the assumption the project is finished. Unilaterally withholding instalments puts you on the wrong side of Article 11, where the retention bands apply, and the developer has a 30-day DLD notice procedure waiting.
• File with the Special Tribunal, not the Dubai Courts or the DIFC Courts. A claim filed in the wrong forum has to be referred on under Article 10, which costs time you may not have.
• Get advice before accepting a settlement or a swap into another project. A transfer into a different development is a contractual variation and may release claims you would otherwise keep.

The Short Version

Article 11 of Law No. 13 of 2008 as amended by Law No. 19 of 2017 runs in two directions with opposite results. Against a defaulting purchaser the developer notifies the DLD, a 30-day notice is served, and the retention is set by completion: all amounts or up to 40% of value above 80% complete, up to 40% between 60% and 80%, up to 25% below 60%, and up to 30% of amounts paid where work never started for reasons outside the developer's control — with any excess refundable within a year of termination or 60 days of resale, whichever is earlier. Where RERA cancels the project by reasoned decision, the position reverses completely: the developer must refund all payments, with no retention, through the escrow procedures of Law No. 8 of 2007. Every dispute about a cancelled or unfinished project goes to the Special Tribunal created by Decree No. (33) of 2020, which can order the escrow agent directly (Article 7), excludes every other court including the DIFC Courts (Article 10), issues decisions that are final and not subject to ordinary appeal (Article 11), and charges no judicial fees (Article 13) — though projects inside the DIFC are carved out of its scope altogether (Article 4). What the decree does not publish is a priority order for distribution, so a full legal entitlement and a full practical recovery are different things, and what is actually in the escrow account is what decides the gap.

This is general information about Dubai off-plan regulation, not legal advice. Laws, article numbering and regulatory practice change, and the outcome of any individual project or claim depends entirely on its facts and its contract. Confirm the current position with RERA, the Dubai Land Department or a qualified UAE lawyer before acting.